Critical Illness (CI)
Early Critical Illness (ECI)
Term Life Insurance
Asked on 03 Aug 2020
Considering that you are in your early 20s, if you are looking at getting CI coverage till age 70 or beyond, you will probably be better off with a limited payment whole of life plan, with a minimum benefit feature (the multiplier). Especially if you are looking at early CI, the total premiums are probably going to be lower than a term covering the same amount. The per year premiums may be higher than a term plan, but you will finish paying your premiums faster, and you will keep your coverage going even in retirement. In retirement, the coverage amount will also grow over time due to bonuses declared, whereas a term plan will just pay a flat amount.
I'd usually suggest ensuring CI cover for life. You'll need a higher amount of coverage when you are working to ensure that any CI doesn't impact your ability to meet your expenses, and when you retire, the CI payouts ensure that you don't have to tap your retirement funds to pay for treatment and other miscellaneous costs.
The issue with getting CI till 70 is this: What if you get CI at 71 then? You won't have a payout, but will still need money. And if you get coverage that lasts till 75, the same question can be posed: what if you get CI at 76? You'll still be alive but need the money. It becomes a bit of a chicken and egg thing, So a whole of life plan will probably serve you better.
It depends on how long you'll want to be covered for. In general, you'll want to be covered for as long as possible, so covering up till age 85 will be ideal. However if you're looking at whole life coverage and limited payment, then a whole life plan with a rider may work beter.
In general, many of the term plans also come with premium waiver riders that waives off premiums while keeping your plan in force to keep you covered.
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Generally, you should be insured for Critical Illness for as long as you live, or at least till you are financially independent and do not need to rely on the sum insured. This is because we are likely to be still alive after an illness strike. Consequently, we will need the money to take care of expenses and needs.
With this in mind, coverage till age 85 may make sense. Nevertheless, you should do further evaluation or speak with a qualified consultant for a detailed analysis and professional advice.
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The cost efficient factor is at around age 65.
But if you intend to be covered for 99 years, then a whole life with ECI/Multipay might be more worth it.
Age 65 is the standard as most would have started to retire.
You can consider buying AIA Power Critical Cover (one of the best CI plan in the market) that covers up to 100 years old. This plan has value of 75% if you decide to surrender after 75 years old (additional 1% after every year) and it covers critical illness from early, intermediate and major. The plan has a power reset & relapse benefit that will reset the sum covered after 12/24 mth of claim up to 500%.
Hope the above clarifies your concerns.