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What are the differences between Whole life and Term life insurance in Singapore?

Term life insurance provides coverage for a specific period of time, for example 10 – 30 years. If the insured passes on within the term of the policy, the death benefit is paid to the beneficiary. If the policyholder outlives the policy term, the coverage ends, and no benefits are paid. Term life insurance is generally less expensive than whole life insurance

Whole life insurance, as it suggest, provides coverage for the entire life of the insured. This means the policy will remain in effect until the insured dies as long as the policy premium is fully paid for. The modern whole life insurance now comes with multiplier effect which provides a higher sum assured coverage until the selected multiplier age. Whole life insurance also has a cash value component, which increases in value over time.

Deciding between term life insurance and whole life insurance depends on your individual needs and circumstances.

- Duration of coverage: If you only need coverage for a specific period of time, such as while your children are young or while you have a mortgage to pay, term life insurance may be a better solution

- Budget: Term life insurance is more affordable for people looking at high sum assured coverage such as mortgage insurance

- Estate planning needs: If you want lifelong coverage, whole life insurance may be a better option.

- Cash value: Whole life insurance has a cash value component that builds over time and may provide income pay-out options at specified age.

Owning a property in Singapore is one of the milestones in life. Whether you are new homeowner of public housing, or private property, it is essential that we protect the homes from financial circumstances out of our control due to health reasons. This is where mortgage insurance comes in, which covers you and your family against the risk of losing your home in the situation that prevent you from paying your mortgage loan (e.g., sudden passing of homeowner, critical illness that prevent you from working and earning an income).

With the rising cost of homeownership in Singapore, there may be a need to have a high mortgage loan, which will also require a higher insurance coverage. As such, Term insurance will be more suited to provide a higher sum assured coverage with affordable premium, and will be a price war between insurers. (We compare premiums between Ntuc Income, AXA, HSBC, Manulife, Singlife with Aviva, China Taiping, China Life Insurance, Tokio Marine Insurance, Etiqa Life insurance)

There is an essay by Ken Murray, a professor of medicine, who wrote an essay in 2011 titled ‘’How Doctors die’’ that showed the degree to which doctors choose different choice of treatments for themselves than that which they recommend for their own patients. 

What works for your friend or closed one may not work for you. Each individual has different budget, family profile, financial needs and goals. As such, the solutions offered will always be unique and it is important to understand what works for you. Speak to our financial advisors in Insurance Empire to guide you on your financial needs and goals. Our financial advisors will be able to compare life insurance policies from various providers to best address your needs. 

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