Under LTA (level term assurance), the term rider pays $60,000 on death during 20 years, plus the saving in the Ideal plan. After 20 years, the rider expires, and the accumulated savings (which is $60,000 plus gains) will be paid.
Under DTA (decreasing term assurance), the term rider pays $60,000 reducing by $3000 each year over 20 years, plus the savings in the Ideal plan. Although the term rider reduces yearly it is more than offset by the additional savings in the year.
On death at any time, the total payout (including the savings in the Ideal plan) should be more than $60,000.
The annual premium is:
Entry -- Male -- -- Female -
Age LTA DTA LTA DTA
25 84 42 55 25
35 211 85 139 57
45 686 290 455 190
The premium rate for DTA is less than half of LTA. The cost difference is more significant at the higher entry ages.
The premium rate for female is about one-third lower than males.
The annual cost of LTA and DTA at the younger entry ages (ie less than 35) is less than $200, and is highly affordable.
RECOMMENDATION: Add a LTA or DTA to our Ideal plan. The premium is level and does not increase with age.
4 comments:
The DTA/LTA looks affordable, to me. Although I personally prefer DTA.
The DTA/LTA coverage will end in 20 years time.
- This is ok because term insurance is meant to protect against the loss of income while we are in our wealth accumulation stage.
- When we are older and have accumulated enough savings and investments, we dont need the term insurance anymore. The term insurance has served its purpose.
- Term insurance is cheap because it doesnt have a cash value.
- By paying a small amount of money per year for this LTA/DTA, one can be assured that in the event of death, one's dependants can get a sum of S$xxxxx, subject to the relevant terms and conditions.
- This is basically how term insurance works.
DTA/LTA has the Idea planning, I need 100 years to support DTA. Please help me, CEO
You can select a 20 or 30 years DTA, depending on your age.
If your less than 30 years old, a 30 year DTA may be suitable.
For example, if you save $3000 a year, you can buy a 30 year DTA for $90,000.
In the event of premature death, the total payment will usually be $90,000 or more.
The cost of the 30 year DTA is quite low. You can get our insurance adviser to give a quote.
Someone sent an e-mail to me.
He thinks that the Decreasing Term Assurance Rider, with level premium, make more sense than the escalating premium under the typical ILP (investment linked plan).
He was surprised that the premium is so low to give a high coverage.
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