I would like to seek an opinion in options for my 57 years old mum's ECI coverage. Would a limited pay whole life insurance with ECI rider be better or Term insurance, with budget of 25k in mind?

Hi anon,

I see that you have posted a budget (presumbly it's your total budget?). I'm going to look at some numbers to put things in perspective.

For reference, a $25K x 4 early CI whole life plan would cost about $4.1K over 10 years, covering $100K early CI till 70 and after age 70, $25K with accumulated bonuses. A $25K x 2 early CI whole life plan costs about $3.2K for 10 years. Both are above budget, although the $25K x 2 early CI whole life would exceed by just $7K (this may or may not be a big issue for you). The intangible benefit of this is simple: She gets coverage for the rest of life without having the need to pay premiums. Being a whole life plan, it will also pay out upon death if no claims are made for CI.

A term plan for pure early CI for $100K coverage costs $2.9K for 13 years, covering $100K for early CI and then terminates thereafter. The same plan, covering $50K would be around $1.55K. (Note that these are reference numbers based on a quick check, but should be around this range). So it is cheaper by a bit, but then we also need to acknowledge that cover ceases after age 70.

So realistically, the only plan that would cover her for early CI and still be within your budget, would be the $50K term plan, for a total outlay of about $20K. You'll still have $5K left over, which you have to 'self-insure' (i.e. set that money aside never to be touched in the event of illness after age 70). Unless you are willing to increase your budget for a whole life, a term might be better. Whether or not you can increase your budget, will be based on your personal circumstances.

Hi Anon,

Glad that you are looking at coverage for your mum.

Just wanted to ask, your budget of 25k is annual? Also based on your mum's age even looking at a term insurance would be rather pricey. As the guideline for term insurance is that your payment term and premium term should be the same.

Personally I would recommend WL as your definitely want to have coverage for the whole of life. However affordability is likely an issue.

So at this point in time, if you are looking at just CI coverage, you could consider looking at renewable term policies that cover CI specifically or just specific CIs like Cancer per say as these will most likely be more affordable as they are more specific in terms of coverage.