Term or whole life? How do you determine which is for you?

If you can invest and get 6% p.a and more, just buy term and invest the rest, no questions asked.

If you cannot, you have option to choose CPF SA ( 4% interest if you are able to hit Full Retirement Sum and Excess by 55), or Perpetual Endowments for 4% (Non-gauranteed). But it doesn't help as much as ECI cost is high (6% p.a for Buy term invest the rest).

Decide base on what is the investment return you can achieve, and also if your budget can fits.

If it burst your budget, it means you are not earning enough to get protected.

Life Insurance, in my view, is a structured, not very transparent to the layman,

product.

Maybe better to stay away generally.

Here is some info i feel sound:

https://www.investopedia.com/articles/active-tr...

Agree with most points here. Especially with working with your budget of 10%.

Although I would add that there are benefits to very short term critical illness coverage as well. This is to cover short term needs such as children (for just 20 years), or even for 10 years. The cost would be significantly lower the shorter the term. A large reason why most term plans for CI and ECI exceeds whole life is because most generate quotations which cover till 85. This will not be the case when you generate terms of 10/15 years.

500k Death and Disability is more than enough given your income and cashflow. Another 100k can be funded by whole life or term. Provided that it’s within your budget. The key is to keep it cost efficient WHILE giving you room to invest and save for your retirement.

Hi Anon,

Actually what the adviser recommended is something I would also agree on. ECI/ CI are the most unforeseen, and can occur at any phase of our lives, so we definitely would want coverage throughout out life time.

Term is affordable and have the best value, yes. And due to that nature, it's best use is to cover us during our working years, as that is the period where we are still getting an income. So use this to cover you up till your retirement age, or to when you think you would most likely retire.

In terms of how much coverage, I do agree with what Hariz recommended;

10x your annual income for death & TPD

5 - 7x your annual income for CI

2 - 3x your annual income for ECI

Also like what Elijah said, we should get our protection set first as that is actually the vital part of our lives. Once that is settled, we can look into investing.

Also in regards to your current income, I believe that there will be increments and bonuses, so your income will definitely increase as the years pass, so you would definitely have opportunity to invest.

Also, though it's good to invest a relatively higher sum of money, the most ideal is to constantly invest even if it's a small amount of even 1 - 200 a month as doing it constantly will definitely bring in the returns due to the compounding interest in the investments.

You can read this for more detailed explanation; https://www.investopedia.com/articles/investing...​​​