Term vs whole life plans

[happy_bear]

Hi all,

I'm in early 30s considering to purchase a term to up my coverage. Thinking of term as people always promote buy term n invest the difference. However, my agent have been telling me that at it is better to buy whole life plans ,limited premium ones ,as their coverage is life long[termplans are till 65] and has a cash value.but downside is lower coverage for a more expensive premium

Given that I do not do much investment besides bank savings, can any one shed some light on which should I go for.

 

[Lewis.T]

Hi all,

I'm in early 30s considering to purchase a term to up my coverage. Thinking of term as people always promote buy term n invest the difference. However, my agent have been telling me that at it is better to buy whole life plans ,limited premium ones ,as their coverage is life long[termplans are till 65] and has a cash value.but downside is lower coverage for a more expensive premium

Given that I do not do much investment besides bank savings, can any one shed some light on which should I go for.

What kind of bank savings?

Buy term and invest the difference only works if... you invest the difference (surprise!).

If you're never going to step foot into that arena you're better off going with high interest deposits or whole life plans.

If you think at some point soon you'll want to start investing and is confident of making your own returns then just get a term plan.

 

[frenchbriefs]

U should probably separate insurance and investment,don't listen to any insurance agent that tells u they can take care of both for u.insurance agents are even worse than stock brokers from stratton oakmond.

Just get whatever health insurance u need,I have no idea how those things work or what they actually cover.

 

[happy_bear]

What kind of bank savings?

Buy term and invest the difference only works if... you invest the difference (surprise!).

If you're never going to step foot into that arena you're better off going with high interest deposits or whole life plans.

If you think at some point soon you'll want to start investing and is confident of making your own returns then just get a term plan.

Fixed deposit, maybe is my risk appetite (being small), I have not got the motivation to invest on higher risk areas like unit trust or stocks.

So can I say that given my portfolio, it is better off with whole life plans.? But then again , is whole life limited pay plans like any of those loss making ilp ? Hope to steer clear of them too

 

[Thoreldan]

agent of course says whole life better....better for their wallet, that is.

they earn peanuts from term insurance

agree with the 'buy term (add hospitalization), invest the rest' advice

 

[deepblueli]

Hi all,

I'm in early 30s considering to purchase a term to up my coverage. Thinking of term as people always promote buy term n invest the difference. However, my agent have been telling me that at it is better to buy whole life plans ,limited premium ones ,as their coverage is life long[termplans are till 65] and has a cash value.but downside is lower coverage for a more expensive premium

Given that I do not do much investment besides bank savings, can any one shed some light on which should I go for.

I think of both terms and whole life as insurance not investment.

Terms you have to pay every year till end of policy. Whole life you pay for limited years but cover for whole life. But nonetheless they are for protection and I wouldn't think to terminate them to get cash value.

If you are thinking about investment for retirement, whole life is not a suitable product as its return is way lower than other means.

 

[VacheronLim]

I feel both have their merits, but dollar to dollar, term is likely to provide a far superior coverage amount so if you're looking mostly from the angle of providing protection, then term should be your priority.

Term insurance, you have the option to have it insure you until you're beyond 65 yrs, can be 70 yrs or 80 yrs etc. If your agent tells you term plan covers until 65 yrs only, this is a warning that he/she is not sharing the truth with you and only wants to sway you towards a decision, that will favour him/her.

If your term plan covers until 65 or 70 yrs, that's when most of your major financial liabilities would have been cleared, or almost clearing up. With little/almost no liabilities, that's when the lesser coverage of whole life plan will come in useful (because a term plan till 80 yr or more will cost significantly more in terms of the monthly premium).

Some prefer to go term all the way until 80 yrs or more, ultimately it's your call.

Finally, if you're going to invest in something with your hard earned money, would you rather make the wrong choice yourself, or let someone get it wrong for you?

 

[happy_bear]

Thanks for all the advices. Also wary the agent earn much more with whole life and thus that loopsided advice.
For term , small premium , big coverage but premium goes exponentially high beyond 65 yr old which made the plan financially tough to sustain

Whole life is high on premium (esp CI) but coverage of whole life gives u the peace of mind ( at least for the sum insured).

If that's the case, will a mixture of both plus hospitalisation be a gd combo. Of course all these is for protection not investment

 

[xXxJavierxXx]

Is aviva saf group term plan a good point to start with?

 

[Maeda_Toshiie]

Hi all,

I'm in early 30s considering to purchase a term to up my coverage. Thinking of term as people always promote buy term n invest the difference. However, my agent have been telling me that at it is better to buy whole life plans ,limited premium ones ,as their coverage is life long[termplans are till 65] and has a cash value.but downside is lower coverage for a more expensive premium

Given that I do not do much investment besides bank savings, can any one shed some light on which should I go for.

Most term plans go to 60-65, yes. However, this is enough for most people, because by then they no longer have dependents. This is the key point of insurance: protection of downside. In the case of term, is to protect your dependents from financial distress in the event of your untimely demise. It is not to make them X dollars richer if you kick the bucket before your whole life (WL) plan expires.

