I'm 25 and I've just bought a term plan (Aviva - 500k death and TPD with multipay ECI -$1,179.30). I'm cash tight cus of my low pay. Did I make the right choice to choose this over whole life? - Seedly

Insurance

Savings

Asked by Anonymous

Asked on 26 Apr 2019

I'm 25 and I've just bought a term plan (Aviva - 500k death and TPD with multipay ECI -$1,179.30). I'm cash tight cus of my low pay. Did I make the right choice to choose this over whole life?

0

Answers (8)

Sort By

Most Upvote

  • Most Upvote
  • Most Recent

10% of whatever you earn should go into your protection needs.

If $1,1793.30 is not 10% then you alright with your commitment. You should not give up your insurance cause of low pay. You will insurance more if your pay is not as high, cause you will be more vulnerable to the bills and expenses.

Term plan is good if you need high coverage and have a tight budget. Both whole life and term both serve to protect your income, choose the one you need more, as your income grow, you can slowly expand and build your portfolio

0 comments

4

My question to you is simple.

What is your current needs? Do you need a savings plan on top of your coverage? Do you need This coverage till age 99? Are you OK with the amount growing at about 3-4% of the money you put in?

From your answer, you are already cash strap. So term is the answer only. If you can afford whole life, you can afford to buy term and invest the rest. Are you going to invest the rest?

If you can't afford whole life, then you are in deep trouble because you definitely have low income, and any advice to buy whole life is really bad imho.

0 comments

1

If you're cash strapped and already struggling; review if you're paying too much for your insurance. Whole life is not recommended and to me, more costly so term insurance is the way to go for me if I'm in your situation.

Review your financial status and identify your reasons for getting the insurance. Are you the sole breadwinner? Perhaps after reviewing you'd notice you wouldn't need such a high coverage at this point of life after all.

Please upvote if I make sense 😏

0 comments

1

If you are already cash tight with a term plan, don't need to think about whole life becos it's gonna be much more expensive for the same amount of coverage.

I'm not sure till what age you are covered by this term plan, but the sum assured looks quite decent for a 25-year-old.

0 comments

1

If you can't afford 100 a month for your insurance, you can't afford to die or fall sick. I'm sorry but that's the truth.

If you really want, you can reduce your sum assured and pay less premiums, and increase it again when you get married or buy a house.

2 comments

1
Bjeggplant

27 Apr 2019

Thank you for your reply! Another advisor is asking me to change my Aviva term plan to GE whole life cus it has value. I just bought my Aviva in March and just met this new advisor last week. Should I listen to her? Since she keeps convincing that it has value
Hariz Arthur Maloy
Hariz Arthur Maloy

27 Apr 2019

Nope, that's bad advice. You're sacrificing lots of short term coverage for less long term coverage. Coverage comes first. If you want you can get additional whole life to cover for insurance needs in old age, especially for critical illness insurance, but you shouldn't be replacing your existing term for a WL.
Brandan Chen
Brandan Chen, Financial Planner at Manulife Singapore
Level 5. Genius
Answered on 26 Apr 2019

For the same coverage, you would probably be more cash tight should you have taken a whole life plan.

Term provides you with high coverage and lower premiums.

If you are feeling cash tight, it could be due to a couple of issues: 1) Premiums are too high for your affordability 2) You may be spending too much on other expenses

If your overall insurance cost is about 5 - 7% of your income, (I assume your financial advisor also recommended you to take up a shield plan), it should be due to Reason 2 stated above.

Feel free to PM me if you would like to seek a second opinion. I am contactable via www.facebook.com/brandanchen

0 comments

1
Alan Kor
Alan Kor
Level 5. Genius
Answered on 26 Apr 2019

Term plan - low premiums, high coverage till a certain date

whole life plan - high premiums, low coverage for life

0 comments

1
Gabriel Tham
Gabriel Tham, Kenichi Tag Team Member at Tag Team
Level 8. Wizard
Updated on 07 Jun 2019

If you find yourself struggling to pay, then its probably too costly for you.

Sit down with your agent or find another financial planner to work out the details for you.

3 comments

1

See all 3 comments

Gabriel Tham
Gabriel Tham

26 Apr 2019

A term plan is pure protection. A whole life has the protection element plus a savings/investment portion. That is why whole life has value because you pay extra to let the insurer invest in funds. https://blog.seedly.sg/term-life-or-whole-life-insurance-which-get/
Alan Kor
Alan Kor

26 Apr 2019

Ur advisor recommended whole life because he/she will get more comms due to the high premiums u will be paying