Everything you need to know about life insurance in Singapore
If you are planning to buy a life insurance plan, you’re making an extremely smart decision. The next 500-odd words will serve as your initiation to the basics of life insurance and will ensure you know what’s what when you visit your insurance provider or go online to buy a Life insurance plan insurance
Key takeaways:
- Types of Life Insurance – term insurance and whole life insurance
- Term plans are pure protection plans, whereas whole life plans double-up as savings instruments as well
- Whole life plans are also of two kinds, participating and non participating whole life policies
- Each kind of plan is designed to suit varying needs, so it is imperative that you know what you want from a plan before you buy one
Life insurance is a vital safety net that everyone should have. It protects you from life’s uncertainties and allows you to live stress-free, knowing that tomorrow is secured. However, when it comes to buying a policy, you can easily be confused. Every insurance provider will have several types of plans to choose from; it can leave first-time customers a little puzzled. Here are some important points you should know about life insurance and help you make an informed purchase decision.
Types of life insurance:
In Singapore, most insurance companies offer two types of life insurance plans – term & whole life. As the name suggests, term life insurance plans protect you for a specific ‘term’, generally 20 to 30 years. These plans usually have an extremely high payout in case something was to happen during the tenure of the plan. If nothing happens to you during the coverage period, the plan expires.
What about whole life plans?
These plans differ from term plans in one big way – they provide a pay-out at defined periods of time. Most of these plans will also grow the money you’ve paid, and make your dollar work hard for you! Usually, whole life insurance plans are either participating and non-participating in nature.
Participating Whole life Insurance Plans–In such policies you share in the of the life insurance companies participating fund. These are market linked plans and bonuses/dividends depend on the performance of the fund you’ve opted for. So when the policy term gets over or when you make a claim you get paid sum assured plus declared dividend or bonuses
- Non Participating Whole Life Insurance Plans - A Non-participating insurance policy has a pre-agreed benefit when you buy the policy. The benefits from your non participating plan will not change throughout your term of coverage
Which plan is suitable for you?
Term plans are great if protection and a lower premium offers you and your family a higher cover. Term plans will provide a substantial amount of compensation in case something of an unfortunate incident during the policy term, ensuring that your loved ones are covered in such circumstances.
Whole life plans combine life insurance and savings or investment plans. Such plans are perfect if you want to build a corpus for your retirement as they are savings tools that help you accumulate and build your funds over time. With a whole life plan, you get protection during the tenure of the plan and a sizeable pay-out when at the end of the tenure; it’s a win-win situation!
So before you buy a plan, it is always advisable to first review your own needs thoroughly. Only once you know what you want from a plan should you head out into the market to buy one. We hope this article has been helpful, and if you ever need further guidance visit the website of a life insurance company and research for a plan that suits you best!