On a per dollar of protection basis, term are a whole lot cheaper, due to their lack of surrender value and limited time coverage (and arguably, the time covered is when you are younger and less of a death risk).

BTW, not all WL plans cover till say 99. The older of age they cover till, the more expensive (per dollar of protection) they tend to be. The reason is simple: they have to cover the time period in which you are more elderly and thus of higher risks. Of course, there is also the surrender value at the end of it.

Well, by the time you are old, your dependents ought to be able to fend for themselves (namely your kids), while your spouse ought to be retired with CPF and all. Besides, you have other savings by then (and seriously, people should learn some basics in prudent investing, not get scared because they hear of punters getting burnt buying the wrong stocks on hot tips).


For starters, go read what Singapore Saving Bonds are. Contrary to some myths, MAS is more credit worthy than any of the banks in Singapore, because MAS is our central bank who will be the one bailing out other banks if they go underwater. There are relatively safe ways to invest in stocks and bonds that is way safer than punting indivdual stocks (no you don't need to be a Buffett or Lynch or Dalio to do it).

 

[mSnooze]

Thanks for all the advices. Also wary the agent earn much more with whole life and thus that loopsided advice.
For term , small premium , big coverage but premium goes exponentially high beyond 65 yr old which made the plan financially tough to sustain

Whole life is high on premium (esp CI) but coverage of whole life gives u the peace of mind ( at least for the sum insured).

If that's the case, will a mixture of both plus hospitalisation be a gd combo. Of course all these is for protection not investment

Not true about exponentially high after 65, nowadays pricing are competitive. Exponentially high only if you want coverage of term from age 80+ up to 99.

It all depends on what you really want; do you want to cover only till your dependents are fully grown up, loans paid up? Then get a term that cover till age 70/75/80, mostly by then are sufficient.

If you want to leave something behind for your dependents, you can either get term till 99, or get a whole life and pass on the cash value within to them.

 

[JuniorLion]

Can always go Direct Purchase Insurance (DPI) for Whole Life Plans up to 200k. Pricing-wise is very good.

 

[andyhtc]

Is aviva saf group term plan a good point to start with?

This is very cheap and good. You can also get it for your spouse.

The only limitation is it covers you up to 65 years old if I remember correctly. By then your dependents (parents, spouse and kids) will be of less concern to you financially.

Hence, you can use the saving from the much cheaper premium to save up for a rainy day or for your retirement when the insurance no longer covers you.

 

[happy_bear]

Thanks for the discussion. Many discussed on the need of insurance after 65 will be diminished as dependents are independent and not of a liabaility. But another crucial point of consideration is also protection and coverage for CI at that age to deray the high medical cost and of course not to burden the family on such cost.

Yes the saf plan is something I have considered.

 

[akwl88]

Thanks for the discussion. Many discussed on the need of insurance after 65 will be diminished as dependents are independent and not of a liabaility. But another crucial point of consideration is also protection and coverage for CI at that age to deray the high medical cost and of course not to burden the family on such cost.

Yes the saf plan is something I have considered.

if you believe u will kenna anything after 65, why dont start to buy insurance from 65 onwards?

 

[mSnooze]

Thanks for the discussion. Many discussed on the need of insurance after 65 will be diminished as dependents are independent and not of a liabaility. But another crucial point of consideration is also protection and coverage for CI at that age to deray the high medical cost and of course not to burden the family on such cost.

Yes the saf plan is something I have considered.

Then you can consider to buy standalone CI plans.

 

[anfielder]

Thanks for the discussion. Many discussed on the need of insurance after 65 will be diminished as dependents are independent and not of a liabaility. But another crucial point of consideration is also protection and coverage for CI at that age to deray the high medical cost and of course not to burden the family on such cost.

Yes the saf plan is something I have considered.

There's medishield life and ISPs to cover medical costs. CI is not a must have and will cost a bomb anyway. It may not look so expensive when you buy it as part of a whole life plan, but that's because you're paying for it over many years.

 

[happy_bear]

There's medishield life and ISPs to cover medical costs. CI is not a must have and will cost a bomb anyway. It may not look so expensive when you buy it as part of a whole life plan, but that's because you're paying for it over many years.

Mediashield life is sufficient?

 

[deepblueli]

Mediashield life is sufficient?

Think about that you hit a CI and need some home care. Medical insurance doesn't cover expenses outside of hospital.

But I would up my medical insurance before thinking about whole life plan

 

[blurpandasg2014]

Hi all,

I'm in early 30s considering to purchase a term to up my coverage. Thinking of term as people always promote buy term n invest the difference. However, my agent have been telling me that at it is better to buy whole life plans ,limited premium ones ,as their coverage is life long[termplans are till 65] and has a cash value.but downside is lower coverage for a more expensive premium

Given that I do not do much investment besides bank savings, can any one shed some light on which should I go for.

The issue is that u would not require ci coverage after u retire as ci coverage is actually to replace income lost.

What I would do is buy term and invest the remainder into a retirement plan or something similar. So regardless whether u are healthy or not after retirement, u still will get money unlike if u buy a ci plan, the only way to get money is to tio ci