Understanding about Multiplier for Whole Life Insurance?

At different stages of your life, you will require a different amount of coverage. The purpose of a multiplier is to boost your coverage in your working years. This multiplier usually lasts until a certain age, after which the coverage will drop back to the base coverage amount.

The main trade-off for having a higher multiplier will be a higher premium amount.

Feel free to get in touch with us if you are interested to find out more.

Hi Will,

A multiplier is simply a factor by which the whole life plan's coverage is increased by, and this multiplier lasts till a certain age.

You may choose the multiplier amount, as well as the duration of the multiplier (not all plans can do this however)

So for example, say you bought a $100K whole life CI plan, which means that you are guaranteed at least $100K CI cover for your entire life (plus cash value)

All else being the same, a x2 multiplier till 70 would mean you are guaranteed $100K x 2 = 200K CI cover till 70, after which the payout would revert back to $100K plus cash value. If the cash value plus the basic sum assured happens to be higher than $200K before 70, then you get that instead of just $200K, since the total value would be more than $200K.

Change the figures in bold and you will get other permutations, for example:

x3 multiplier till 80 means you are covered for $300K CI till 80 at least

Now, about a high multiplier vs a low multiplier.

A $50K x 4 would give you $200K CI cover till 70, and a $100K x 2 would also give you $200K CI cover till 70. The question is, what happens after the multiplier ends at 70? In the first scenario, you'lll have $50K CI cover plus cash value after 70, but in the second case, you retain a more significant $100K plus cash value.

So while it may seem cheaper to get a $50K x 4, you might be better off with a $100K x 2, considering that by the time you are 70, inflation will make $50K seem very small. Calculate the difference between a $50K x 4 and a $100K x 2 in terms of total premiums, and you will see that the increase in premiums for $100K x 2 might be just $10K to $20K in total, which provides extra $50K coverage after 70. Is it worth it? Only you can decide.