Your Must-Have Guide To Term Insurance

A need and not a want - this accurately describes life insurance as it is a purchase that we make out of necessity. With increased responsibilities and financial liabilities, it is essential that we are protected in the face of any unfortunate events. Therefore, having adequate coverage is crucial when we start a family and have dependents financially reliant on us.

However, with the multitude of insurance options available, choosing the right life insurance can be confusing. This is especially so if you are unfamiliar with the different policies and benefits available. A lack of understanding could also lead to potential problems such as unsuitability or insufficient protection. According to a survey done by Prudential, 70 per cent of Singaporeans are underinsured and fail to get sufficient coverage as a result of budget constraints.¹ This is likely due to the common misconception of insurance coverage being expensive. However, this is not necessarily true as term life policies can provide high protection coverage at affordable prices.

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What is Term Insurance?

Term insurance is a life insurance commonly purchased for temporary protection. This is because unlike whole life policies, term policies only provides coverage for a specified period (e.g. 30 years) and is usually used to cover the protection gap until retirement age. As the cheapest life insurance available, term insurance offers us with an affordable option for protection coverage.

Offered on a non-participating basis, term plans do not accumulate cash values and therefore do not pay out upon maturity. However, while term insurance does not have cash values, the savings accumulated could be used for personal investments. Moreover, with a variety of term policies available it ensures that there is a policy suitable for everyone and every need.

*Premiums are generated based on a 30 year old non-smoker male, for a sum assured of $500,000 and coverage for death, terminal illness (TI) and total permanent disability (TPD) up till the age of 65

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For familiarity: i-Term

Established in 1970 with the intention of providing affordable insurance protection for the masses, NTUC Income has since become a household name.² As one of the largest insurance firms in Singapore,³ its size and recognisable brand-name may allow Singaporeans to feel more comfortable when purchasing from NTUC Income. Therefore, if you seek familiarity, i-Term, the term insurance offered by NTUC Income may be suitable for you. The basic plan covers for death, terminal illness and total permanent disability with add-on riders available should you wish to enhance your coverage.

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For smokers: ManuProtect Term

ManuProtect Term, a term insurance offered by Manulife offers a quit smoking incentive embedded into its term policy. This feature is meant to encourage smokers to quit as it allows them to enjoy non-smoker premium rates for the first three policy years. Should they quit smoking and provide sufficient evidence of doing so by the third policy year, they would be able to change to a non-smoker status and can enjoy future premiums at non-smoker rates. Therefore, this policy would benefit smokers who are looking to quit due to the lower premium rates that they can enjoy.

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For the price conscious: TM Term Assure

Competitively priced, TM Term Assure offers a pocket friendly option for obtaining term insurance. With its affordable premiums, it ensures that budget constraints would not deter us from obtaining our ideal coverage amounts.

However, when comparing between policies, it is important that you take into account other factors that may affect your coverage requirements. This is because price is not a sufficient indicator as explained in our previous article "Why Cheapest Isn't The Best (Policy)". Moreover, it is imperative that you do not unintentionally neglect your protection needs in favour of lower prices.

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For assurance: i-Term

i-Term provides customers with a peace of mind knowing that their term policy is guaranteed to be renewable up to the age of 84. This is unlike other policies which may limit their renewability to shorter term policies. Moreover, if no claims are made on the policy during its term, automatic renewal for the same term and sum assured is enforced. Thus, this can provide customers with a renewal option for their term insurance.

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For flexibility: ManuProtect Term and TM Term Assure

Alternatively, ManuProtect Term and TM Term Assure allow policy owners the flexibility of converting their term policy to other life insurances such as whole life or endowment. This conversion can be done up to your current coverage amount without needing to supplement any additional evidence of health. This feature thus makes these policies suitable for customers who may want to switch to other types of life insurance in future.

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How FSMOne can help you get on track

Our team of friendly advisers are able to help you review your financial objectives, long term commitments, and offer you investment and insurance advice specific to your needs. If you would like assistance in reviewing your financial and protection portfolio, or simply to get a quote for an insurance plan, you can contact our advisers at advisory@fundsupermart.com.

^{1Source: http://www.businesstimes.com.sg/banking-finance/majority-of-singaporeans-not-financially-prepared-for-lifes-crises-survey}

^{2Source: http://eresources.nlb.gov.sg/history/events/def653e3-0756-460c-a8e7-05fcebde6634}

^{3Source: http://sbr.com.sg/professional-serviceslegal/exclusive/singapores-50-largest-insurance-firms-in-2017}

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