Whole Life Insurance Singapore
“You don’t buy life insurance because you are going to die, but because those you love are going to live.” –
Why Insurance Matters?
As the above quote goes, life insurance meets one’s life’s end, but it also signifies the start of another’s life’s beginning. So why do you need to buy insurance? With adequate coverage, one can be assured that upon a premature sudden death, his/her loved ones are covered against:
- funeral and burial expenses
- mortgage, car, and any outstanding loans
- living expenses such as food and utilities
- lifestyle adjustment expenses to rebuild due to one’s income loss
- children’s education fees
- surviving spouse’s old age living funds
As you can see, there are different kinds of financial needs. And for every need, there are differing extents to how much one requires depending on several factors which we covered under Life Insurance segment. There are also different types of insurance products to suit every individual. Under this segment, we shall look more in depth into participating whole life insurance policies.
What Is A Participating Whole Life Insurance Policy?
Commonly defined as the “traditional whole life insurance policy”, participating policies basically share the profits of the insurance company, and as such, policyholders receive bonuses from the insurer. These bonuses are non-guaranteed, which means, the insurance company may or may not pay out bonuses, and that depends on the company’s experience and performance. However, once declared, they are guaranteed. This bonus payout feature is the main differentiating factor between a participating policy and a non-participating policy (which we will cover in another segment).
Types Of Bonuses
1. Reversionary Bonuses (RB)
This is by far the most widely used method to distribute bonuses to policyholders. It is in proportion to the sum assured, for example, $15 per $1,000 sum assured and $35 per $1,000 on accumulated RB. This bonus is declared annually and is credited to the policy on its anniversary date. And as mentioned, once declared, this becomes a guaranteed amount which will increase the sum assured accordingly and be paid out when a claim is made.
2. Performance Bonus
This is a one-off bonus which is a percentage of the accumulated Reversionary Bonuses (RB). It may be paid under three scenarios namely, when the policyholder surrenders the policy, makes a claim, or when the policy matures. The performance bonus to be paid out will be dependent on the date at which the scenario takes place.
3. Maturity Bonus
This is also a one-off bonus which is a percentage of the accumulated Reversionary Bonus (RB), and as the name says, it will be paid when the policy matures.
Tips On Getting The Right Insurance
Amongst the wide selection of insurance products, there is no one that is outrightly better than the other. At different stages of your life, you may need different type of product for your financial need and preference. Under this section, we will look at the three main types for participating policies to determine which suits your budget, preferred horizon and level of sum assured.
- Single Premium Policy
This is usually for people who are looking for high levels of sum assured with high affordability. They prefer to pay one lump sum and not be bothered with the regular payment throughout the rest of the policy term. Currently in the market, there are financing schemes to leverage upon such that policyholders can borrow to fund for their single premium policies.
- Straight Whole Life Policy
This can really be termed as the most traditional policy where a policyholder pays either up to an old age of 85 or throughout the lifetime of the policy. Because of the long nature of payment term, the premium amount is relatively lower, thus this is considered more affordable for people with less budget. However, please note that as this is payable for nearly the whole term of the policy, the cash value builds up slower.
- Limited Payment Whole Life Policy
This has been a popular choice in recent years and will be suitable for people who are resistant to paying premiums throughout the whole life policies. Insurance companies usually have a few specified premium terms for policyholders to choose from according to their comfortable budget and horizon. However, because of this limited payment nature, the premium amount tends to be relatively higher than that of a straight whole life policy. On the flip side, its cash value builds up faster due to the shorter premium period.
With the above in mind, you will be better well equipped on what types of participating policies suit you better. Insurance is a huge topic, and can be morbid to some, hence it tends to intimidate and also confuse people. With the correct guidance and advice through comprehensive discussion and data analysis with a professional financial consultant, it will help remove this barrier and create awareness on your desired financial objectives through proper financial planning.
Comparisons Between Different Whole Life Insurance Policies
Based on the following profile, we have come out with a simple comparison from Compare First website.
Age Next Birthday: 30
Sum Assured: S$100,000
Premium Payment Term: 25 years
Disclaimer: The above is just for illustration purposes.
For actual and more detailed information, please visit the individual insurer and Compare First website to retrieve the most updated quotation.
Financialogy is a website that promotes the importance of financial planning in Singapore.
We strive to provide Singaporeans with the platform to understand more about whole life insurance and how it can cover you against financial burden if unforseen circumstances happens.
Want To Know More About Whole Life Insurance?
If you would like to know more about whole life insurance, you may contact us at (+65) 9380 2839 or you can click on the button below to enquire about the different financial services that we provide.
Get Free Quotation
Products & Services
- Life Insurance
- Term Insurance
- Health Insurance
- Keyman Insurance
- Mortgage Insurance
- Whole Life Insurance
- Endowment Insurance
- Critical Illness Insurance
- Hospitalisation Insurance
- Early Stage Critical Illness Insurance
We are a licensed and certified financial planner in Singapore that provides a comprehensive financial planning solutions to meet all your financial and insurance protection needs.
Address: 47 Scotts Road, Goldbell Towers, Singapore 228233
Contact Number: +65 9380 2839
For terminal illness, it is a condition that in the opinion of a specialist or registered medical practitioner by the appointed insurance company to be highly likely to lead to death within 12 months. The benefit will be the same as the death benefits. The...read more
What is the difference between mortgage insurance and term insurance? Which should I get to cover for my housing loan in Singapore? We will provide all the information here. Read on. Difference Between Mortgage Insurance and Term Insurance Mortgage...read more