When Should You Buy Term Life Insurance?

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When and why buy term life insuance

What is life insurance and why do we need to buy it? Life insurance is a way to manage risks. People buy life insurance primarily to protect against financial losses, should anything untoward happen to them. Broadly speaking, life insurance can be categorised into whole life or term life insurance. Here’s a table to outline their main differences:

Areas of Consideration Whole life insurance Term life insurance
Coverage Period

Full lifetime of the insured or upon reaching a specified age e.g., age 100

A specified term or up to specified age only

What is paid upon death

Sum assured + accumulated savings

Sum assured

 

What happens when you surrender your policy  before it matures

The insured shall receive the policy’s face value (i.e., death benefit); or  choose to extend the term to leave the benefit for his/her beneficiary upon passing on

Cash value¹ of the savings component (if any), after deduction of early termination fees or other costs as stipulated in the policy wordings. Note that the insured may end up receiving nothing or less than the total premiums paid

Nothing, but some policies, such as Tiq’s ePROTECT term life, offer renewable option

Having read so far, you’re probably wondering why would anyone want to buy term life insurance? There is no money back if you survive the term or surrender the policy before it is due. Nonetheless, there are different stages in life when buying a term life may be more worthwhile than you think. Read on to find out more.

1. Getting your first job after graduation

Buying term life insurance when you first graduate

Congrats for landing your first job after graduation! Since you have just started earning your own keep, it’s likely you don’t have much savings or spare cash after paying the bills. While it’s common you’d want to delay buying life insurance to “a later time when you earn more”, don’t!

Getting life insurance typically equates to a lower premium when you are younger, as you are likely to be healthier without pre-existing medical conditions. In fact, term life insurance is an affordable no-frills option for the budget-conscious as a financial backup for your dependants in the event of a sudden death.

#TiqOurWord At Tiq by Etiqa Insurance, you can get your preferred term life coverage with ePROTECT term life at only S$7.37 per month*. This means you only need to save on one dessert treat in a chic café every month, which not only cuts unnecessary sugar intake, but could also give your loved ones some security! Learn more here.

*Based on a 5-year term plan with cover of S$401,000 of a non-smoking female aged 23 years old.

2. Purchasing a property

buying term life insurance when buying property

Undoubtedly, purchasing our own property is one of the key milestones of adulthood. Given that Singapore property prices are generally in the 6- to 7-digit range, it is also a long-term financial commitment that can last up to 30 years for HDB flats and 35 years for private properties.

Therefore, you need to ensure you are sufficiently covered during the mortgage repayment period should any unfortunate event happen. While some may think that the compulsory Home Protection Scheme (HPS) will suffice for HDB homeowners, do note that term life insurance is also an option for covering your mortgage, as it offers great value and flexibility.

Learn more about the differences between term life insurance and mortgage insurance here.

3. Starting a family

buying term life insurance when you start a new family

Another major stage in life is when you get married and start your own family. As parents, you are likely to support your children until they are financial independent. This generally means you would be their financial pillar from the time they are born till they start their first job at around 20 to 25 years old.

Depending on your parenting style, it can be a costly affair to raise a child in Singapore. Thus, you should plan your finances and prepare for this major milestone, which includes the financial support for your children should you pass on prematurely.

Buying term life insurance can provide your children some nest egg to live on, until they are old enough to graduate and start their career in the unfortunate event of your death, terminal illness or total and permanent disability.

4. Supporting aged or sick parents

buying term life insurance to support elderly

As we grow older, our parents will also age, and it is inevitable that health problems will develop as we age. Regardless whether our parents are financially independent or not, we should try to provide for them in their old age, just like how they cared for us when we were young.

It is estimated the average Singaporean will live to 83.6 years, which is one of the world’s longest life expectancy. Yet, we are likely to spend more than 10 years in ill health compared to thirty years ago.

It certainly hurts to see our loved ones suffering in ill health for a prolonged period, especially if they still have to cope with the financial stress that comes along due to insufficient insurance coverage. This serves as a reminder to get yourself adequately covered as early as possible, so as to ensure quality of life isn’t compromised for you and your loved ones.

5. Establishing your own business

buying term life insurance when you are a business owner

When you set up your own business, your dependants aren’t just your family members. In the event of your passing, your employees and partners may also be affected, and it could break the company you worked so hard to establish.

Buying a term life insurance plan makes sense for the entrepreneur because, in case of an untimely demise, terminal illness or total and permanent disability, it:

  • supports family members with replacement income,
  • takes care of existing business financial liabilities, and
  • provides financial support for the running of the business, such as paying employees

Term life insurance: High coverage at lower costs

the pros of term life insurance

By now, you should have realised that term life insurance is not a waste of money. And buying one is not complicated, at least not at Tiq – the digital channel of Etiqa Insurance. Online application for our term life insurance plans is simple with no medical check-up required2.

Choose the amount and duration of coverage you need to keep your loved ones safe. Our ePROTECT term life plan will insure you from S$401,000 to S$2 million with the flexibility of a 5-year renewable term, a 20-year fixed term or protection till the age of 65.

Protect your life with our ePROTECT term life here.

¹ For whole life insurance policies, a portion of your premium paid is used for investment to build up cash value in addition to paying for your insurance coverage.
² For customers up to age 40 and in the pink of health.

[End]

Information is accurate as at 16 February 2021. This policy is underwritten by Etiqa Insurance Pte. Ltd. (Company Reg. No. 201331905K). Protected up to specified limits by SDIC. You should seek advice from a financial adviser before deciding to purchase the policy. If you choose not to seek advice, you should consider if the policy is suitable for you.

As term life insurance has no savings or investment feature, there is no cash value if the policy ends of if the policy is terminated prematurely. It is usually detrimental to replace an existing policy with a new one. A penalty may be imposed for early termination and the new plan may cost more or have less benefit at the same cost.

As buying a whole life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid. This advertisement has not been reviewed by the Monetary Authority of Singapore.

 

Tiq by Etiqa Insurance Pte. Ltd.

A digital insurance channel that embraces changes to provide simple and convenient protection, Tiq’s mission is to make insurance transparent and accessible, inspiring you today to be prepared for life’s surprises and inevitabilities, while empowering you to “Live Unlimited” and take control of your tomorrow.

With a shared vision to change the paradigm of insurance and reshape customer experience, Etiqa created the strong foundation for Tiq. Because life never stops changing, Etiqa never stops progressing. A licensed life and general insurance company registered in the Republic of Singapore and regulated by the Monetary Authority of Singapore, Etiqa is governed by the Insurance Act and has been providing insurance solutions since 1961. It is 69% owned by Maybank, Southeast Asia’s fourth largest banking group, with more than 22 million customers in 20 countries; and 31% owned by Ageas, an international insurance group with 33 million customers across 16 countries.

Discover the full range of Tiq online insurance plans here.

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