Don’t worry if you’re confused between term and whole life insurance. These types of investments really need to be researched and understood.
With that in mind, this post will aim to clarify and demystify them with clear differences. And while the best insurance agents in Singapore can explain the nitty-gritty better, we’re here to cover the basics with this post.
Type of Coverage
To get the best life insurance coverage, you’d want to weigh the length against the costs (more on this in a bit). Of course, your coverage preference will play a big role in it, as well.
Term life insurance can cover you for a specific period and its usual term lengths involve one, five, ten, 15, 20, or other five and ten-year increments. Should you pass away during this term, your policy’s beneficiary will receive a portion of the payout.
On the other hand, whole life insurance is designed to last your entire lifetime. The most reliable whole life insurance policies are those that not just pay out regardless of death but can also be borrowed against or surrendered for cash.
If the last bit in the paragraph above got confusing, we’ll clarify it further in the next section.
Whole life insurance policies are more straightforward compared to term life insurance. It comes with a cash value that, when built up over a specific period, can be eventually used in exchange for a cash payout or a loan.
On the other hand, term life insurance can be adjusted to your lifestyle and needs. If you need to accommodate health insurance or home insurance in your budget, a policy can be adjusted to suit your needs at the time.
You can enquire about renewing your term life insurance policy, as well. The coverage typically remains the same, though as you get older, the premium will likely increase to reflect your lifestyle, health, and other circumstances.
Hands down, the cash value of whole life insurance is more expensive than term life insurance. Because it covers your entire lifetime, its cash value also grows at a fixed rate.
Unlike pondering about homeowners insurance to protect your assets, whole and term life insurance are for securing a better future for your loved ones or beneficiaries. But as previously stated, some policies can accommodate add-on coverage for your needs.
For instance, you might want to consider a rider policy to cover insurance for students if your child is going off to college. Doing this can help you make the most out of your policy and assist your beneficiaries in different life stages, as well.
How and When to Use
If you’re in the financial position to pay for higher premiums, you can choose whole life insurance over a term life one. This is typically the option for those thinking of eventually passing an inheritance on to their children or heirs.
But just like choosing health insurance, it’s always good to think about what’s affordable and right for you at the moment. If you’re not yet a senior and in relatively good health but have other expenses to pay, you might want to settle for term life coverage in the meantime.
Major financial obligations, whether current or future, play a big role in your insurance decisions. That’s why most people also opt for personal accident insurance in Singapore to be ready for practically any emergency situation.
Term life is also a good option for particular phases in life such as during pregnancy, mid-career changes, or other circumstances and events in a woman’s life that may require insurance.