Term insurance is a type of life insurance with high health and protection coverage. The default coverage is for Death and Terminal Illness. Coverage for a fixed period of tenure ranging from 5, 10, 15, 20,25, 30 to a specified year until the policy expires. The coverage can be enhanced with additional supplementary benefits knows as riders.
Supplementary Benefits (Riders) for Term Insurance
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)
Note that most Term Policy discontinues upon payout of an insurable event.
Key features of Term Insurance policy
Lower cash premium
As a term policy does not accumulate cash value, hence, the premium amount is generally smaller. It is generally cheaper than a traditional life policy with cash value. Therefore, if you are looking for coverage with little budget, Term Insurance will be suitable for you.
Boosting coverage for a period of time
Due to life stages or lifestyles changes, one may require additional health and protection coverage only for a specified number of years. These may include scenarios such as:
- Purchase of property
- Parent of a newborn child
- Marriage or divorce
Options to convert to other life insurance policies
Some of the Insurance Companies may offer an option to convert your term policy to a life insurance such as Whole Life Policy or Investment-Linked Policy without medical underwriting. This is useful for those with a lower initial budget as it can convert into a life insurance when your budget increase.
Read about: Whole Life Policy: How does it work?
Read about: Investment-Linked Policy: How does it work?
High insurance coverage at a low cost
For the same amount of coverage, a life policy that accumulates cash value over time will cost a lot more compared to a Term insurance. Do note that once the coverage period is over, getting a new term insurance with the same coverage will cost significantly more. This is due to the insurer catering for the additional risk of protecting an older aged individual.
What are some of the Term Insurance available?
Without preferences and in no order of ranking, here are some of the popular term insurance available in Singapore:
Aviva: MyProtector – Level Plus
Prudential: PruTerm Vantage
AXA: AXA Term Protector
Great Eastern: Prestige Term
NTUC Income: iTerm
What should I consider when taking up a Term Insurance?
Term insurance premiums are normally cheaper as the plan do not have cash value. However, if you were to surrender a term policy, there will be no cash value. Ensure the Premium Term is within your financial budget, be it monthly or yearly. The Sum Assured or coverage must be sufficient to cover a specific financial goal or objective.
Do also consider the increased cost of getting health and insurance coverage, once the term insurance policy expired.
Read about: No budget for Financial Planning?
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Considering a Term Insurance or related insurance products?
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