I think alot of my NS friends or friends, colleagues who have been to NS will have this insurance policy.
That is usually bought during NS time to insure for something, that something you are not sure off since you are 18 and you really don’t know much about insurance.
Now come late adult hood, i hear alot of forumers and friends who wants to cancel this policy.
The recent move by Aviva to upgrade those existing policy holders who have not insured up to SGD 200,000 seems to increase the confusion.
I was insured under this plan for SGD 62,000 paying SGD 6.40 per month for the premiums.
What does it cover actually?
In short this is your typical Death, TPD (NO CRITICAL ILLNESS COVERAGE) + Personal Accident Plan
The most basic of this plan covers the following:
- Death due to illness for the sum assured you paid for
- Total Permanent Disablement (TPD) for 120% of the sum assured you paid for
- Death due to non-SAF related accident for sum assured you paid for + SGD25,000
- Extra Death Benefit of up to SGD100,000 more for Death Directly due to SAF training or during SAF occupational activities including Ops Ready In-camp Training for sum assured plus extra 100% of sum assured
- TPD due to accident for 120% of sum assured plus SGD 25,000
- Accidental Total and Permanent Dismemberment
This policy covers till 65 or if you push it 70 years old. That is normally retirement age. What this policy does is to insure that should you pass away or be dismembered during your working life when your dependents most depended on you, they can take this sum assured and continue with their lives.
In summary, if you pass away from illness, or gets permanent dismembered due to illness you get to claim. Note that permanent dismembered normally means you are incapacitated until quite bad, so don’t get the impression you can claim easily. Personal accident due to accident outside SAF is covered and during NS also covered. Lets be sensible here, this is after all termed SAF Group insurance.
How probable does these things happen?
I don’t have statistics here, but with the advancement of medical science, the life span of humans have increase a fair bit.
The likelihood that both of these cases happening is there, but its not high if you take a sample group of people of the same age.
Why is the premiums so cheap compare to what my insurance agent sells?
One of the main reasons it is so cheap is because it does not cover critical illness (CI). We have to do an apple to apple comparison.
I have a 100k Term from Asia Life Costing me SGD49.00 per month covering Death, TPD and Critical illness.
In contrast to the 100k SAF Group Insurance here it will cost me SGD12.80 per month.
The difference is SGD 36.20. That is perhaps the cost of the Critical illness coverage alone.The Critical illness covers major illnesses that we are FAR MORE likely to get before the age of 65 years old yet might not kill us.
So the probability of critical illness happening is much higher, thus it is more expensive because it is likely the insurer pays out more of this than death and TPD.
A note to all is that alot of ILPs sold by insurance agents are typically without CI and they sell it as if its a plan that is cheap yet you can focus on your investments. Always ask if CI is included.
If you compare the same plan against Whole Life and Limited Whole Life, this one seems even cheaper.
By my estimation, my Asia Life 20 year Limited Whole Life for 100k would have come up to SGD 180 dollars per month.This amount is 4 times that of my Asia Life Term plan that covers the same thing. We don’t even need to compare it to the SAF term plan because you can be insured up to almost 18 times (read 1.8 mil) for the same amount paid.
Do note that Whole Life insurance has cash value so you are essentially getting something back. For more analysis and my views of Whole Life vs Term insurance take a look at my Insurance Philosophy here.
Why do Aviva wants us to upgrade?
There can be alot of reasons:
- The coverage of these people are too low. With the standard of living it is advisable to upgrade so that the dependency really won’t be left in a lurch when something happens.
- Operational move. The lowest plan now for SAF Group insurance is SGD100,000. So alot of us is on like SGD50,000
- Greed. They see this as a move to get more of us to increase their cash base.
- Strategic. They changed the terms and conditions of some of these categories, so they want us to resign and screw us over.
For number 4, do take a look at the terms and conditions carefully. The shitty situation for most of us is that we do not have the original one! that is like 10 years ago!
For the optimistic people, i believe it should be no 1 that is the main reason but with capitalism i got a feeling its No 3.
What is the difference between group insurance and normal ones?
To put it simply here is the definition of group insurance from wiki:
Group insurance is a health care coverage plan in which individual employees or members are included under one ‘master policy’ owned by their employers. Because the group insurance plan has so many contributors, the policy often provides coverage for more services at a much lower cost per participant. Group insurance may be provided by other organizations besides for-profit companies. Labor unions, churches and other service groups can also obtain group insurance for recognized members and possibly their dependents.
The main thing is that since the terms are negotiated as a collective, premiums tend to be cheaper. However the most important thing to note is that should you leave the collective, you cannot be covered under it.
Is this upgrade going to be more expensive?
Well its hard to say. I can only calculate based on how much i paid.
So for 1k of my existing coverage, it cost SGD 6.40 / 62k = $0.103 per 1k coverage.
With the new coverage and premiums, it will cost SGD 25.80 / 200k = $0.129 per 1k coverage.
I think i am paying more. The initial premiums on my 62k coverage was $8. And on that premium this upgrade is cheaper.
So in summary i am paying more. But i feel its more worth it if i don’t have to go through additional underwriting.
If i have pre-existing condition will I need to get underwritten again?
What Aviva states is that you should not need to underwrite for any new illness. However, all pre-existing conditions during your initial policy that is excluded will still be in force. You must fall within the eligible age limit and still be an NS men. If you were rejected from this policy in the past, i’m afraid there is no good news for you here.
If you are suffering from something after getting the initial policy and there is no need to underwrite again then its worthwhile to get this upgrade for greater coverage.
The SAF Insurance Rebate
Every year should the payout by aviva be less than that of the premiums paid, Aviva can choose to return the premiums to the customer.
The SAF Group Term Life (GTL) Insurance Scheme is a term life and personal accident scheme that provides enhanced protection for you and your family. IT provides 24 hours coverage world wide against unfortunate incidents that may happen whether you are performing your military duties or at leisure (and out of camp). Besides insurance coverage at afforable rates, insured member can look forward to premium rebate in good years.
We are pleased to announce that current rebate will cover the 18 moth period from Apr to Sep 07 (6 month period) and from Oct 07 to Sep 08 (full policy year). The total rebate amount stated below will be credited to your bank account end May 09
$17.78 (Rebate Percentage = 14.25%)
They have been returning steadily to me so my actual insurance cost is not SGD 6.40 per month but lower than that.
This kicker should enable your premium paid to be even lower than other private term plans covering the same coverage.
All in all, i think this is a like for like upgrade. The possibility of you claiming it is low, but the rebate and perhaps upgrade without underwriting is the advantage there.