SG Budget Babe
Asked on 05 Dec 2019
Turning 24 next year. I currently only have an ISP and 100k life policy which my parents bought when I was young and have no dependants.
The few insurance agents I have met either recommend the multipay policies or life with a rider as it is more "worth" given my age and each are normally only willing to give me 1/2 quotes which makes it harder to compare across policies.
Would like to know how I can go about analysing this.
I am not a fan of ECI, because the amount of policyholders claiming such clauses has been very small against the population of policyholders. Main reason is because it is very hard to detect CI illness at its early onset. I rather you spend the money purchasing life insurance or term. This should be higher priority insurances you should go after to cover your life expenses as contingency planning
I'd get a limited pay whole life with ECI coverage as a rider first. Then, if budget permits, I'll add on a small amount of multi pay as a term plan.
The whole life plan will cover you for life, and you'll have some form of coverage even when you are retired. The term plan will provide you with additional coverage on ECI while you are working and have the greatest need for coverage.
Any independent financial advisor can quote and compare for you a range of companies and policies for both Whole Life and Multipay plans.
While whole life plans are generally quite similar, multipay plans can be more complex in structure and you will need to know exactly how each of the plans work before deciding which is the right one for you. This is where the advisor comes in to help you understand these products before you make a decision. Getting a policy is a long term commitment so you will want to make sure you get the one that suits you best.
I'd recommend both. A base Whole Life with ECI cover and an additional term multi pay CI plan.
Check out this article for a comparison of the term multi claim products.
Note that AIA and AXA has updated theirs and Singapore Life and Tokio Marine's were ommited from the list.
If you'd like to speak to an independent financial advisor like myself that can distribute more than a dozen insurers for comparisons, let me know. :)
Just make sure you follow the rule of thumb of 5 X Annual Income in the event of CI as cover.
To ensure that you receive the best possible advice, we will have to do two things first.
Firstly, I will always do a comprehensive insurance portfolio summary for all my clients. Through this process, we will be able to clearly understand the policies that we have, its pros and cons, as well as on our financial gaps. I have explained it further here: https://www.blog.pzl.sg/why-every-client-needs-an-insurance-policy-summary/
Next, we will do a cashflow analysis to understand your financial situation - assessing your income ability and spending habit. Here are some key things to know: https://www.blog.pzl.sg/understanding-your-personal-cash-flow/
With the two steps completed, we will have a clearer understanding on your background. Thereupon, we will discuss on your needs as well as on your goals for the future. Since there is no absolute answer to single pay vs multi-pay, then it will depend on how we build your financial future.
Talk to a professional from various insurance companies and understand the exact terms and features associated with each plan. Yes, this may be a tedious process but it will definitely be worth it. This is because of the long-term commitment that you will be facing and you don't want to make the wrong decision.
Additionally, surface comparison, i.e. comparison based on price, cover, and basic features doesn't help much. Hence, spend more time with a professional who is capable of explaining the contractual obligations in layman terms to you. Ultimately, insurance is useless if it comes with complicated payout terms. Never settle for 'definition is standard'.
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You have a very valid concern, and to be honest I am very glad that you are already looking into this at your age; Maturity does not come with age, but the acceptance of responsibillity, and you are a mature young woman!
I think 1 thing you can do is find out if your current life policy has any ECI coverages, if there isn't there are a couple of ways around it;
You could buy a stand alone early CI plan or Term plan, but the tricky part for this is how long a term would you purchase for? Would you want to purchase it only during your active years, where you still have the power to get wealth?
You could get another whole of life plan, where you can add in a rider to cover early CI, and for some plans the early CI component will stay throughout the whole life policy as long as there was no claim before
You might think if having another whole life policy is too much, but it boils down to what your concern is in regards to ECI