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Insurance plan for a young man
25 Jul 2023 (951 views)  

I am 27 year old this year and have worked for more than 2 years. I have some questions and hope to hear your opinions on it.

1) Currently, I am insured under a whole life plan from Prudential. I pay an annual premium of $2,200 for 15 years and is covered for  whole life. I am insured for $150,000 on death and critical illness, and $75,000 on early critical illness before 80 and one third of these sums after age 80. I am covered for $150,000 on permanent and total disability up to age 70 only. 

2. I realized that I was paying a bit too much for an insurance with limited coverage. However, I have already paid for three years. I was wondering should I terminate my whole life and switch to a term policy (such as SAF group life insurance or Singlife) with higher coverage with much lower premium so to invest the remaining into an index fund

3) Do we actually need to be insured for early critical illness? Reason I am asking is because I realize the premium differences between early and late CI is significant.

4) How much insurance coverage do we need if I do not wish to have kids in future? Many agents suggested 3-5x of your annual income but should it also based on multiplier of annual expenses instead because higher income does not necessarily mean higher expenses depending on the individual?

Reply by Tan Kin Lian

Since you have already paid 3 years of the 15 year premium, it is best that you continue the existing policy.

If you are healthy, there is no need for critical illness (early or late). However, it depends on the premium for the component. If it is small, you can keep it. If it is large, you can terminate the coverage and save on the premium. 

If you need additional insurance, you can buy the group insurance for another 3 to 5 years of coverage. The premium should be quite low.
 

Insurance plan for a young man
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I am 27 year old this year and have worked for more than 2 years. I have some questions and hope to hear your opinions on it.

1) Currently, I am insured under a whole life plan from Prudential. I pay an annual premium of $2,200 for 15 years and is covered for  whole life. I am insured for $150,000 on death and critical illness, and $75,000 on early critical illness before 80 and one third of these sums after age 80. I am covered for $150,000 on permanent and total disability up to age 70 only. 

2. I realized that I was paying a bit too much for an insurance with limited coverage. However, I have already paid for three years. I was wondering should I terminate my whole life and switch to a term policy (such as SAF group life insurance or Singlife) with higher coverage with much lower premium so to invest the remaining into an index fund

3) Do we actually need to be insured for early critical illness? Reason I am asking is because I realize the premium differences between early and late CI is significant.

4) How much insurance coverage do we need if I do not wish to have kids in future? Many agents suggested 3-5x of your annual income but should it also based on multiplier of annual expenses instead because higher income does not necessarily mean higher expenses depending on the individual?

Reply by Tan Kin Lian

Since you have already paid 3 years of the 15 year premium, it is best that you continue the existing policy.

If you are healthy, there is no need for critical illness (early or late). However, it depends on the premium for the component. If it is small, you can keep it. If it is large, you can terminate the coverage and save on the premium. 

If you need additional insurance, you can buy the group insurance for another 3 to 5 years of coverage. The premium should be quite low.
 

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