1. What are the different types of life insurance available?
There are three main types of life insurance plans you can consider: term life, whole life, and universal life. Each offers a lump-sum payout upon death, terminal illness, or total and permanent disability.
Term life insurance provides coverage for a specific period, making it a straightforward option. Whole life and universal life insurance include a savings or an investment component. With these plans, a portion of your premium goes towards building cash value, which you may have an option to withdraw after a certain period depending on the insurer’s terms.
Having a clear objective is crucial when selecting a life insurance plan. Determine your coverage needs and when you want to receive the insurance policy payouts . If you’re saving for retirement or your children's education, you might prefer accessing the insurance policy payouts earlier. Alternatively, you may choose to allocate your insurance policy payout as a wealth transfer to your loved ones, safeguarding their financial future.
For a detailed comparison of each plan, check out our Life insurance infographic.
2. How to calculate the right amount of life insurance coverage for my needs?
The Life Insurance Association of Singapore recommends coverage of approximately 9-10 times your annual income1 to ensure financial stability for your dependants. However, the right amount depends on your current financial situation, dependants, and future needs. Some key factors you can take into consideration include your existing financial commitments such as mortgage repayment, car loan, credit card debts; and even end-of-life expenses like funeral cost. If you have dependants, you should also consider how much they would need to continue maintaining their current lifestyle and the future education costs for your children.
3. Can I customise my life insurance coverage?
Absolutely! Life insurance plans have evolved significantly over the years, offering more flexibility to customise your coverage to align with your personal and financial needs. Add-ons, or riders, allow you to enhance your base plan's coverage. In Singapore, many life insurance plans offer add-ons like critical illness coverage, which provides a lump-sum payout upon diagnosis of a covered critical illness.
4. Do I have the option to increase or decrease my coverage in the future?
Maybe. Life insurance plans often provide options for you to adjust your coverage, depending on the type of policy and the insurer’s terms. You may want to increase your coverage during significant life events such as starting a family or buying a home. Conversely, you may reduce it as financial responsibilities lessen, for instance, when your children become financially independent , or you have paid off your mortgage.
Some policies allow adjustments without additional medical underwriting, while others may have specific terms or fees.
5. What happens if I can’t afford my premiums in the future due to a change in my financial situation?
Life insurance is a long-term financial commitment. Consider what might happen if you’re out of work or taking a career break and have a limited budget. It’s important to choose a plan that meets your coverage needs while staying within your budget. In the event that you encounter financial challenges and struggle to pay your premiums, speak to your Financial Planner. They can help you explore options such as lowering your coverage amount, making your premiums more affordable. This way, you can maintain some coverage without putting a strain on your finances.
In addition to these questions, you may also want to find out whether there are any exclusions and how the recommended plan complements your existing coverage to avoid the risk of being over-insured. By asking these questions, you can confidently choose a life insurance plan that provides the protection and financial security your family needs. | 
