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 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?
DIYInsurance, an insurance portal that allows you to compare and purchase insurance of companies like Manulife, AXA, Tokio Marine, Zurich and Aviva, has come up with a comparison table.
This comparison table lets you compare and easily see for the same coverage, how much annual premiums you will pay if you purchase from each insurer.
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 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:
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 and FWD looks to be the most price competitive.
The follow table compares the annual premium for death & TPD coverage for female:
Premiums for females are lower and still the most price competitive is FWD and Aviva.
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
K is 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, Tokio Marine, Aviva 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 and Aviva being the cheapest.
Compare and Get your Quote Today
You can look up, compare, then purchase the following term insurance straight from DIYInsurance:
- Tokio Marine
- NTUC Income
To purchase FWD Insurance, you can purchase the term insurance from them direct 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.
This article is a collaboration between Investment Moats and DIYInsurance.