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Buying Term Insurance Direct - Compare First Website
14 Apr 2017 (170 views)

You may be confused with the many options available for Term Insurance in the Compare First website (www.comparefirst.sg).

It is best to fix some of the options up front:

1. You want to buy a Term Insurance policy to cover 20 to 25 years. Do not go beyond 25 years. You do not need a longer period. Furthermore, the premium will increase with the term. 25 years is long enough for you to accumulate your savings and invest it to get an accumulated sum.

When you start your financial plan, you saving is quite small. After 25 years, your accumulated saving is quite a large sum. So, you do not need any insurance protection by that time.

After 25 years, your children would have grown up and are working. They are financially independent of you. So, your need for life insurance protection is reduced.

2. You will want to buy a sum assured of 5 years of your income. If you annual income is $60,000, you need insurance for $300,000. If you are the sole breadwinner (i.e. your spouse is not working), you may want to increase the coverage to 10 years of earning. But, where there are two income earners, each person can insure for 5 years, and that will be adequate.

If you need 10 years of earnings as the sole breadwinner, but you find the cost to be too high, it is all right to take 5 years. This is better than no insurance, right?

3. You have the option to include critical illness cover. For the time being, we will exclude it. We can take a separate decision on whether to pay a higher premium to include this cover.

4  Here are the annual premium for a 25 year Term Insurance policy covering $300,000 for a male aged 30 years who is a non-smoker.

Sum insured is LEVEL for 30 years
Tokio Marine - $285 yearly
NTUC Income - $348 yearly
AXA - $354 yearly

I find all three to be acceptable. Even though you may be paying slightly more for NTUC Income or AXA, the difference is quite small. It should not affect your decision on the insurance company that you are comfortable with.  If you are younger than 30, you will pay a lower premium. If you want a smaller sum insured, the premium will also be lower.

5. You have to be careful. The Compare First website actually provides you with products where the sum assured reduces over the term. For these products, you are insured for $300,000 during the first year, but it reduces in each subsequent year and becomes $0 at the end of the term. These are described as "Mortgage policy" and are automatically included, unless you uncheck the boxes.

SUM ASSURED REDUCES OVER THE TERM (MORTGAGE POLICIES)
Aviva $223 yearly
Etiqa - $240 yearly
Manulife - $240 yearly.

The premium for these policies are roughly one third lower than for the policies that provide level coverage.

I prefer to go for the level coverage and pay slightly more each year.

6.  I will now show the premium for the level coverage but include the critical illness coverage.

LEVEL TERM, INCLUDING CRITICAL ILLNESS COVERAGE
Tokio Marine - $651 yearly
Great Eastern - $747 yearly
AXA - $785 yearly

The yearly premium is about twice of the premium payable for a policy that does not cover critical illness. 

For a person aged 30 covering for 25 years, the chance of a critical illness claim is small, almost negligible. it is not worth while to pay double the premium to include this coverage.

If you want to know how to navigate through the Compare First website and get the coverage relevant to your needs, you can watch the video here  (Compare First website - Whole Life Policy). 


Buying Term Insurance Direct - Compare First Website
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You may be confused with the many options available for Term Insurance in the Compare First website (www.comparefirst.sg).

It is best to fix some of the options up front:

1. You want to buy a Term Insurance policy to cover 20 to 25 years. Do not go beyond 25 years. You do not need a longer period. Furthermore, the premium will increase with the term. 25 years is long enough for you to accumulate your savings and invest it to get an accumulated sum.

When you start your financial plan, you saving is quite small. After 25 years, your accumulated saving is quite a large sum. So, you do not need any insurance protection by that time.

After 25 years, your children would have grown up and are working. They are financially independent of you. So, your need for life insurance protection is reduced.

2. You will want to buy a sum assured of 5 years of your income. If you annual income is $60,000, you need insurance for $300,000. If you are the sole breadwinner (i.e. your spouse is not working), you may want to increase the coverage to 10 years of earning. But, where there are two income earners, each person can insure for 5 years, and that will be adequate.

If you need 10 years of earnings as the sole breadwinner, but you find the cost to be too high, it is all right to take 5 years. This is better than no insurance, right?

3. You have the option to include critical illness cover. For the time being, we will exclude it. We can take a separate decision on whether to pay a higher premium to include this cover.

4  Here are the annual premium for a 25 year Term Insurance policy covering $300,000 for a male aged 30 years who is a non-smoker.

Sum insured is LEVEL for 30 years
Tokio Marine - $285 yearly
NTUC Income - $348 yearly
AXA - $354 yearly

I find all three to be acceptable. Even though you may be paying slightly more for NTUC Income or AXA, the difference is quite small. It should not affect your decision on the insurance company that you are comfortable with.  If you are younger than 30, you will pay a lower premium. If you want a smaller sum insured, the premium will also be lower.

5. You have to be careful. The Compare First website actually provides you with products where the sum assured reduces over the term. For these products, you are insured for $300,000 during the first year, but it reduces in each subsequent year and becomes $0 at the end of the term. These are described as "Mortgage policy" and are automatically included, unless you uncheck the boxes.

SUM ASSURED REDUCES OVER THE TERM (MORTGAGE POLICIES)
Aviva $223 yearly
Etiqa - $240 yearly
Manulife - $240 yearly.

The premium for these policies are roughly one third lower than for the policies that provide level coverage.

I prefer to go for the level coverage and pay slightly more each year.

6.  I will now show the premium for the level coverage but include the critical illness coverage.

LEVEL TERM, INCLUDING CRITICAL ILLNESS COVERAGE
Tokio Marine - $651 yearly
Great Eastern - $747 yearly
AXA - $785 yearly

The yearly premium is about twice of the premium payable for a policy that does not cover critical illness. 

For a person aged 30 covering for 25 years, the chance of a critical illness claim is small, almost negligible. it is not worth while to pay double the premium to include this coverage.

If you want to know how to navigate through the Compare First website and get the coverage relevant to your needs, you can watch the video here  (Compare First website - Whole Life Policy).