I bought MINDEF Group Term Life and Group Personal Accident earlier on. It is pretty cheap compared to outside but what is the difference between "group" and personal?

Hi anon,

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In general, the differences are:

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Group insurance:

• Cheaper as the group to be insured is larger and the insurer can factor that in when pricing.
• You do not own the policy and if you are no longer a member of the group, you will immediately lose the benefits
• Price can change any time when the yearly renewal of the group policy occurs. Terms may change as well (e.g. MINDEF group insurance moved everyone to 209 CI definitions for all renewals since Aug 2020, even if you wanted to stay on the 2014 definitions)
• You may be able to extend the coverage at the same rate to your loved ones at the reduced rate
• Not able to make a nomination

Peronal Insurance

• Higher premiums as they have to underwrite based on an individual
• You own the policy so the policy stays with you no matter what stage of life you are in
• Price is locked in for most cases (except hospitalization/CI riders) and will stay level. Terms and conditions locked in at point of purchase (except hospitalization which can change)
• To protect your loved ones you have to underwrite based on their profile
• Able to make a nomination

I'd take a mixture of both for my protection needs. Group insurance can be cost effective but I will always have a backup plan with my personal policies since they will always protect me regardless.

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If you are talking about the specific limitations of SAF group insurance, then you'll have to consider things like the payout being made in installments if the claim amount is over $200K, as well as the sub limits in the event of terrorism and war, to name a few.

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More detailed information can be found here: https://www.aviva.com.sg/content/dam/aviva-publ...

Hi Anon,

Generally group insurance serves as a good cost effective complement to our personal insurance. It may not be necessary to switch but maybe consider your current life stage and financial situation and speak to an adviser if needed to review your existing coverage to ensure sufficiency and suitability of coverage.

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The lower costs for MINDEF/MHA GTL comes with some limitations which may include: 1. Unable to make nominations, 2. Instament payouts for claims above $200k, 3. Coverage definitions (CI), 4. Group risk.

Let me explain a little further.

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1.Unable to make nominations

Because you are not the owner of this policy (MINDEF/MHA owns it) you do not have control over the policy like you would over a personal term life policy that you bought direct from an insurer.

You cannot make nominations of beneficiaries for the group term life policy and payouts will be made to your estate (subsequently depending on whether you have a will written, or Intestate Succession Act)

I don't suppose many young men serving NS or just starting working have their wills written. I shan't elaborate on the challenges of admininstration process here but it's troublesome and much slower than a nominated insurance policy payout to say the least.

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2. Instalment payouts

From the product summary pg 5 under Important Notes https://www.aviva.com.sg/content/dam/asl-public...

Your family will not be getting the $1m cheque you thought they would upon your death.

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3. Coverage definitions may change (CI)

As in the case of the recent update to Critical Illness definitions, group policies like this have updated their CI coverage as well. You may have been holding on to a CI policy with 2014 definitions, and that would remain unchanged if it was your personal policy. Whether this is a good or bad thing, it's up to the policyholder to decide.

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4. Group Risk

In the unlikely event of war/terrorism attacks. When many people claim together, there's a clause (on pg 3 of product summary) that limits the maximum liability of the insurer to 0.75% of aggregate sum assured.

Just some numbers for illustration. Say the aggregate sum assured of this group policy is $10 billion (it's definitely much higher), assuming there are 10,000 members who bought $1m coverage. If those 2 events occur and all 10,000 members claimed together, insurer will only pay out $75 million to the 10,000 members.

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Others

It may interest you that qualified dependants of NSMen and a whole list of people who are not NSMen are also eligible for this group term policy. There is an equivalent for public officers - Public Officers Group Insurance Scheme (POGIS) which is currently underwritten by Aviva as well. $500k at $21.50.

It is definitely cheap for those under 65, but you realise the huge spike in premiums after 65 should you decide to hold on to the policy.

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You may catch my webinar to understand more about Group Insurance Policies here https://www.youtube.com/watch?v=oZvGpePXvHE :)