Universal Life Insurance Singapore | Life Insurance Plans in Singapore

Insurance | Life Insurance

Universal life insurance Singapore can be an excellent legacy planning tool, but it is not appropriate for everyone. From premium financing to how it compares to other life insurance policies, here’s everything you need to know about universal life insurance Singapore. Universal life insurance in Singapore is a sort of cash value life insurance that is typically advertised as a legacy planning tool that allows you to leave a substantial sum of inheritance for your loved ones.

In comparison to other types of life insurance, such as whole life insurance or term insurance, universal life insurance is a significantly more sophisticated product with various distinct features. In this guide, we’ll explain what universal life insurance is, how it works, its benefits and drawbacks, and how it differs from traditional insurance.

What exactly is Universal Life Insurance Singapore and how does it operate?

In Singapore, there are essentially two forms of universal life insurance. The first sort of universal life insurance is protection-oriented universal life insurance, which is what most people think of when they hear the term “universal life insurance.” It has very high upfront premiums, which results in a substantially bigger sum assured for policyholders, and it is widely used for legacy planning.

The second form, savings-oriented universal life insurance, have significantly lower rates and policy coverage. These are frequently regarded as flexible savings options. We will just look at the first form of universal life insurance – protection-oriented universal life insurance.

How Does it Work?

Universal life insurance is a packaged product that consists of two components: insurance protection and investment. It covers you for life as long as appropriate premiums are paid. The investment component invests a portion of your premiums (after deducting different fees and levies) on your behalf, and the returns contribute to the cash value of your insurance over time. The amount you receive is determined by the crediting rate, which varies based on the insurer and policy.

Meanwhile, the protection component includes a death benefit, which pays out an insurance payout to your family in the event of your death. This amount, also known as the sum assured, is calculated by the number of premiums paid. Some policies also provide coverage for terminal illnesses. In Singapore, universal life insurance and premium financing are available. As previously stated, universal life insurance rates in Singapore are extremely high. We’re talking about seven-figure sums, which are normally collected in advance as a lump sum payment.

Things to Keep In Mind

Due to the enormous sums involved, some insurers may partner with banks to provide you with a loan to pay for your universal life insurance premiums, often known as premium financing. It’s a realistic solution for freeing up cash flow, but keep in mind that it comes with hazards. For starters, you may lose your insurance coverage. If you fail to repay the loan, your insurance will be surrendered for its cash value.

If the cash value of your policy is less than the loan amount at this stage, you will have to pay the difference in cash, frequently on short notice. In other cases, the bank may request that you repay your loan in part or in full in the face of rising interest rates or if the earnings on your insurance fall short of expectations. Premium financing may not be the ideal option unless you are prepared to handle it.

If the cash value of your policy is less than the loan amount at this stage, you will have to pay the difference in cash, frequently on short notice. In other cases, the bank may request that you repay your loan in part or in full in the face of rising interest rates or if the earnings on your insurance fall short of expectations. Premium financing may not be the ideal option unless you are prepared to handle it.

In Singapore, how can you buy universal life insurance?

To maximize your legacy, buy a universal life insurance policy from a reputable insurer with a track record of delivering on its promises. Manulife, AXA, Singlife, AIA, and HSBC are among the insurers that provide universal life products.

Home Loan | Education Loan | Personal Loan | Car Loan | Travel Insurance | Lifestyle | Real Estate | Career