Whole Life Insurance
Asked on 14 Jan 2020
Even though there isn’t any information with regards to it’s par fund performance, the multiplier age of 86 seems to give a genuinely “whole” life coverage at an extremely affordable price. Since life expectancy for females seems to be about 85 right now, is it alright for me to not be too concerned about it’s par fund performance in the future and just assume the multiplier amount to be the SA?
In fact Anon, you can extend the Guaranteed Benefit for life after 86 and just pay cost of insurance on net sum at risk as well.
Truly having the multiplier last for whole of life.
Plus, it's currently the cheapest Whole Life policy available with the latest and most updated Early CI benefits attached.
It depends on a number of factors, e.g. your insurance needs and objectives, and your goals for the future.
Next, it will be valued to spend some time to understand how a participating fund works in a traditional whole life policy. Here is some information about it: https://www.blog.pzl.sg/what-is-a-participating-fund-singapore/
For instance, a participating policy is affected by claim experience, as well as on the investment return from the participating fund. With this in mind, what if the fund suffers from a poor performance? Will smoothing of bonus always work in your favour every single year?
More about smoothing of bonus: https://www.blog.pzl.sg/smoothing-of-bonuses-singapore/
At the end of the day, the money from the participating fund is also your money. Therefore, it is fundamentally important to understand what is happening to your money and whether you are overpaying for its expense ratio among other factors.
Otherwise, you may wish to do a comparison with other types of life insurance coverage, e.g. term insurance, investment-linked policy. Here is a general comparison between a term and a whole life insurance policy: https://www.blog.pzl.sg/term-vs-whole-life-insurance-singapore
On the whole, I will suggest you to go back to the basics by understanding your needs and the risk (costs) that you are willing to undertake in order to fulfil your needs. Ultimately, buying a life insurance is a long-term commitment and the last thing you want to see is to look back and regret.
Take some time to think through what you want and plan it in a way where you will be confident to stay with.
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