No one can deny the fact that life has become very uncertain these days. One only needs to glance at statistics to reveal this very sad aspect of modern times. Over the last ten years or so have medical claims in Singapore has gone as high as $200,000 for a critical treatment such as cancer.
Another palpable change that modern time is a witness to is the continuously rising prices. This has forced people, particularly those from middle class to live strictly within their budget. It is here that life insurance proves its utility and reduces the burden of the deceased person's family by paying them the full amount of the policy.
Had life insurance not been their saviour, the family would have been shattered on the sudden demise of their only bread earner. Thanks to life insurance, such unpleasant scenario never happens and life insurance ensures that the family does not miss the absence of its only earning member, at least financially.
However, one should exercise some precaution before opting for life insurance. Eg. One should ensure that no wrong information is provided to the insurance company, or else any complication might raise its head later.
What are the kinds of life insurance plans are there in the market:
1. Term life insurance policy is a cost-effective option at a period in your life when you can't risk being without a life coverage but are financially challenged. However, it does have its disadvantages. If you know how to take care of those you'll enjoy the best of both worlds.
Term life insurance has two major disadvantages: It's lack of flexibility and the risk of being declared uninsurable. However, these two broad disadvantages could be easily tackled. You may not be able to get any life insurance protection when you need it most in your life. This is since you'd have to reapply at the expiration of the period or term you bought. Some folks are deemed uninsurable when they reapply and are therefore compelled to be without any form of life insurance protection. To cancel out this demerit, request for a term life insurance policy that is convertible to whole life plans and/or request for guaranteed renewal to ensure you can always renew your term life insurance coverage. You can quickly switch to a whole life policy if you buy a term life insurance policy that has convertibility as a feature This allows you to take advantage of the good points of any policy type at different points in your life. You enjoy the advantages of paying a lot less for considerable coverage when you have a small budget and then change over to another policy as soon as things improve with your finances.
2. Endowment
Endowment Save a modest amount monthly and see your savings increase with attractive returns better than bank deposits. Cash Loans can be taken from an endowment plan after some time. Upon Maturity, you receive the the sum assured and your accumulated bonuses as well.
Upon death or diagnosis of a dread disease, the full sum assured and all accumulated bonuses will be immediately paid in a lump sum. Payment in instalments will be made in the case of permanent or total disability.
3. Whole Life
There are 2 types of whole life insurance plan. One is a payment for a certain period of time eg 20 years and the coverage still goes on at an accumulating interest rate even after the payment term is up. Another more common whole life plan is cheaper but it requires continous payment throughout one’s life.
For some companies, a whole life insurance plan can becomes an annuity which pays out lifetime income at participating value after age 55 onwards. One such company is NTUC INCOME
Payout is for Critical Illness/ Permanent Total Disability / Death. Eg. Of critical illness:
• Cancer
• Heart attack
• Coronary artery by-pass surgery
• Stroke
• Kidney failure
• Coma
• Paralysis (Loss of use of limbs)
• Heart valve surgery
• Blindness
• Deafness (Loss of hearing)
• Loss of speech
• Multiple sclerosis
• Fulminant hepatitis
• Major organ/bone marrow transplantation
• Primary pulmonary hypertension
• Alzheimer’s disease/severe dementia |
• Surgery to aorta
• Major burns
• Terminal illness
• HIV due to blood transfusion & occupationally
acquired HIV
• End stage lung disease
• End stage liver failure
• Muscular dystrophy
• Parkinson’s disease
• Aplastic anaemia
• Angioplasty (partial payment) & other invasive
treatment for coronary artery
• Bacterial meningitis
• Benign brain tumour
• Encephalitis
• Motor neurone disease |
4. Investment Link Plans
These are investment plans. Watch out if these plans are sometimes merged with term policies. Mortality charges can be very high and borne by customers at higher ages. See more under article:
How Do You Compare A Life Insurance Based on Charges / Policy Fees
5. Hybrid Plans
This is a very new term. It is a combination of endowment and investment plans, giving people of earning traditional guaranteed returns as well as earning the chance of doing investments. One such example is NTUC INCOME REVOSAVE (see: http://www.skcagency.com/blog/new-plans/new-revolutionary-savings-plan-launched-revosave)
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