The beginner's quick guide to whole life insurance

 Life insurance is probably one of the most important forms of insurance out there. The coverage gives you immense peace of mind by assuring you that your family will be financially secured if something unfortunate happens to you.

Now, when buying life insurance, you will have to choose between term life insurance and whole life insurance. Term life insurance only covers you for the specific term pre-decided by you at the plan’s start date. Whole life insurance covers you for the entirety of your life. In this article, we will take a look at the meaning of whole life insurance and what this form of coverage provides.

What is whole life insurance?

Whole life insurance is a form of insurance that covers you against death, terminal illness, critical illness, and total permanent disability. The coverage lasts for the entirety of the insured person’s lifespan. The premiums, however, need to be only paid for a certain limited period post which you continue to enjoy protection. Most insurers offer a premium payment period that lasts anywhere between 5 and 35 years.

Some insurers also offer you an option called the ‘multiplier benefit’ on your whole life insurance plan. Under this benefit, you are allowed to boost your coverage up to 5 times until a certain age (usually between 65 to 80 years). This means that if a claim is made within this age limit, payout will be multiplied by 2X, 3X, 4X, or 5X as selected by the insured individual.

Whole life insurance plans are further sub-divided into-

·         Participating whole life plans

In participating whole life insurance plans, you receive bonuses when the insurance company makes a profit on their investments. Learn how participating plans work here.

·         Non-participating whole life plans

In non-participating plans, you enjoy the standard protection a whole life insurance plan has minus the bonuses.

What is surrender value in whole life insurance?

You may have heard the whole life insurance plans come with a ‘surrender value’. This surrender value refers to the cash component of the participating plan that gets paid out if you happen to surrender your coverage.

Do bear in mind that the cash value of your whole life insurance plan in no way equals the death benefit that gets paid to the plan’s beneficiary.  It is advisable to speak to your insurer for a detailed understanding of the cash value of your whole life insurance plan.

Do whole life insurance plans have riders?

Yes, you can opt to enhance your whole life insurance plan with the help of riders too. For instance, insurers allow you to add supplementary benefits such as –

·         Added coverage for your child against conditions like autism and ADHD

·         Coverage against a number of intermediate / early stage medical conditions

·         Coverage for benign tumours

Do make sure to go through all riders that are available and choose the one that works the best.

We hope that this guide will prove helpful when you buy life insurance in Singapore. Do consider speaking to a financial consultant for further help in selecting a whole life insurance plan as per your need for coverage.

Take care.