Hi there, I would like to check, am I better off buying Term Life Insurance instead of buying Whole Life Insurance? It is so expensive to pay for Whole Life Insurance. Any suggestions? - Seedly
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Anonymous

Asked 2w ago

Hi there, I would like to check, am I better off buying Term Life Insurance instead of buying Whole Life Insurance? It is so expensive to pay for Whole Life Insurance. Any suggestions?

I have just turned 23 and am considering all of my options. I feel like Term Life Insurance would be good for me at the moment since it is cheaper.

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Term life insurance is an insurance product that insures you for a period of time or until a certain age. It provides coverage against death and there will be a payout in the event of the policyholder’s death/total and permanent disability/terminal illness diagnoses.

Whole life insurance is a life insurance product that is guaranteed to remain in force for the policyholder’s lifetime provided that the full premiums are paid or until the maturity date of the policy. There will often also be a surrender value or cash value of the plan after it has been held for a specified period of time.

The main difference will be the time period of the policy, the premium as well as the cash value.

Each plan has its own pros and cons. It will be good for us to understand more about your personal financial situation before providing you with advice.

Do get in touch with us if you are interested to find out more.

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KT
Kaycee Tan
Level 4. Prodigy
Answered 2w ago

You have to also consider that Whole Life Insurance comes with cash value so it’s more expensive. It’s more cost effective with Whole Life in the long run, though you will feel the pinch of paying more for premiums every month. More than just considering the cost, you have to see if the plan is enough for your coverage.

A reasonable coverage for life insurance is:

10x annual income in the event of death

5x annual income in the event of CI

Your needs will change over time so you can buy a term plan to fill up those gaps.

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Whole Life insurance has its place. For example, a limited WL policy, which you pay for X years, then you don't need to ever pay again and at the same time, you're covered for death, TPD and CI. Premiums are higher than those non-limited ones. I think it's good to have a mix. You can consider to get term & WL at the same time.

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No. The market competition has forced insurers to reinvent Whole Life policies to a point where the value proposition is compelling for a person to choose whole life.

Term is useful for short term requirements, I would not discount it's strategic use.

Some is better than none, so go with what you feel comfortable with.

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It depends on your needs and how you wish to plan for the long-term. Generally, the direct cost of insurance will be cheaper for a term insurance policy as it has no cash value. However over time, the accumulation of cash value for a whole life insurance policy may negate the short-term higher cost that you need to pay.

With this in mind, it is more important to spend quality time to determine your needs and evaluate on how you wish to plan for your future. For this purpose, you can research and do it on your own, or to speak to an experienced consultant.

Meanwhile, here is a comparison between the two: Term vs Whole Life Insurance Singapore

I share quality content on estate planning and financial planning here.

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