Asked on 09 Sep 2019
Hi, I’m a 33-year-old single female, non-smoker. Current dependents are my parents. I’m looking for the best value for money insurance, if possible?
1) At 33, is whole life insurance still a better option than term life for total premiums paid? How about term insurance till 65/70?
2) Is multi-pay critical illness insurance beneficial to get?
Is whole life insurance + multipay CI at 33 recommended?
Well, it totally requires us to know a few things
1) What is your objective in the insurance? A peace of mind? Returns too?
2) What is your current income? The hard guideline is not to be more than 10% of your take home pay. Anything more is going to create a mental pressure on your income. But you can also spend less than 3% if it fit your objective.
3) Are you familar with investment? What is your exact risk profile? What returns are you looking at? How long can you ride the volatility? Will you set aside premium terms (meant to be Whole life premiums) just for CI protection?
There are many moving parts which require you to answer, before anyone can recommend you anything based on ANY criteria.... If you are just looking at the most efficient (and able to keep to your investment opporunities and profile), mathematically speaking, Buy Term Invest the rest works better. However, psychologically, nobody can say anything until you know what is your objective.
As your age is at 33, it may be prudent to look at Term CI/death (accelerated) and Term Death till 65 for most cost efficient returns.
The mathematical calculations assume the following:
For Term death, its really affordable that you just choose, because leaving your money with Fixed Ds and high interest savings account can beat the returns for Whole life plans as such.
For CI protection, its a 4% returns to beat. This can be protected with either WL plan, or a BTIR strategy using CPF-SA contributions only.
For ECI, i personally find its expensive, and hence did not opt. For BTIR, its a 6% compared to Whole life.
However, if you have dependents, you may wish to do a review as 65 may
not be sufficient.
Your question is too difficult to answer without knowing what you are looking at. I am wary to give you simple and straightforward because there is no best for such a case unless your paremeters are very defined. (Your scope is well done).
Keep it simple, step by step. Don't overcommit and stress your cashflow, build up your basic protection first such as term life, personal accident and hospitalisation (=Medishield related). For example, get $1 million of basic coverage for only $312 a year (= $26 a month). Read more at https://thelobang.com/index.php/2019/08/27/insurance-basics/
16 Sep 2019