Written by Singlife | 16 Oct 2020 |
Written in conjunction with Moneysmart
If you’re reading this article, you’re probably thinking about buying term life insurance, or even wondering what in the world it is (no, really, what is it?).
Term life insurance is a way to protect those nearest and dearest to us, especially when we hit key milestones in life — such as buying a property, getting married (and starting a family), and when we start providing for our parents.
Why does one need to think of term life insurance during milestones that people consider to be ‘happy’?
Well, that’s because these milestones also signify that we have become responsible for something precious to us — whether that be a house or a family. More emphatically, these precious people or things now depend on our future income in some way or another.
Like its name suggests, term life insurance provides coverage for a specific duration. For example, it could cover the years that we are paying off the mortgage on our property, cover the years that our children depend on us financially before they start working, or cover the period where we estimate the resources that we need to take care of our elderly parents after they retire.
Let’s take a closer look at these milestones and how term life insurance can help:
One of the major milestones of #adulting is getting our own home. Property prices in Singapore are usually in the 6- to 7-figure range, and monthly mortgage repayments — whether from our CPF savings, in cash or a mix of the two — can go on for as long as 25 years (HDB flat) and 30 years (private property).
In short, getting our own home is a long-term commitment, and we are responsible for paying for it. By the same token, we need to make sure we can fully pay the loan or mortgage we take out. Other considerations to be had are if we have co-owners or co-occupants – We also need to make sure that we are adequately covered during the mortgage repayment period in case (touch wood) something unfortunate happens — because we don’t want our co-owners or co-occupants to be saddled with our debt.
But isn’t there already the Home Protection Scheme or mortgage insurance?
Ah yes, when we use CPF savings to pay for our HDB flat’s monthly mortgage instalment, we are usually covered by the Home Protection Scheme (HPS). The HPS is a mortgage-reducing insurance that covers our outstanding home loan in the event of death, terminal illness or total permanent disability. The HPS covers up to age 65 or until the housing loan is paid up, whichever is earlier; and the premium term is 90% of the HPS cover period.
Similarly, if we want other options, some of us may choose to buy mortgage insurance, aka Mortgage Reducing Term Assurance or MRTA from a private insurer.
What’s the difference between HPS/mortgage insurance and term life insurance?
The thing about HPS and mortgage insurance is that the sum assured decreases as you pay off your home loan and the premiums usually remain the same. Some opt for HPS/mortgage insurance as it is often cheaper than term life insurance at the same starting sum assured amount.
Why do some others opt for term life insurance, then? For term life insurance, your sum assured remains the same throughout the policy term — and if this sum assured is enough to cover your mortgage, you can also apply for an exemption from HPS.
Term life insurance is also more flexible. Unlike HPS and mortgage insurance, the payout from the term life insurance will be disbursed to your named beneficiary(ies) instead of directly to the bank/HDB. Additionally, your beneficiaries have the flexibility to use the payout according to their immediate needs. This means it can be used to meet other family’s needs, and not just for the repayment of mortgage.
Getting married and starting a family of our own is yet another common milestone of our adult life. As responsible parents, we aim to support our children as long as we can, or at least until they are financially independent. For many, that’s at least 20-25 years of ensuring that a child is well-protected from birth till they start their first job.
How much does it cost? Some have estimated that it costs a middle-range average of S$360,000 to raise a child in Singapore. While this figure is debatable, the amount is still sizeable nonetheless, and prospective parents need to prepare for that.
Part of this planning process is for a parent to also consider and prepare for the unfortunate event if they, as a breadwinner, pass away prematurely.
In the case of an untimely death of a parent, a term life plan can bridge the financial gap. This means that your child’s well-being and future goals aren’t hampered even if you are no longer around.
In short, term life insurance ensures that there is at least some nest egg or income replacement for your little ones in the event of your passing… at least to last them until they are old enough to graduate from university and start their career.
Time is never kind, and as we grow older and have our own lives, our parents, too, will age. When they retire, it’s only right that we provide for them in their old age — as they did for us when we were young.
Even if you don’t plan to buy a house, see no need to get married, or don’t want to procreate, it’s important to have filial piety to the ones who raised you to adulthood. Some of us may also have siblings or relatives who rely on us financially. What will happen to these loved ones if we are no longer around?
A parent never wants to bury their child, but should that happen, you’ll want to ensure that there’s something for them to depend on as your last act of love.
Singlife has 2 base plans for you to choose from, DIRECT-Term and Term Life Series 3. Here’s what they entail:
* Terms and Conditions for DIRECT-Term Series 1.2
** Terms and Conditions for Term Life Series 3
Find out more about Singlife’s term life insurance.
Singlife has a seamless application process that’s completely done online and takes just a few minutes. No papers are required. It’s even quicker if you sign up via MyInfo. Also, did you know that starting the application journey via MyInfo will win you S$20 worth of GrabFood voucher? Find out more here.
If you’ve decided to get term life insurance — here’s how to start your journey with Singlife:
*General rule of thumb:
Save 20% on your Term Life plan + riders for cover above S$400k.
For a limited time only.
Promo code will be automatically embedded.
Terms apply. Head over to singlife.com/promotions for more information.
This premium discount is not applicable to any loadings imposed due to underwriting. Singlife reserves the right to amend the terms & conditions of this campaign at its sole discretion at any time without prior notice.
The information is meant for your general knowledge and does not regard any specific investment objectives, financial situations or particular needs any person might have and should not be relied upon as the provision of financial advice.
Singlife’s term life plans are protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Singlife or visit the LIA or SDIC web-sites (www.lia.org.sg or www.sdic.org.sg).
This advertisement has not been reviewed by the Monetary Authority of Singapore.
Information updated on 16 October 2020.