Dear Mr. Tan,
My insurance adviser has given two proposals for me to increase my coverage:
a) critical illness protection for 35 years
b) whole life policy with critical illness rider
Which is better for me?
REPLY
For the term insurance policy, ask the adviser to give you the following options:
a) Level term for 25 years and 35 years.
b) Decreasing term (or mortgage protection) for the same period.
You can compare the rates with the benchmark rates quited in my book on financial planning. My benchmark rates are quite high, so you should be able to get a rate lower than the benchmark rate. You have to decide on the term insurance that suits your needs, by looking at the cost and coverage.
In my view, the most suitable is a decreasing term insurance policy for 25 years. I avoid critical illness policy or rider, as they are usually too expensive (i.e. poor value for money).
Warning.....don't buy any product with cash value. You will be short changed both the protection and the return. So don't waste your time on them.
ReplyDeleteDon't touch vivolife with a 20 foot pole.It is a limited payment wholelife critical illness plan. True to its name the features and benefits are limited except the commission to the insurance salesman disguised as financial consultant.
ReplyDeleteYes, CI insurance is very expensive, even for group insurance. The cost shoots up after age 45.
ReplyDeleteJust follow Mr Tan's advice for level term or reducing term. Use his book to guide you. It is important for you to know the exact purpose, need and coverage amount for this big lump-sum cover. Don't buy life insurance for the sake of getting life insurance, and definitely NOT for savings.
The other important thing to cover yourself is medical / hospital insurance. This will also cover for cancer treatment and kidney dialysis. Medishield from CPF is cheapest but covers for C Class Ward in structured hospitals. If you want to get private integrated shield plans, can consider those covering B1 class wards. Premiums for higher class wards or private hospitals are too expensive IMO -- only if you have too much money and don't mind spending money.