An introduction to Term Insurance Plans And Policies

What are Term Insurance Plans?

Term insurance plans provide coverage for a fixed period of time and can be used to supplement your existing coverage requirements for a limited period of time. As there are no saving or investment elements in such policies, there will be no cash value upon maturity or termination.

Typical coverage periods are 5, 10, 15, 20, 25 or up to age 65, 70 or 75. However some plans may allow for flexible coverage periods based on your need.

Read More: 5 Best Term Life Insurance in Singapore (Updated)

What does a term plan covers you for?

To enhance the coverage offered by a Term Insurance, riders for additional insurable events can be included in the main Term Insurance policy. Such insurable events include:

• Total and Permanent Disability (TPD)
• Early Critical Illness (ECI)
• Critical Illness (CI)
  
  

Why choose Term Insurance Plans and Policies

As premiums for Term insurance policy are comparatively lower than Whole Life insurance, such products are popular among adult that just started working for protection purpose. Sometimes, the additional coverage is only required for a period of time, such as education and living expenses of child or mortgage of property.

Term Insurance Plans and Policies can provide a boost in coverage when you need it the most.

Term insurance usually offers a high level of coverage and protection for Early Critical illness, Critical Illness, Death, Total Permanent Disability, Terminal illness at a fraction of the cost of other insurance policy.

What else should be considered when taking up Term Insurance Plans and Policies

As long as the policy is in force and premiums are paid on time, term insurance is usually guaranteed renewable, so coverage can be extended. However, the premium will increase along with age and premium can be substantial after age 60. Do note that as the policy has no cash value, late or no payment will result in a lapse of policy and subsequent acceptance of a new policy will be at the insurer discretion should any illness occurs on the policyholder.

Read about: 3 things to consider before taking up a new financial product

Buy term, invest the rest?

Compared to investment, the returns from life insurance policy may not be as attractive. This has prompt some individuals to instead purchase a term insurance and focus on wealth generation in their Investment Portfolio.

While higher growth in wealth may be achieved over a long time horizon through a well-maintained portfolio, a certain level of discipline and judgement will be required for consistent investment return to be realised.

Alternatively, Whole Life Insurance which combines considerable protection coverage with investment element can also be a part of your Insurance Portfolio.

Read about: Term life or Whole Life (Financial analysis and comparison)

What are the Term Insurance Plans and Policies available?

Without preferences and in no order of ranking, here are some of the popular term insurance available in Singapore:

• Singlife: Singlife Elite Term II
• FWD: Term Life Plus
• Prudential: PRUActive Term
• Manulife: ManuProtect Term (II)
• AIA: Secure Flexi Term
• HSBC Life: HSBC Life Term Protector
• Etiqa: Essential Term Life Cover
• China Taiping: i-Protect
• China Life: China Life Term Guardian
• NTUC Income: TermLife Solitaire
• Tokio Marine: TM Term Assure II
  
  

Where can I find out more about the benefits and coverage of Term Insurance Plans and Policies?