Asked by Anonymous
I currently have a couple of term insurance plans that covers death, CI, hospital, TPD and accident. These plans cost 1k plus annually and it covers until when I'm 62. I'm worried that i have to purchase new term plans with high premiums at age 63 onwards with little or no income. Is there any plans that will allow me to cover those above till 85?
There are plans that go up to 85. Heck, there are plans that go up to 99 but it depends what you need them for.
If you've not been 'investing the rest' up to this point or you're generally not comfortable with the concept, you basically have thre options:
1) You can buy a whole life plan
2) You can buy Term till 85 or whatever that makes you comfortable.
3) You can risk not buying it.
I'm sure my peers will eventually chime in on this answer for (1) and (2), so I'm going to focus on (3).
Death/TPD: I put TPD twice, but here I'm talking about in relation to cost. Life insurance has become exceedingly cheap because of our longer lifespans, and its even cheaper for women. But it depends if you have any specific needs for having it. Do you have someone who needs the money after you die, or who you want to pass it on to anyway?
One of the weaknesses of purchasing life insurance up to an extremely high age, or whole life for that matter, is how low the price is during working years but how high it scales exponentially. If you invest the difference between a whole life plan and a term plan for life insurance alone (please note), you could easily achieve similar returns via Singapore Savings Bonds, let alone if you invested in a low risk fund.
It's not too late to start investing, so that'd be my initial assessment.
CI/TPD: I put these two together because the cost of these two will probably rise in the future. Even level Term policies are typically not guaranteed (means the company reserves the right to raise your price) and you may want to have your existing policies reviewed.
CI addresses two primary purposes and a bunch of sub-purposes, but the two are basically
1) Income Replacement when working - if you can't work, you can't make money. That's a loss to you and CI pays you out in cash.
2) Income Replacement after working - because that seriously stacks up in terms of transport, medication, food choices, time/mobility etc.
Purchasing CI to last after 65 usually only address (2), which is why the Multiplier option you mentioned is so popular and makes a lot of sense - have a boost during crucial years, then enough to scale in your retired years (and this amount keeps increasing). You will inevitably have a claim, making it pretty valued for money.
The problem that I'm seeing (and why I'm not screaming BUY NOW BUY FROM ME PLEASE) is that you already have a bunch of term policies. If you're a dilligent saver, even if you're not bursting with investment savvyness - chances are you'll have enough on your own to address (2). So it'll depend on how much you're willing to spend now so that you don't have to spend on (2) in the future, and it needs to be a discussion.
Accident: Accident plans are pretty cheap even after 55. Don't worry. There are age limits you'll hit though, probably around mid 70s for most plans before you're just generally not insurable.
Hospitalization: Shield plans with extensive coverage tend to rack up in costs, which is why people generally buy extensive coverage when they are working and downgrade once they're older. It's a bit sad, but you have to manage your budget. This is inevitable, but you should talk about what kind of needs you have to address in your future in your 60s+ and how much you're willing to pay to address those needs.
The answer to your question is YES, there are plans that address what you want. And YES, if you purchase them in your mid 30s it'll be a bit costly, but not nearly as costly as trying to purchase them just when your Term plans expire.
What I've tried to show you is you have a whole range of options and considerations, especially after accounting for your existing policies, non-guaranteed conditions and inflation...
Do drop me a message if you'd like my help. As an FA who represents multiple companies, I love solving these complex problems.
I've been actually focusing on ladies in their mid 30s for the exact same inquiries you're having. You've probably seen our ad on FB & Insta.
Anyways, what we have been advocating to our clients are to make sure we do two things.
1) Go for regular full body checkups especially for female organs as the technology has allowed us to detect any abnormalities early and get insurance to pay for it. (AIA Glow of Life or NTUC Lady 360)
2) Purchase a Multi Pay CI plan that covers all stages of CI plus relapse throughout the entire policy term. You can do this by adding on a whole of life plan or as a Term plan to 85 (the life expectancy for females in SG). Aviva, AIA, Manulife has these options and we can do a comparison for you if you'd like.
3) I also advocate, if you have not done, to take your HPV Vaccination. This is the leading prevention for cervical cancer.
So the idea here is, go checkup regularly, if anything is detected we pay to cover the loss of income plus treatment, and it continually covers you paying additional times if the illness worsens or if specific conditions relapses.
You can reach me via PM or message my page asking for Hariz Maloy. Hope this helped.