Will cost of insurance for my whole life or term plan increases as I get older till my surrender value is not even to cover the cost and causes policy to lapse?

Hi anon,

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Typically for whole life or term plans, the cost of insurance is already factored into the pricing. So these premiums are level and do not increase with age.

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The only way for a term plan to lapse is if you don't pay the premiums

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The only way for a life plan to lapse is 1) in the first two years you miss a premium 2) your policy went on automatic policy loan and the cash value decreased to a point where it was lesser than the next premium.

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However, there is a class of term plans called renewable term, whereby the term plans start with a low premium and renew every 5/10/20 years (depending on the plan). At each renewal, the premiums will go up. This may be a concern as they can escalate once you are in your 40s/50s. But if you don't have such a plan, then its not a concern.

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Cost of insurance should only be a concern if you have a protection based ILP.

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On protection based ILPs, I share my thoughts here.

Straight answer in 20 seconds is likely NO, as whole life / term plans are often level premiums (means fixed regardless of age), depending on when you bought the policy.

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For term plan, as what Elena said below, premiums will be specified from the start of contract which is lower if you are younger, because:

• you are less likely to die so soon
• so the insurer has more time to earn your premiums
• so in return you pay less each year)

One of the few scenarios when the premium goes up is if you choose to buy a term plan in shorter periods. For example, say you are aged 30:

• Plan 1: Term is every 5 years. So premium is fixed for age 30 ~ 35. When you renew at age 35, the premium is set at age 35 and not 30
• Plan 2: Term is until 75 years, pay every year. So your premium each year is based on age 30 years old & is FIXED (UNLESS if the contract has a clause saying the insurer has the right to revise premium anytime. So please read the wording carefully!)

For Whole Life Plans, like what Zhe Liang said below, the insurance premium already includes the cost of insurance to the insurer. The surrender value is usually what you get should you choose to stop paying premiums and give up the plan totally.