Asked on 12 Aug 2018
Top Contributor (Aug)
To someone who has a family depending on their income. I will always recommend some of your cover be whole life especially if you're getting Early CI Cover.
However, not everyone can choose to afford it. Thus, a term instead.
My generic advice will not change. It's about the amount of coverage you'll require. It will only change after seeing my client's affordability.
If you have people depending on your income:
You'll need 10X of your Annual Income in Death Cover & 3-5X of your Annual Income In Income Protection Due to Illness. Some whole life, some term based on your budget.
My take is that it is not so much about the type of people but rather it is based on one's individual needs, budget and preferences.
As what Luke Ho (fellow FA who has been very active on Seedly) mentioned several times, if one's needs is towards covering critical illness,esp for early stages, WL is a more cost effective solution as compared to term. If we are purely looking at Death coverage, Sticking to term makes alot more sense from a financial standpoint.
That being said, the other factor that comes into consideration is budget. Though it is indeed more cost effective to insure early stage CI with Whole Life Plans, one may not always have the budget to do so since it tends to be more expensive.
Feel free to drop me an email at [email protected] should you prefer a more in depth discussion
Can i assume that you're referring whole life insurance as opposed to term insurance?
Whole life insurance i would recommend to everyone except those who need 1) extremely high coverage, or 2) prefers to have no commitments (pay as you cover) towards insurance.
Whole life & term insurance not only replaces income but also provide for care giving costs during times of catastrophes so is something everyone should have!
Whole life is for the purpose of having a life long critical illness cover.
If you want life cover for dependent protection, term policy is the most efficient. Buy term and invest the rest.