Benefits of Term Insurance | Term Life Insurance in Singapore

Insurance | Life Insurance

What is the Purpose of Term Insurance?

First and foremost, what exactly is life insurance? Life insurance policies pay out a lump payment to you and your family if you become incapacitated, terminally sick, critically ill (an optional feature), or die. In this blog, we tell you the benefits of term insurance (term life insurance). 

Your Family

If you have family members who rely on you, a term (or whole) life insurance policy is essential. If you die away or are unable to work, it serves to provide them with money to help them get by for a short period of time, fulfilling financial demands such as school fees, daily expenses, mortgage, and so on.

Fixed Premiums

Term insurance premiums are fixed, unlike whole life insurance prices, which might fluctuate, allowing you to organize your money ahead of time.

Affordable

Term insurance rates in Singapore range from S$18.67 to S$34.12 per month (for S$500,000 assured for the next 20 years) and are significantly less expensive than whole life insurance plans.

Term Insurance vs. Life Insurance

So you’ve heard of people purchasing term life insurance and others purchasing whole life plans (often known as life insurance in short) – What, though, are the parallels and differences between term and whole life insurance?

Life Insurance (Term)

Term life insurance protects you for a set period of time (thus the name) – typically until the age of 75. That is, if you are diagnosed with a terminal disease, have a total permanent disability, or die before the age of 75, your family will get the lump-sum payment you were promised. However, if you outlive your policy (i.e., live over the age of 75), your term insurance policy will immediately terminate and you will not receive any of your money back.

Whole Life Insurance

Whole life insurance, on the other hand, typically protects you until you reach the age of 99, 100, or die (depends on your insurance company). You will receive both guaranteed and non-guaranteed cash returns if you outlive your plan. You’ll also be able to add a multiplier (also known as supplementary coverage) for a set number of years to increase the total amount you’re covered for. Because of the length and flexibility of coverage, whole life insurance rates are often ten times that of term insurance.

Benefits of Term Insurance (term life insurance)

Why Should You Get Term Insurance?

Lower Premiums

Term insurance plans have lower rates than whole life insurance plans, making them suited for young working individuals, new parents, or new homeowners who may have heavier financial responsibilities and loans.

Simple

A term insurance policy will undoubtedly be simpler and easier to understand than a whole life insurance policy. You pay premiums and get paid out if you die or are diagnosed with a terminal condition, for example. 

Temporary

If you’ve recently had a child, the amount of life insurance you’ll need a raise. A term insurance policy can fill that void for the following 25 or 30 years until your child reaches financial independence, at which point you technically no longer require the policy.

What Should You Think About Before Purchasing Term Life Insurance?

Affordability

It all comes down to what you believe in and how much money you have. Whole life insurance premiums are often 10 to 12 times higher than term insurance premiums.

Coverage

A term insurance policy guarantees a fixed sum (for example, $400k until you reach the age of 100). However, you can tailor your whole life plan’s coverage to include S$1 million until the age of 65, and $250k until the age of death.

How Much Term Life Insurance Do I Need? – Benefits of Term Insurance (term life insurance)

Mortgage

If you are a homeowner, the first thing you should think about is your mortgage – how many years do you have to pay it off, and how much is it in total? In the event that you are unable to work or pass away, your term life insurance should cover at least your planned contribution (or in full) to help your spouse get through the mortgage-paying years.

Loans

If you have other loans, such as a remodelling loan, a car loan, or personal loans, you must also consider the number of years and repayment amounts.

Lifestyle

Next, look at your family’s present spending and conduct some research on projected expenses to get a more realistic estimate of how much money your family will need to maintain their lives if you’re gone.

Retirement

If you are supporting your parents, you must also consider the monthly monetary allowance you offer them.

Insurance | Credit Cards | Loans | Banking |