Life insurance coverage against death, TPD and critical illness is necessary and most people I know do not have adequate coverage. They think it is expensive to get themselves adequately covered. However, that is not the case. Adequate life insurance can be affordable, yet leave you with good cash flow to live life.
The basis of insurance is for protection first and foremost.
When we purchase insurance, we sought to address a particular health risk that would create monetary challenges for ourselves or our loved ones.
Some of the most common ones are:
- The risk that if you passed away, your loved ones will have a difficult time getting on with their lives, servicing still outstanding debts and mortgages. We buy life insurance against death for this
- The risk that if you suffer from some major illness or require a major hospital stay, you do not have the money to pay for astronomical inpatient or outpatient medical bills. We buy hospital and surgical plans for this
- The risk that if we suffer from an advanced stage illness, we do not have an income as we have to stop work, and we readily need money for miscellaneous treatment costs and alternative treatment. We buy critical illness plans to address this
There are more health risk that insurance can hedge, and a good primer on insurance is listed out in this FREE E-Book which I talked about here.
How much protection do you need to purchase and will it cost a bomb?
The above table shows how much it would cost you to get covered for death, total permanent disability and advanced stage critical illness if you purchase it at less than 30 years old, 35 years old, 40 years old and 45 years old.
Getting adequate coverage need not be un-affordable.
DIYInsurance, an insurance portal that allows you to compare and purchase insurance plans of companies like Manulife, AXA, Tokio Marine, Zurich and Aviva, has come up with a set of life insurance comparison tables.
These life insurance comparison tables lets you compare and easily see for the same coverage, how much annual premiums you will pay if you purchase from each insurer.
Let us go through each sections.
Term Life Insurance for Death and Total Permanent Disability (TPD) Protection
The first area of protection protects 2 areas:
- it assures your dependents that if you passed away, they have $X to maintain their life for Y years
- it assures a sum paid out if the assured suffers from permanent lost of both hands above the wrists, both feet or above the ankles, one hand or one foot, or that the assured is unable to perform 3 out of 6 “Activities of Daily Living”
Suppose the assured K has the following profile:
- Earns $50,000/yr
- Youngest child will be productive (graduated from university) in 22 years
- Amount of outstanding debts other than mortgage is $2500
- Cost of Education when required $180,000
The total amount of coverage that K requires, works out to be roughly $1,282,500.
The table below compares the term life insurance to age 70 for a coverage of $1 million. This is for a male, non-smoker (click image to view larger table):
Aviva, FWD, Singapore Life are the most price competitive.
The annual premiums for the plans change from time to time so do not take it that once you see it here, the figures will not change.
From time to time, some term insurance distributors such as Aviva will have discounts on premiums if you purchase a $1 million policy. These are factored into the price comparison above if DIYInsurance are aware.
Use these tables to:
- find out how much it will cost you to cover the amount you need
- see how wide the annual premiums can be for generic coverage
- find out which are the cheaper ones and more expensive ones
The younger you can get yourself enrolled the lower the annual premiums to pay.
The cheapest premiums for different age bands are also different. Aviva, FWD and Singapore Life looks to be the most price competitive.
The follow table compares the annual premium for death & TPD coverage for female:
Again, the annual premiums for woman is cheaper with FWD and Singapore Life being the cheapest.
Term Life Insurance for Critical Illness Protection (inclusive of Death and TPD)
Critical Illness Protection covers you, on top of the death and TPD protection mention previously, 37 major critical illness as defined by the Life Insurance Association (LIA).
These are illnesses that have reached a severe stage. Readers should be aware that there is critical illness protection for illnesses that are diagnose in the early stage. This is NOT that.
Typically the assured K tries to cover 3 to 5 years of his/her income and a sum of money for alternative treatment.
So if the assured K:
- Earns $50,000/yr
- Plans to have $100,000 for alternative treatment and out of pocket treatment
To be assured, K should be looking for a coverage of $250,000 to $350,000.
The following table shows the coverage for male for a sum assured of $500,000 to age 70:
FWD, Singapore Life are the most price competitive.
The coverage amount is less than a pure death & TPD, but the premiums is more expensive than death & TPD primarily due to the cost of the critical illness portion.
The following table compares the coverage for the female in terms of critical illness:
Again, the annual premiums for woman is cheaper with FWD, Aviva and Singapore Life being the cheapest.
The Trend of Price Changes for Singapore Term Life Insurance and Term Life with Critical Coverage
The comparison have change a little since the last coverage at Investment Moats.
AXA have reduced their premiums overall by 5.3% since last quarter across the various age band.
FWD insurance reduced their premiums for male term life insurance purchased when the male is 30 years old and below.
Singapore Life raised their premiums across all categories by 3.6%.
Compare, Get your Quote and Purchase Direct Today
You can look up, compare, then purchase the following term insurance direct from DIYInsurance:
- Tokio Marine
- NTUC Income
To purchase FWD Insurance, you can purchase the term insurance directly from them on their web portal here.
To purchase from Singapore Life, you can purchase the term insurance directly from them on their web portal here.
For Term Insurance of Smaller Amounts – Direct Purchase Insurance (DPI)
While the illustration shows term death and critical illness coverage of $1 mil and $500,000 respectively, you can vary the coverage based on your needs.
It does not mean the coverage is fixed.
However, DIYInsurance have shared that for term life insurance (death and TPD coverage only) that is less than $400,000, it would be more value for money if you purchase it directly from the insurers under the Direct Purchase Insurance (DPI).
The DPI is the government’s execution of one of the recommendation, to create an avenue for consumers like you and me to purchase term life and whole life insurance from the insurance company direct, and not have to go through agents.
All 12 insurers in Singapore have direct means for you to purchase, though they may be hard to find.
If the amount is $400,000 or more, or if you require critical illness coverage, then the term life insurance premium comparison table above is valid.
Credit Rating of Insurance Companies
An insurance company credit rating is the opinion of an independent agency regarding the financial strength of an insurance company. An insurance company’s credit rating indicates its ability to pay policyholders’ claims.
The following table enables you to gauge the credit rating of insurance companies:
This article is a collaboration between Investment Moats and DIYInsurance. The views are of InvestmentMoats.com alone. I am an existing customer of DIYInsurance and recommend DIYInsurance due to the quality of the product, the service and the integrity of the people behind it.
Here are how the price comparisons of the Term Life Insurance and the Term Life Insurance with Critical Illness across the insurers Last Quarter in 2017 December
This is so that you have an idea of the price changes since last quarter.
Term Life Insurance – $1 million Coverage for Male and Female
Term Life Insurance with Critical Illness – $500k Coverage for Male and Female
2017 December Changes
HSBC Prices came down in the quarter. The prices were at least 17% higher last time around. We see some reduction in prices.
Prudential have reduce prices for Term with Critical Illness coverage in the quarter. Prices was at least 7% cheaper for life insurance with critical coverage. The plans without critical illness coverage stayed the same.
AIA comparison was taken out of the table. AIA secure Term Plus (II) Plan only provides fixed coverage duration for 5, 10, 20 or 30 years. In DIY Insurance’s comparison the terms are 25, 30, 35, 40 years.
Technically only the 30 years can be shown.
Also, since their plan do not includes total permanent disability (TPD), they were taken out of the comparison since it would not be apples to apples comparison.
Singapore Life is included. A new insurer is in town. Like FWD, in terms of their credit rating is low, all life insurers in Singapore are under the Policy Owners’ Protection Scheme, which protects up to a $500,000 cap on aggregated guaranteed sum assured.
Their prices are shown to be very price competitive.