Musings Of A Couple: Our Family, Our Life Commitments

Musings Of A Couple: Our Family, Our Life Commitments

Why do most people buy life insurance?

In case you are like Meryl and Ed, read on to understand better why most people buy life insurance.

At different stages of life, we assume different roles and responsibilities. Our increased life commitments also signify potential liabilities, subjected to the great unknown. If given a choice, most people would rather give joy than misery to our loved ones. Wouldn’t you?

Having life insurance gives one the assurance and peace of mind that their loved ones will not be subjected to financial difficulties in the event of an unexpected incident. While there’s limited capacity for what one can do to minimise potential emotional and mental pain of a losing a loved one, at least a life protection plan can help to ease unexpected expenses and financial obligations.

Potential financial obligations are often the reasons why people buy life insurance. Some of these monetary obligations include:

  • Co-signed loans (e.g. house loans, car loans, etc.)
  • Debts – this will be passed on to your beneficiary in the event of death
  • Paying for final expenses
  • Living expenses of dependents (e.g. ageing parents, non-working wife, children, etc.)

 

Do you need life insurance? Here’re some questions that you should first consider:

Immediate needs

  • If you were to die tomorrow, who would assume your debt?
  • Are you financially secured or have assets to take care of your dependents’ immediate financial needs?
  • After your demise, how long will it be before your property is turned over to your inheritors?
  • Will your property owe substantial debts and taxes after your death?
  • If you are a business owner, does your business has a succession plan?


Long-term needs

  • How many people depend on your earning capacity?
  • Do you have children that are depending on you?
  • How much money would your dependents need for living expenses?
  • How long would it take for your dependents to become self-sufficient?


Term life Vs Whole life insurance

For your information, there are term insurance and whole life insurance. Term insurance are life protection plans that are fixed for a certain period whereas whole life insurance will cover the span of a lifetime. Which is a suitable policy for you?

Term Life Insurance Whole Life Insurance
Purpose Life protection coverage
Coverage Period A specific period only
(usually ranging from 5 – 30 years)
Lifetime
Limitation(s) Lower premiums but could vary at each renewal. Levelled but higher premiums

Generally, the premium for whole life insurance will be higher but there is usually a savings component to it. In the event whereby you change your mind and wish to surrender the policy, there would be a payout. However, do note that the surrender value would be lower than the death benefit payout.

For term life insurance, the flexibility of the coverage period, which allows premium to be lower, is also a limitation from another perspective. For example, if you purchased a term insurance policy for 20 years at the age of 25, you may find a significant increase of your premium at the next renewal. You’d also need to be in the pink of health, otherwise you may be disqualified from buying an insurance policy. The difference in premiums (amount you pay) will vary for each person, depending on age and health.

Is life insurance really necessary?

As of 31st December 2016, the ^Mortality Protection Needs of Economically Active Singaporeans and Permanent Residents is S$1,547 billion, which translated to an overall protection need of 9.0x average income. After allowing for insurance and savings, the mortality Protection Gap of working adults is 2.1x annual income.

While it is never too late to make provisions for the future, especially when it involves our loved ones, it is better to do so sooner than later. The above figures highlight the importance of having both adequate savings and insurance coverage in case of rainy days.

Still wondering about life insurance? Find out more here or contact Etiqa Customer Care at +65 6887 8777.

 

^Source: 2017 Protection Gap Study – Singapore by Life Insurance Association Singapore

 

HUMANISING INSURANCE

Committed to placing people over policies, Etiqa is a Singapore insurance company owned by Maybank Ageas Holdings. Maybank Ageas is a joint venture between Maybank Group–the fourth largest Banking group in Southeast Asia with more than 22 million customers across 20 countries worldwide, and Ageas –one of Europe’s largest insurance companies with 33 million customers across 16 countries and a history of over 180 years.

Protecting more than 300,000 homes in Singapore since 1961, Etiqa is best known as the appointed insurer for the Singapore Housing Development Board (HDB) Fire Insurance Scheme. Etiqa also provides comprehensive life and general insurance solutions with affordable and transparent insurance premiums. These include motor insurance (including motorcycle insurance), travel insurancehome insurancemaid insurancepersonal accident insuranceinsurance savings planretirement and legacy planning. Etiqa is one of the first insurance companies in Singapore to empower its customers with online insurance, offering innovative, customer-centric experience such as real-time travel delay insurance and usage-based car insurance.

Discover the full range of Etiqa online insurance plans: http://www.etiqa.com.sg/buy-insurance-online/

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