Would whole life or term life plus standalone ECI/CI be better if I want to have longer ECI/CI coverage?

I currently have a whole life insurance for 50K death/TPD/CI (no multiplier as it is an old plan). Was looking to increase my coverage and was quoted the Aviva term life insurance for 500K death/TPD, 100K ECI, and 200K CI (single payout) till 85 years old for approximately 2K a year.

However on second thought, I am okay with having additional death/TPD cover till around 65/70 years old, but would still like to have additional ECI/CI cover till around 80/85 years old - just so that I won’t have to drain my retirement funds/assets to pay for expenses that are not covered by my hospitalisation plan.

Was therefore wondering if it would be better to get another whole life plan (if the total premium I have to pay is lower), or a term plan for death/TPD plus standalone ECI/CI, instead. Cash value and not having additional cover for ECI/CI after 80/85 years old are not too big of a concern. Many thanks in advance.

(Female, age 28 next birthday, non-smoker)

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Elijah Lee

22 Aug 2021

Senior Financial Services Manager at Phillip Securities (Jurong East)

Hi anon,

You're looking at decoupling here.

Yes, it is very likely that you don't need death/TPD cover till your 80s. Death/TPD cover is to cover liabilities and dependent needs if you were to be no longer around during your working years. By the time you reach 70 years old, you would likely have retired, with no mortgage and financially independent children. So a term plan is a better fit for this.

For CI/ECI cover, if you're going for coverage till 80/85, you might as well get a life plan. What you said echoes what I have been saying for years now; you don't want to liquidate your retirement funds and assets just to raise money to pay for expenses not covered by a shield plan. And since you can't tell when you will get a CI, a life plan remains a very cost efficient way of covering yourself. Imagine getting a term plan till 85, and then getting cancer at 86. You're not dead yet, but you'll certainly need the money, and your term plan, after paying for all these years, would have expired. Would you really be happy with that? Not to mention that the total premiums will likely be lower too.

So decouple your coverage. Get Death/TPD on a term till 65/70, and a life plan for ECI/CI with a decent multiplier will 65/70. Remember to get quotes from multiple insurers so that you can see which insurer is cost effective for you (in terms of death/TPD), or which insurer is able to provide a good balance between cost and scope of cover (for CI/ECI WL plans). You may want to work with an independent financial advisor to understand more about the various options from the insurers.

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rogersk

Edited 21 Aug 2021

I think you need to speak to a financial advisor on this and receive product quotations.

Term insurance is extremely expensive after a certain age (around 65). Which is why I plan to stop my Term Life Policies by around 65. Then my investments from now till 65 would take over as my CI coverage and compound annual for each year I do not fall ill.

Different insurers have a cut off age for Term Life Insurance, such that when you continue with the Term Life insurance past this cut off edge, the premiums will begin to rocket. So you need to know what this age is for the company you're buying your products from. If I'm not wrong, Aviva is 65. Hence, probably why your Term Life till 85 seems like a little more costly. It almost looks like the price of a Whole Life Policy from Aviva.

If you really want to be covered till 85, I think a Whole Life Policy would suit you better.

Just my 2cents worth. You do you.

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