Whole Life

Term life guarantees a payout in the event that the insured passed away during the policy contract, for a specific period only. Typically, term life insurance does not consist of saving elements or cash value. On the other hand, whole life insurance ensures the insured is covered for a lifetime in Singapore. It also consists of saving elements and will accumulate cash value throughout the policy contract.

It is beneficial to get whole life insurance. While getting whole life insurance is generally more costly as compared to term life insurance, you are permanently covered by the unchanging policy regardless of your age and health, as long as you pay your premiums religiously. The whole life insurance also helps build cash savings over the course of the policy, allowing you to use those savings for any unforeseen circumstances.

Whole life insurance in Singapore is designed to provide coverage that lasts a lifetime. Hence, as soon as you are financially stable, you should consider getting whole life insurance. Here are the benefits of whole life insurance at a glance:

• Guarantees your lifetime protection for peace of mind.
• Your premium amount stays consistent as soon as your policy is accepted and will not change according to age.
• Whole life insurance plans contain a savings component which can accumulate cash value over the long term.

When choosing a whole life insurance plan, it is important to ensure that it aligns with your needs and financial goals. Here are some key factors to consider:

• Coverage Amount: Determine the amount of coverage you require to adequately protect your loved ones or meet your financial objectives. Consider factors such as outstanding debts, future financial obligations, income replacement needs, and potential estate planning requirements.
• Premiums: Understand the premium structure of the whole life insurance plan, including the initial premium amount and any potential changes over time. Evaluate whether the premiums fit within your budget and can be sustained over the long term.
• Cash Value Growth: Assess the projected cash value growth over time. This includes the potential cash value accumulation and the flexibility that the whole life insurance plan can offer in accessing or utilising the cash value.
• Riders and Customisation: Explore the available riders or optional features that can be added to enhance the coverage of the insurance plan. Consider riders for additional coverage for specific needs.
• Flexibility and Conversion Options: Consider the flexibility offered by the whole life insurance plan in terms of premium payment options, coverage adjustments, and conversion options. Determine if the policy can adapt to your changing needs over time.

It is advisable to seek guidance from a professional financial advisor who can analyse your specific needs, explain the policy details, and help you make an informed decision based on your circumstances and objectives.

When opting for whole life insurance, here are five things to consider before choosing either term life or whole life insurance:

1. Age & Health - The younger you are, the lower the premium for your insurance policy. The older you are, the higher your chance of having a health condition that will leave a significant impact on the premiums, as there will be health loading involved with a much higher premium.

2. Duration - The choice between term or whole life insurance depends on how long you intend for the policy to protect you. Whole life insurance covers a lifetime, while term insurance covers a specific period only. For example, if you are concerned about having protection coverage for at least 40 years, whole life insurance is a better choice for your needs.

3. Budget & Life Stage - Term insurance has a more affordable premium as it does not cover a lifetime and has no cash value built up. Although a low premium policy may seem lucrative, it might not be the best option for the long-term considering its insurance coverage. It is recommended that you plan the finances for each stage of your life. This can be anything from your own health requirements to purchasing a property to paying for your child's higher education. Making advance plans for the future ensures that you will be able to achieve all your financial goals at a later stage.

The rule of thumb is between 10 to 15 times of your income, as per most financial advisors' recommendation. Contact your preferred financial advisor representative to assist you in identifying your needs.

The cash value of a whole life insurance plan grows over time based on a portion of the premium paid and accumulated interest. The cash value can be accessed through policy loans or withdrawals, providing a source of liquidity and financial flexibility. Thus, the cash value can be utilised for various purposes, such as supplementing your retirement income, fund emergencies, or other financial needs. However, it is important to note that any outstanding loans or withdrawals will reduce the policy's cash value and death benefit.