You have decided to buy life insurance in order to protect your nearest and dearest. That is a great first step to take towards ensuring your family’s continued happiness. However, before signing up for a policy, there are some decisions you must make first.
Spend some time honestly answering the following three questions so that you can make the best possible decision when choosing a life insurance plan.
One of the most important things to consider is whether you need whole life or term life insurance.
Whole life insurance protects you for life and invests a portion of your premiums for the future1. It is recommended for those who wish to protect their families for as long as possible. Another advantage of whole life insurance is that it offers the potential to grow your wealth, which can in turn help you to achieve your retirement goals.
However, if you do not need protection all your life, it might be more worthwhile to purchase term life insurance instead, which protects you up to a specified date. As term life insurance offers protection without any investment component, premiums are typically lower than those charged by whole life insurance.2
For instance, if you decide that you only need protection until, you might decide to opt for term life insurance instead of whole life insurance.
In the long run, opting for term life insurance such as Manulife’s can save you quite a bit of money, since you not only enjoy lower premiums but also avoid paying for coverage you will no longer need beyond a certain point.
Depending on your needs and budget, take these pointers into account when choosing for a life insurance plan.
Investment-linked insurance policies (ILPs) offer insurance protection while at the same time investing a portion of your premiums for the future3. This enables you to protect you and your family while at the same time investing money for your retirement.
Insurers typically offer a choice of sub-funds to invest in through your ILP 4,and it is up to you to determine if there is a sub-fund that matches your risk appetite and investment goals.
An ILP may or may not be for you depending on your risk tolerance, investment preferences and goals. If you are able to find a plan and sub-fund that correspond to your needs, an ILP enable you to meet some of your investment goals while offering protection at the same time.
However, if you do not wish to invest through an ILP, you might find it more worthwhile to buy term life insurance with no investment component, and then invest your spare cash separately.
There is no one-size-fits-all approach, so feel free to choose the option which best suits your cashflow, risk appetite and protection needs.
You can also opt for a term life insurance policy likethat can later be converted to a whole life plan if you feel you will be ready for it at a later stage in your life.
Other than choosing a life insurance plan, you also need to determine how much life insurance coverage your family needs.
That is where sum assured comes in. Sum assured is the amount of money you or your family will receive from your life insurance policy if you pass away, become totally and permanently disabled or become terminally ill.
When trying to figure out how much coverage is appropriate, you will have to estimate your family’s financial needs and liabilities, as well as your care expenses if you become disabled.
According to , households spent an average of S$5,904.50 a month, including S$1,198.90 on food and non-alcoholic beverages, S$122.90 on clothing and footwear and S$781.20 on transport. Knowing how much other households in Singapore are spending can be a useful gauge when estimating your own household’s needs.
If you find that you are not able to afford the premiums needed to obtain your desired sum assured, one option is to choose a term life policy, as such policies tend to come with lower premiums than whole life policies.
These insurance products are underwritten by Manulife (Singapore) Pte. Ltd. (Reg. No. 198002116D). This article has not been reviewed by the Monetary Authority of Singapore. Buying a life insurance policy is a long-term commitment. There may be high costs involved if you terminate the policy early, and your policy's surrender value (if any) may be zero or less than the total premiums paid. This article is for your information only and does not consider your specific investment objectives, financial situation or needs. It is not a contract of insurance and is not intended as an offer or recommendation to purchase the plan. You can find the full terms and conditions, details, and exclusions for the mentioned insurance product(s) in the policy contract.
This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the LIA or SDIC web-sites ( or ).
We recommend that you seek advice from a Manulife Financial Consultant or its Appointed Distributors before making a commitment to purchase a policy.
Information is correct as of 25 November 2020.