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Anonymous

15 Jul 2020

Insurance

Should I buy term insurance, limited pay whole life or an investment-linked policy?

Recently spoke to my AIA financial advisor on the 3 plans they have in those 3 categories. These are namely: AIA power critical cover, AIA pro lifetime protector and AIA guaranteed protect plus. I still have difficulty coming to a decision which one to take up. I have heard many negative reviews on ILP on seedly and will be leaning towards separating my investments from insurance.

Discussion (1)

What are your thoughts?

Elijah Lee

Elijah Lee

15 Jul 2020

Level 18·Independent Financial Advisor at Phillip Securities (Jurong East)

Hi anon,

Since insurance is a long term commitment, you'll want to maximize your coverage in terms of what you pay and what you get. Here's my take:

AIA Power Critical Cover is a multi pay plan. You will have to evaluate this against other comparable multi pay plans on the market, such as Aviva MyMultiPay. It won't be easy as the payout structures are generally all different. It depends on what you prefer.

AIA Pro Lifetime Protector is an ILP. I don't recommend mixing investments with insurance, so I have nothing much to say here.

AIA Guaranteed Protect Plus is a limited payment whole life plan. You will want to add riders to cover CI or ECI. However, I would suggest that you also benchmark it against other comparable and competitive plans such as Aviva's MyWholeLifePlan III or China Taiping i-Secure. Premiums to coverage wise, these two companies are generally quite good (this of course depends on your age, gender, etc).

In general, you would use term insurance to cover death/TPD, which is via your traditional term plans, but multipay CI plans are also term plans. Limited payment life plans work best if you want whole of life CI/ECI cover without having to pay forever.

You might want to evaluate options from multiple insurers first before deciding which plan and which insurer to gowith.

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