Whole Life or Term Life + CI for a single person with elderly parents?

Christopher Tan from Providend spoke about term life and whole life insurance during the Seedly PFF 2021. Found it very helpful!

Hi Anon,

Are you parents dependent on you? If so, you'll want to ensure that you have a term plan to cover death and TPD, since if you are no longer around, income comes to a stop completely. The amount and duration should provide for your parents retirement till around age 90 (average life expectancy + 5 years for buffer in case they are blessed with longevity). Getting a personal term plan is better for many reasons, amongst which if the coverage amount required is large ($1 million) and you want flexibility to cover beyond age 65. Not to mention that a group term plan is dependent on the contract renewing yearly.

For yourself, I am presuming that the Aviva group insurance that you got is the group term life which covers death/TPD with no CI coverage. It's ok to keep that plan as supplementary coverage since the premium is low, but then you will have to look at getting CI coverage. CI coverage provides a lump sum payout in the event of critical illness, which is important to ensure that you can continue to meet your expenses, as well as take care of alternative treatment costs, etc, that won't be covered by your hospitalization plan.

In my view, the hybrid whole life-term plan is probably one of the most cost efficient ways to get CI coverage. Such plans provide you with whole life cover, with only a limited payment term for the premiums. You get a basic coverage to provide for alternative treatment, other expenses, etc, and the coverage before retirement is boosted by a factor of 2 or 3 times, which gives you added cover to meet your expenses if you should fall critically ill while working and don't have sufficient funds yet.

Beyond that you can consider a multi pay critical illness plan, which will allow repeated payouts in the event of critical illness. However such plans can be expensive if the coverage duration is long, and the premium term is not limited, meaning that if you are healthy, you have to keep paying till either you claim, or the coverage ends. It is a good thing to have if budget allows however.

The above will probably be the type of life insurance that you require at this stage of your life. Although it doesn't fall into the same category, I recommend that you look into hospitalization coverage as well. An integrated shield plan would cover any hospital bills and associated pre/post hospitalization costs. Add a rider to take care of the deductible/co-insurance costs. Depending on your budget, you can take a private hospital plan and downgrade later, or just go for Goverment A ward.