Tan Kin Lian's Blog: Group insurance rates

Wednesday, April 07, 2010

Group insurance rates

You can view the group insurance rates charged by Aviva for SAF members and dependents here. These rates can be used as a benchmark to compare the rates offered by other insurance companies for term life, critical illness and personal accident insurance.

The rates for term life (payable on death) and personal accident (payable on death or injury by accident) is the same regardless of age.

The rates for critical illness increase sharply after age 45. If you find them to be expensive, you do not need to have this insurance, if you already have sufficient savings by that time. You can draw down on your savings in the event of a critical illness.

Example
Assume that you are 30 years old, earn $3,000 a month and wish to insure for the following:
Term life $200,000 premium $25.60
Critical illness $100,000 premium $10.00
Personal accident $100,000 premium $4.17
Total premium $39.17

The premium is about 1.3% of your earnings. This rate will remain unchanged until you reach age 45. After that, you have to pay a higher premium for critical illness, but you can discontinue it at that time.

14 comments:

Anonymous said...: Hi Mr Tan,

Why does an individual needs to buy the term as well as personal accident insurance as suggested by your example?
My understanding is that both covers death arising from any cause? The only difference is that personal accident premium is much cheaper.; April 07, 2010 8:36 PM
Vincent Teo said...: Mr Tan

The Group Term life coverage also include the Personal Accident benefit. There is no need to buy additional PA coverage unless you opt to.; April 07, 2010 8:36 PM
Tan Kin Lian said...: If you want a total cover of $300k, it is all right to haev some of it in term life and the rest in personal accident.; April 07, 2010 9:23 PM
Collin said...: There is a possibility that group insurance will be discontinued right? ie Aviva decided not to cooperate with SAF anymore.; April 07, 2010 11:59 PM
Tan Kin Lian said...: Reply to Collin Yeo
It has not happened in 30 years, and is not likely to happen in the future.; April 08, 2010 12:03 AM
Collin said...: I see, so there might still be a black swan event in future. Perhaps we should tell people not to rely solely on group but as a top-up.

Anyway Mr Tan, the url takes forever to loads!; April 08, 2010 12:05 AM
Tan Kin Lian said...: Reply to Collin Yeo
Which browser are youusing, take takes a long time to load? I have problem with Chrome but is okay with Internet Explorer.; April 08, 2010 6:59 AM
Tan Kin Lian said...: Personal accident pays 10% to 100% of the sum assured for permanent disability due to accidents, e.g. loss of limbs or eyesight.

This cover is not provided under a term insurance policy, unless the disability qualifes as a permanent total disability which is covered under some time insurance plans.

It is all right to have part of your total sum insured under a term insurance policy and another part under a personal accident policy.

The cost of this combination is lower than having all of the sum insured under term insurance.; April 08, 2010 8:35 AM
Anonymous said...: Some of you think that $300k is a lot. It is not alot .In fact it is inadequate.
Example:
An average family of 4 including 2 children require $500K to replace income if the bread winner dies.
The bread winner requires at least $200K for critical illness and a H&S medical plan.
A disability income plan of $xxxx per month to provide if bread winner is disabled until bread winner is 65.
How much you need? Do you have this much at least?
Wait, don't worry, the total won't cost you a limb .Less than $100 a monthly and you TRULY get peace of mind. The rest you can invest to earn good return.
These are the scenarios.
If death comes first there is $700K for the family.
If critical illness comes first and followed by death after 3-5 years then the family gets $500K which can go to see them through life.
If the bread winner is totally disabled first then $700K . If disability follows critical illness then total is $700K
This is a rule of thumb . Each has different needs. Need analysis is to find out your real needs and NOT WANTS.
So you see, how much your trusted insurance agent has short changed you by pushing you a wholelife. Worse they pushed you a limited payment one and the worst an endowment and the worst worst an anticipated endowment disguised as cash back or coupon.
All these products make a lot of money or commission for the agents but poor you , you are inadequately covered and left with a ticking time bomb, no peace of mind.
If consumers still can't see what is going on and are in comatose state or brain dead nothing education can help. You deserve to be conned.; April 08, 2010 10:12 AM
Anonymous said...: I'm sure that if the tender term between SAF and Aviva runs out, and Aviva decides not to renew or continue the business, then SAF will appoint another insurer to take over. Just like how CPF gave the profitable Medishield Plus business to NTUC, and how DPS was outsourced to NTUC and GE; and not to mention Eldershield too.

I remember in the mid-1980s when I did my NS, the standard SAF insurance then was Personal Accident with NTUC. During 2nd week of BMT, the platoon sergeant and section leaders all gave us horror stories to encourage us to sign up. I guess in those days, no other insurer willing to underwrite a bunch of goondus playing with live ammunition, laying claymore mines, transporting live artillery shells, firing mortars, and running alongside and in front of M113s. Furthermore, up till the mid-1990s if anybody died during NS or reservist, the family just got a $10K cheque, that was it ... oh maybe plus military funeral.; April 08, 2010 1:21 PM
Anonymous said...: Hi,
I enjoy learning from your site.
May I know what is the rough premium i should pay at 46 yrs, 56yrs as you mention premium increase sharply for critical illness?
Assume i need just a term life $100K, critical $100K?
Just need a rough estimate cos i considering BTITR for my protection and retirement nest.; April 09, 2010 9:56 AM
Anonymous said...: Anon April 09, 2010 9:56 AM,

just have 5 times your annual salary for critical illnees.
5-10 times of your annual salary for death/disability insurance to take care of your family if you konk off. It depends on how many children and the term depends on age of youngest child. Is your spouse working ? If no , provide her retirement fund etc. You are advised to engage a professional planner (please don't use an insurance agent, sure die)to help crunch those figures and other advice. It is NOT easy as you think to DIY. The above is based on rule of thumb and is not accurate too.; April 09, 2010 11:01 AM
Anonymous said...: Mr Tan,

May be i missed something. But this is group insurance. If I want personal insurance, i do not think i can get that cheap premium? rgds; April 10, 2010 12:48 PM
Anonymous said...: If you are a civil servant apply for 'polgis' from your HR.
If you a union member buy 'LUV' direct from ntuc.
If you are a safra member buy from SAFRA.

They are cheap cheap and that is what you need to insure personal risks and NOT WHOLELIFE or LIMITED PAYMENT or ENDWOMENT or ANTICIPATED ENDOWMENT. Only dumb people will buy them.; April 11, 2010 6:12 PM