Insurance

All About Term Insurance 2019

Everything you need to know about term insurance and its riders.

  • Phuan Wei Ning
  • |
  • Published on 11 Jul 2019

The basic, no frills solution to life insurance, term insurance offers affordably priced premiums thus allowing coverage to be obtained without any budget constraints. However, as basic term plans only provides death coverage, this may not suffice for your protection needs. In this article, we elaborate on the coverage that term insurance provides and highlight 4 riders that can help to enhance your coverage levels.

(See "Transfer Your Wealth To Future Generations With A 3G Plan")

What is a term insurance?

A type of life insurance, term insurance is commonly purchased for temporary protection and is often used to cover the protection gap until retirement age. As a non-participating plan, term insurance provides an affordable option for protection with a death benefit given in the event that the insured dies during the period of coverage.

While a basic term plan only covers for death, coverage can be enhanced by adding riders to a term plan.

(See "Term or Whole Life - Which Should You Choose?")


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#1 Total and Permanent Disability (TPD) rider

Claims are payable when:
The insured will be eligible to claim for the TPD benefit if he/she can never perform any work, occupation or profession again.

TPD benefit may also be given if the insured suffers from a loss of sight of both eyes, loss of both limbs and/or loss of sight of one eye and loss of one limb. However, do note that TPD definitions may differ between insurers.
Payment of benefit:
Your TPD benefit may either be paid out in a lump sum or in instalments according to your policy conditions.
Attach this rider if...
Some term insurance plans may come bundled with TPD coverage. However, should your term insurance not include TPD coverage, you may then wish to attach a rider for a more comprehensive coverage.

(See "3 Things Your 20 Years Old Policy May Not Tell You")


#2 Critical Illness (CI) riders

Critical Illness (CI) riders are not to be confused with Early Critical Illness (ECI) riders, with the extent of coverage differing between the two riders.

ECI rider

CI rider

Claims are payable when:
Covering for up to 119 medical conditions*, claims may be made for medical conditions and/or procedures of different stages of severity.
Unlike ECI riders, CI riders only offer coverage for advanced stages critical illness.

This coverage usually comprises of the 37 standard definitions* of CI by the Life Insurance Association (LIA).
Payment of benefit:
Upon a successful claim, you will receive a lump sum pay-out, subjected to your policy limits. These pay-outs may then be used as income replacement or for long term and/or follow up treatment expenses.
Attach this rider if...
ECI and CI riders should be attached to your basic plan to ensure that you are protected in the event of a critical illness. This allows you to focus on your recovery without having to worry about financial constraints.

*Note: The scope of coverage differs between insurers. Please check for your coverage levels before purchasing any ECI riders and/or plans.

(See "Comparing Cancer Plans 2019")


#3 Disability rider

Claims are payable when:
Claims are payable should the insured be unable to perform a specified number of Activities of Daily Living (ADL).

The 6 ADLs are:

Payment of benefit:
The benefits for a disability rider are usually given on a monthly basis over a specified period of time. This is meant to serve as income replacement and help the insured with his/her daily expenses.
Attach this rider if...
Consider attaching this rider for a peace of mind in the event of a disability. This allows you to receive a monthly benefit that could help with your long term care expenses.

(See "3 Reasons An International Health Plan Is For You")


#4 Payor premium waiver rider

Claims are payable when:
With a payor premium waiver, future premiums on the policy will be waived for the remaining term of the rider. This will be in effect upon the death or total permanent disability before age 70 of the policyholder.

Do however note that this rider can only be attached to a plan where the policyholder is not the life insured.
Payment of benefit:
Following a successful claim, all future premiums will be waived. This ensures that the life insured will continue to receive coverage regardless of what may happen to the policyholder.
Attach this rider if...
Consider this rider if you have purchased term insurance for your dependents and are concerned about a policy lapse in the event of your death or TPD.

(See "Is An Annual Travel Insurance Worth Purchasing?")


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Information obtained from:

https://www.lia.org.sg/media/1463/lia-ci-framework-2014_lia-definitions-for-37-cis.pdf

https://www.moh.gov.sg/careshieldlife/about-eldershield


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