Should I surrender whole life policy?

I am a 32yo female, no dependants, no liabilities, non-smoker. I bought a GE Flexi Living Term policy (sum assured 100k) and Flexilife Multiplier 65 (sum assured 35k, with lots of other riders, but ECI is 50k) in 2017. I am paying $492 and $1.6k/year for these respectively.

I subsequently read up more on insurance policies and decided I would do well with a comprehensive term policy instead of a whole life policy with expensive premiums and low coverage. I got GREAT Term in 2021 - (sum assured 1 mil, living care rider 400k, complete living care rider 100k - i think that means CI/ECI at 400/500k coverage). Yearly premiums $2050.

I am therefore looking to surrender the two policies I got in 2017 as it doesn't make sense to keep them, but have been told that certain definitions for CI have changed in 2020 and it will be more difficult to claim under the new policy I bought in 2021. Despite so, the coverage is only 50k, and I don't think I should be paying an extra $1.6k/year for that.

Appreciate any thoughts on the above.

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PolicyWoke

01 Apr 2022

Turbo-charge Your Savings with REPs at PolicyWoke

Hi Anonymous,

Please seek advice from a financial advisor before deciding on surrendering your whole life policies. Buying a life insurance policy is a long-term commitment. An early termination
of the policy usually involves high costs and the surrender value payable (if any) may be less than the total premiums paid.

Disclaimer: PolicyWoke is a traded insurance policies broker.

https://www.policywoke.com/

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Aven

01 Apr 2022

Treasury Associate at MP

Hi, I am a financial planner from GE.

The benefits of whole life is that you pay for a limited time but get covered your whole life (maybe pay 20 years and you are covered till you die). You seem to have been paying for 5 - 6 years so maybe you have another 14 years to go. If you surrender your Whole Life policy now, you will definitely be making a lost.

Ultimately, it depends on your level of comfort. Are you comfortable not being covered at all when your Term policies all expires? You also need to consider that CI cover is not meant to pay for your hospital bills. It is meant to replace your income. Therefore, having cover when you are old (when you do not have any income) is actually not necessary as long as you have hospitalisation cover. I would recommend surrendering the term policy from 2017 though since you got a new one that covers 1 million. The general rule of thumb for insurance is no more than 10% of your gross salary so if what you are paying now in total is a lot less than 10% (maybe 5%), then maybe you might just want to see the whole life plan through since you have already paid for so many years). Alternatively, if you surrender, then I would recommend you re-direct all the money into investments instead of using it as extra money to spend.

As for the change in definition, you may refer to seedly article:

https://blog.seedly.sg/changes-to-critical-illn...

Just to clarify as well, the GREAT Term you got in 2021 (sum assured 1 mil, Living Care Rider 400k and Complete Living Care 100k) means you are covered:

Death/TPD/TI : 1 million

CI: 400K

ECI: 100K

Accelerating (meaning if you get ECI, you can claim 100k and your cover will drop to 900k then if you get CI you can claim another 400k and your cover drop to 500k and if you get TI/TPD/Death, then the remaining 500k will be paid out).

Hope this helps.

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