5 Things to Consider Before Buying a Term Life Insurance Plan

Term life insurance plans may or may not be the best option for your protection needs depending on various factors. Learn more and understand your insurance needs before making a commitment.

Is a term life insurance plan really the best option for your current coverage needs? Or would you be better off with other protection plans?

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Having term insurance is important when you have liabilities to pay or family members dependent on your income. It is the cheapest and the most basic type of life insurance plan that you can get for protecting the lifestyle of your loved ones should the unforseen happens to you.

Studies conducted by various insurance companies have shown that the majority of Singaporeans are under insured with some only covered

leaving them to the term coverage provided by employers, generally in the one-time amount of their salary. Therefore, a term insurance plan is significant for anyone with family members dependent on them or have liabilities that need paid off. The following are five tips to know to help you get the right coverage.

How much is needed?

The usual approach is to get a coverage plan in the amount of 10 times your annual salary, plus outstanding loans or liabilities. This amount ensures your liabilities are paid and family members have enough to maintain their lifestyle.

Which retirement plan is best, Basic or Income Option?

Matching your policy with your cash flow liability is significant. A loan is often settled right after the claim, thus, a lump sum amount in the amount of the outstanding loan is appropriate. The remaining balance can be received as a lump sum or income payments. Therefore, if your spouse is good with managing investments and finances, a lump sum may be best. Otherwise, payments over time is an option.

Who to cover with the retirement plan term coverage?

Many insurance companies provide the option to choose another person on the term coverage. Adding accidental death benefits can improve your coverage, along with adding critical illness and waiver of premium benefits for another person to ensure the policy you receive is more comprehensive. The critical illness feature offers living benefits while protecting against risks of living with a disability after it covers major diseases.

Where to purchase term coverage?

Most insurance companies prefer settling legitimate insurance claims. Generally, claims that are rejected are fake claims or because the claim did not have supporting evidence about the income or health. Thus, only looking at claim settlement ratios might mislead you. Instead, it could be worth reviewing corporate governance records, solvency ratios, and violations of regulatory norms.

Should I purchase through a bank, agent or online?

The difference may not be significant between buying term coverage from a distributor or online. If you’re more comfortable making online transactions, you might get a discount by purchasing online. Although, if you’re more comfortable with face to face transactions, going through a distributor may be a better option. It also provides the opportunity for bringing up concerns you may have. The choice of using a distributor or online outlet is more personal preference with minimal differences.

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