Friday, April 30, 2010

Cheapest Term Insurance in Singapore?

Some years back, I purchased a term insurance under the SAF Group Term Life for me and my wife. The consideration back then was affordability.

Just for information, term insurance has the following features:

1. Cheap in premiums compared to whole life policies and investment linked plans (ILPs)
2. High Coverage.
3. Pay and Throw Away. You don't get any returns from it. It is a pure protection plan.
4. Provides coverage only for a term (usually up to age 70) compared to 99 yrs for whole life and ILPs.

Aviva SAF Group Term Life

I have not really done any comparisons but I am pretty sure that this must be one of the cheapest term insurance.

For my case, I pay $51.72 per month for $100,000 coverage for death, total permanent disability, critical illness and personal accident for both me and my wife.

In addition, I just got a letter 2 days ago that says a rebate has been given. This rebate is worth around $106 and will be credited back into my bank account. This rebate is calculated annually and is based on the actual claims experience of the insurance company for the group policy.

So with the rebate factored in, the term insurance only costs me $250 per pax per year for $100,000 coverage. That is really cheap and works out to be around $20 per month for each person.

Do you know of any cheaper term insurance than the SAF Aviva Group Insurance?

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  1. Hi FF,

    I think I should warn you about cheap group insurance. It usually comes with a cost - non-guaranteed renewal. To me, guaranteed renewability is a very impt component of a sound insurance portfolio because our health is not going to get better as we age.

    Here's a very good summary of what's not so good about the aviva saf plans :

    I'm not blasting this plan down. It is very cheap and good, but to me, it's good if you have a backup plan that has guaranteed renewal. This is to prepare for the screw ups that life will throw at you from time to time :)

  2. Hi LP,

    Thanks for bringing up the issue about guaranteed renewability.

    It is indeed my oversight on one of the supposed drawbacks of the plan. Indeed, every single plan has its drawbacks but this tend to be higher in group policies since the individual is not the owner of the policy.

    Thanks for highlighting it. Gives me an idea. Perhaps I will expand on this post on some future date to explore the pros and cons of this term insurance.

  3. My say on insurance ...

  4. Hi,

    may i ask if anyone can advise what kind of insurance is needed for an individual? Term insurance? Critical illness ? life insurance ? (its usually not recommended) any other insurance is needed as set aside the investment portion.

  5. Anon,

    It's varies from individual to individual.

    For me, I need:
    1. A whole life plan to cover Critcal illness till death
    2. A term plan to boost coverage during critical period where there are dependents
    3. A personal accident plan to cover accident. Very easily claimable
    4. Hospitalisation and surgery plan - for coverage in case there's hospitalisation
    5. Disability income - to protect your future income stream in case of disability

    In the future, could be looking at:

    6. Endowment plans for kid's education to guarantee a certain portion, while investing the rest to achieve the target savings
    7. Long term care - to protect your kids in case you get old and unable to take care of yourself.

  6. Hi Anonymous,

    Just to add to LP's point. Insurance is just part of financial planning. It is a subset and not the totality of financial planning. In life, we have many financial objectives. This might include being insured, having enough money for our children's education, saving for our first home/car or simply saving for our retirement.

    When you have listed down all these objectives, you then need to prioritise them accordingly from highest to lowest priority. The reason for this is that you only have so much money or resources and it is possible that you might not have enough money to meet ALL your financial objectives. That is the reason why some people might not even see buying insurance as important. To them, that is the lowest priority.

    When it comes to insurance, I see myself needing the following insurance for TOTAL PROTECTION. Again, you will need to prioritise amongst all these insurance needs. I tend to categorise insurance needs according to the 5 basic needs:

    1. Hospitalisation plan (basic Medishield or to upgrade?) - For hospital bills.

    2. Death coverage

    3. Disability Coverage

    4. Critical Illness Coverage

    5. Personal Accident Coverage.

    Other coverages that people might need depending on their situation are:

    6. Travel Insurance
    7. Home Insurance (Protect against fire and theft)
    8. Car insurance (if you drive)

    What insurance is required varies from individual to individual. The question is what do you want to be protected against in terms of priority, how much coverage you wish to obtain and the budget that you have. There are a lot of other questions that need to answered first if you are deciding what to buy.

    My thoughts are these: If you need insurance but don't know what to buy, just get a term insurance first while you sort out your thoughts about ILPs and whole life.

  7. Hi All,

    Just wanted to update those who went and read up the link on LP's post above:

    This is another link with an excerpt from that same blog post, but with someone from Aviva commenting and clarifying some points:

    The original blog post fails to communicate that most of the "problems" with that SAF-Aviva policy are the industry standards for TERM insurance. Therefore, that blog post might mislead readers to think that this SAF-Aviva policy is inferior to other term insurance policy.

    However, that being said, I do not know if this SAF-Aviva policy is indeed "equal" to other term insurance policy. My advice is for you to do your own research thoroughly, and make your own conclusion. I'm doing my own research at the moment as well.

    Do your own research, understand the differences between Term, Life, and ILP. Decide on what you want, then compare Term with Term, or Life with Life. No use comparing Term with Life from different companies, as Term and Life are "entirely different" products.

  8. Hi,

    Thanks for the really good insights!

    The suggestion to compare Term with Term and Life with Life is really good. People should always compare like products with like products. It is much fairer a comparison compared to saying "Term is cheaper than whole life policy" so term is better.

    If I am not mistaken, before Aviva took over the SAF group policy, it was serviced by ICS insurance. Aviva bought over ICS and thus took over the group policy.

    When it comes to guaranteed renewability, most term insurance contracts would say that it is guaranteed renewable. Premiums stated however are not guaranteed.

    Term insurance should be similar across the board. But since the SAF group term policy is a Group Policy at the end of the day, there might be slight differences compared to personal term insurance that you can purchase.

    Disclaimer: I have the SAF grp term for both me and my wife.

  9. you might want to check the term insurance from POEMS (philips capital) as their premium is pretty cheap compared to the one you mention on the blog

  10. Hi,

    Yes please do not compare Term plan and Life, come to think of it, for ppl who have "buy term invest the rest" mindset, will only benefit when something is going to happen to them early. If not, Limited payment Life plan is more ideal.

    As for ILP, please also be very concious on who is managing the investment for you. Is he or she doing a good job. When age creeped in, mortality charges went up, it might be a time bomb ticking.

    over all there is no lousy product in the market.

  11. Hi Sentosa,

    Thanks for highlighting the term insurance. It is NTUC I-term policy. I have created a posting on it and the posting has also been published on CPF's IM$avvy site. Thanks for sharing it with us. By your sharing, you have benefited lots of people!

    Hi Jim,

    Yes. ILP is indeed a time bomb when one gets older. However, if one knows how to tweak the plan as they get older (i.e. reduce coverage), then perhaps it might be better.

  12. NTUC's Safra Living Care term insurance is cheaper after including critical illness coverage.

    1. NTUC where to buy? Hardly see any insurance agent from NTUC.

  13. Let us not worry for diabetes patients and their future in this uncertain life as Alaska Life Insurance Company offers life insurance for diabetics as per the rules explained. It insures their health as well as treatment expenditures incase of any unfortunate time to him. Such diversity of choose and client friendly attitude is what keeps the company a step ahead from others.

  14. The suggestion to compare Term with Term and Life with Life is really good.It is much fairer a comparison compared to saying "Term is cheaper than whole life policy" so term is better.

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  15. When it comes to Life Insurance, there are benefits that should be of importance to you. Things like "conversion privileges", Accelerated Death benefits", Terminal Illness Riders" Ask us which plans offer these unique benefits.


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