Should I opt for Term or Whole life insurance?

Hi anon,

To answer your questions

1. If your policy is still inforce, you'll get a payout. Some life plans cover your for life, literally, even if you live beyond 100. If you have a term plan that expires at 99 and has no survival benefits, then you get nothing. If your term plan expires at age 99 and has survival benefits, you will get your sum assured at age 99. If it was a life plan that matures at age 99, you would have got your payout at age 99. If it was a life plan that covers for life, you'll get your payout. Note that life plans that don't go past age 99 will definitely mature and payout the sum assured plus bonuses.

2. If you have no dependends or liabilities, you don't need death coverage, strictly speaking. (Legacy planning is a seperate matter). If you fall critically ill however, you need money to take care of costs that are not covered by your hospitalization plan, even after you retire. This prevents you from digging into your retirement funds, so that after you recover, you can return to the same standard of retirement you had before you fell ill.

3. Death coverage isn't really mandatory if you have no dependents or liabilities after 65/70. Most people should be debt free by then. However, if you wanted to leave monye behind after you pass on, regardless of when, that's a seperate issue. A term plan would still be the most cost efficient till age 75. This depends on your profile

4. I'd say a whole life limited pay plan would be cost efficient beyond that age.

Coverage Period

The basis of a term insurance policy is very simple - pay and get covered. At the end of the coverage period, the insurance company keeps all the premium.

More Details:

What is a Term Insurance Policy

Hence, the answer for your first question: If you pass away after the coverage period, then your beneficiary don't get a single cent.

By the way, participating whole life insurance policies usually covers till age 100.

More Details:

What is a Participating Whole Life Insurance Singapore

In any case, the concept is the same, i.e. if you pass away at age 101, your beneficiaries don't get anything as well.

Death Coverage

Generally, there are 5 reasons why you need death coverage, e.g. dependents, loans, legacy planning.

General Guideline: 10x Annual Income

More Details:

5 Reasons why You need Life Insurance - Death Coverage

The advantage is your beneficiary gets a payout when they need it.

Critical Illness

On the other hand, we should get critical illness coverage for as long as we live. This is because it is a supplement in addition to the healthcare insurance. For the most part, it replaces our income and support our living expenses and other needs.

General Guideline: 5x Annual Income

There are many plans in the market that you can choose from. However, what I feel is most important at your stage is to do a comprehensive life planning. Through this process, you are able to know what you need and how to plan for your future. Thereafter, an insurance policy is merely a tool to fulfil your needs.

With this in mind, speak with your agent or an experienced professional who is able to guide you to this end.

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