What kind of insurance coverage should i get? Term or whole life?

Hi anon,

I'd take term insurance if it's more cost efficient than whole life.

This is usually the case when you're talking about death/TPD coverage, for which term insurance is by far the cheapest solution, and also for the fact that you don't need death/TPD cover for your entire life.. This is also probably where you might have seen the 'Buy Term and Invest the Rest" statement.

Whole Life becomes an interesting proposition when you factor in critical illness. You can look at the numbers, but right now, a whole life with critical illness/early critical illness rider has a good chance of being cheaper in total cost compared to a similar coverage term policy, with the added benefit that you retain CI cover for the rest of your life. Try adding ECI and LCI cover on a term plan and you'll be surprised at how much the premium jumps by. Unless you strongly believe you can achieve consistent investment returns of at least 6% per annum (investment returns are not guaranteed) and continue this trend even in your retirement, WL will likely be a very competitive solution for you.

While WL is mainly for income protection, you will also appreciate that the payout, being a lump sum of money, also means that you are free to utilize it for treatment such as a second opinion, TCM, experimental medication, etc, that a shield plan may not cover you for. A payout to cover such ancillary treatment monies would be helpful regardless of whether you are working or retired.

It is probably appropriate that I also point out that I'm referring to the hybrid whole life-term, or also commonly known as a plan with multiplier/minimum benefit. Such plans combine the features of whole life, term and a limited payment plan into a single package, and most insurers would have their version of it.

Yes, premiums might be higher by a couple of hundreds on a yearly basis, but you probably pay only 20-25 years as opposed to every single year on a term. In this case, Whole Life has a strong case going for i

You'll probably need around $160K - $180K as a rough guideline. Lock in insurability as you are still young, and work with an independent financial advisor to understand all the options available to you as well as their costs. Whole Life CI plans are not created equal, some plans have features that others don't. While price is a determinant, it should not be the only factor for you to go by. As a guideline, you should not be spending more than 10% of your income on coverage.

Of course, if you believe that you don't need CI cover in your retirement, then term might be the solution for you, but I personally believe in have a safety net in retirement and thus I have CI cover for life. However, do note that depending on when your term plan covers until, your total premiums can be significant.

Hi,

Depending on what your liabilities are as of right now and how you budget your money, but assuming if you don't have any big ticket items coming soon to pay for and stuff:

I would recommend getting a whole life first at your age, maybe about $100k to $150k coverage with early critical illnesses included (depending on your budget). Then when you need more coverage, top it up with a term plan till your desirable age.

Buying a whole life plan should not be seen as an investment, it is there to replace your income in any unfortunate circumstances. The thing about your age at 22, it is very hard to predict when you will 'retire' and having a whole life plan is also cheaper now.

It is good to have a combination, similar to investments, it can also be as a form of diversification. If you want to get a term and whole life plan, but deciding which one to go for first, can consider getting a whole life then topping a term plan after that when you have more liabilities and need more coverage for death, tpd and critical illnesses.

If you buy a term first then a whole life plan, you still have to pay 20 years for the whole life plan and would have to pay more in the future.​​​

Hi Anon,

We should first understand what is your objective in getting insurance. The 2 main ones are for protection against loss of income and medical expenses.

Then we should ask ourselves how long is this coverage required? How much coverage is required, and what is the best way we can fully cover ourselves. If we go along this thought process, the question of term or whole life will answer itself.

We have an ebook on the case of term vs whole life insurance to help consumers like you make an informed decision in your planning needs. And to help you along, you might want to take a guided journey here in our no pressure virtual shop to get a better sensing of what your needs are without having to buy any products :)

When you are ready, speak to our client advisers to carry out your plans or to further customise the plans if required.

Hope to be of service to you soon!

Hello.

The primary purpose of a CI and ECI plan is income replacement. i.e. When you are diagnosed with those illnesses, you want to receive a payout that can pay for your expenses for a fixed period of time, usually 1-2 yrs for ECI and 3-5 yrs for CI. Therefore, you do not need to worry about paying for the bills and for your dependents, since the payout will cover it. With that in mind, it would be more cost-efficient to get a term life to cover for this purpose. It should cover you until:

• You retire

• Your dependents do not need your income anymore

A whole-life plan may still make sense in some circumstances, but it might be more cost-efficient to first get a term plan.