Sum assured
The sum assured refers to the amount that your insurer will pay out to your named beneficiaries upon your death or total permanent disability. This amount is tax-free but if your beneficiary is residing overseas, be sure to choose an insurer that can facilitate this. You should choose the death benefit value of your plan based on the amount needed for your dependants to survive in the unfortunate event of your passing.
Exclusions
There are certain situations where your policy may not pay out upon your death. Common exclusions include:
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death by suicide within the first year of purchase or reinstatement of the policy
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death due to dangerous activities including racing, diving, mountain climbing, and more
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civilian casualty of war or terrorism
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death while under the influence of alcohol or drugs
Depending on the insurer, some policies may even include uncommon exclusions such as
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death by natural disasters
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death by pregnancy or childbirth complications, and
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death due to pre-existing illnesses or lifestyle diseases (eg an illness from excessive smoking)
Be sure to read the fine print before deciding on a plan.
Surrender value
If you choose to voluntarily terminate your whole life policy before it matures, you will be able to receive some cash back in the form of a surrender value. The amount you receive differs based on how far into your policy you are.
The surrender value will always be less than your death benefit, so it’s generally not recommended to surrender your policy unless as a last resort.
Enhanced or customisable coverage with riders
Whole life plans usually cover you against death, terminal illness, and total permanent disability. You can also customise your existing policy with riders to cover critical illness, accidental death, and more, without having to purchase a new plan.
Premiums and payment terms
While life insurance is certainly important, it should not come at the expense of other financial goals like your daily expenses, savings, and investments when you retire. Some whole-life plans allow for limited or flexible payment terms, allowing you to only pay premiums for between 10 to 30 years while enjoying coverage for the rest of your life. If you have company-provided health or life insurance, it’d also be a good idea to speak to your HR or corporate insurance provider to learn more about your coverage. So you’ll be able to choose a complementary personal plan.
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