Early Critical Illness (ECI)
Whole Life Insurance
Asked on 27 Feb 2020
He already has a whole life plan since young by it is the old plan with no ECI, just CI. Is multi-pay very hard to claim? If not, should we buy him a plan and he buys another later when he starts working? The he can have 2 different ECI plan.
Hi Lim, you should work with an advisor to help you understand your options in the market.
Multi claim policies that are available to be purchased for whole of life are incredibly expensive because the risk is already priced in.
In fact, if managed well, a single claim ECI payout would be partially used and partially invested so that if another one strikes, you'll be prepared from your own self insurance.
I'd suggest getting a single claim all stage CI rider for the whole life policy coupled with a term multi claim CI till age 70/75.
These are possible answers to your queries
1) Is multipay or single ECI better? - Multipay is slightly more expensive than a single ECI. Many feel it's value. Me included
2) Which company is better for multipay and which for ECI? - these are some solutions
3) old plan with no ECI, just CI - getting early CI coverage for him will be meaningful now. It covers short term loss of income well
4) Is multi-pay very hard to claim? - Claims are based on condition stated and definition is the same as early CI.
5)** we buy him a plan and he buys another later - Lock in the plan benefits now and the premium at his current age. Then he ONLY needs to start buying more coverage when he has a life stage like marriage and/or mortgage liability.**
Hope it helps. Look for a qualified adviser to run through the pros and cons of the various solutions and the stages of multi-CI claims. If I can be of help drop me an email at [email protected]
Numerically, multiple pay is cheaper as they are partially accelerated products as compared to single pay. The goal of multiple pay is to ensure you stay insured for other ailments even if you get hit by one illness. It guarantees continued insurability.
A $200k 3 time pay CI plan is cheaper than a one time $600k CI plan.
Buy what you can if you have the cash, as you need to buy CI with health as well. Time works against you for protection plans.
Thank you for being a great parent. I think it's a good thing for us to have parents who looks after the important aspects of our lives. I think in regards to multi-pay CI, it depends, but based being multi-pay, usually after the first claim, the insurers will look into the next claims more closely.
I think there is no harm having more policies, but the more important part is to unsure that he has sufficient coverage that covers 2 - 3x of his annual income for ECI and 5 - 7x of his annual income for CI.
There are two things that we are looking at for your case, firstly, a whole life insurance coverage, and secondly an early critical illness coverage.
Early Critical Illness
For the latter, you may wish to do a detailed read and evaluate whether you prefer to work with an insurance company that adopts a very strict or a broader definition for claim. While all insurance companies issue a payout so long as the contractual definition are met, some insurer adopts a broader definition. This is especially important for early critical illness and multi-claim (if such coverage applies).
For the most part, most of my clients prefer to focus on recovery rather than to battle with complicated terms for payout. Hence, this may be a point when you do your comparison over cost. On the whole, I have studied various insurance company's policy contracts for a number of years now and I am comfortable with the terms offered by AIA. Therefore, it may be a solution that you may be open to.
Whole Life insurance
For whole life insurance coverage, it can be divided into two parts again - 1) insurance coverage, and 2) participating fund. Here is some information that you may find useful: https://www.blog.pzl.sg/what-is-a-participating-whole-life-insurance-singapore/
For the participating fund, here is how it works: https://www.blog.pzl.sg/what-is-a-participating-fund-singapore/
In general, you may wish to consider a participating fund that has proven track records over the years with low expense ratio. This is to protect your interest especially with smoothing of bonuses. Furthermore, asset allocation is fundamentally important where we need to know how much risk that the fund is undertaking in order to achieve the same rate of return to the policyholders. While all these may not seem like it affects you directly, check out my post on participating fund where I explain why all these costs are related to policyholders indirectly.
All things considered, these are some of the points that you may wish to look out for when looking for the right insurance policy that fits into your needs. Moreoever, it is also important to have a comprehensive insurance portfolio summary to ensure that this whole life insurance that you are getting will fit into your portfolio for your future. Here is why: https://www.blog.pzl.sg/why-every-client-needs-an-insurance-policy-summary/
If you are open to my advice and to find out how I work with my clients, feel free to get in touch.
Here is everything about me and what I do best.