Last Updated on February 17, 2023 by Tree of Wealth

Subscribe to our Telegram & Email Newsletter for immediate updates!

Term insurance, as its name implies, is a type of insurance that provides coverage for a specific period of time and a predetermined amount of money. During this term, the policyholder pays a premium to the insurance company in exchange for the death benefit, which is the amount of money that will be paid out to the beneficiaries in the event of the policyholder’s death.

It is characterized by its low premium costs in comparison to Whole Life Insurance policies. For individuals who are financially savvy, they may opt for the strategy of “Buying Term and Investing the Rest (BTIR).”

What Do You Mean by Term Insurance?

The main advantage of term insurance is its affordability. Compared to other types of life insurance such as whole life insurance, term insurance has much lower premiums. This is because the policy only provides coverage for a specific period of time and does not have any investment or savings component.

Term insurance plans provide coverage for a designated length of time and a specific sum assured.  This is another advantage of term insurance which is its flexibility. Policyholders can choose the length of the term that best suits their needs and budget. For example, if the policyholder is young and wants to ensure that their children are financially protected until they are grown, they can choose a term of twenty years. On the other hand, if the policyholder is nearing retirement age and wants coverage for a shorter period of time, they can choose a term of ten years.

They are especially beneficial during life events such as getting married, obtaining a new property (such as with a Mortgage Reducing Term insurance plan), having a baby, or graduating from school. Some insurance providers also offer a Guaranteed Insurability Option, which allows policyholders to increase their coverage as they reach these important milestones.

It’s important to note that term insurance does not build up any cash value and will not provide any payout if the policyholder does not die during the term of the policy. This means that if the policyholder outlives the term, they will not receive any benefit from the policy.

For example in the event of the policyholder’s death or total and permanent disability or occurance of critical illnesses, term insurance will pay out a one-time benefit (which is often higher than that of Whole Life Insurance due to its more affordable premiums) within the specified term. If no such event occurs during the term, the coverage will end and no maturity value will be provided.

Why Do We Need Term Insurance?

Term insurance is often chosen for specific financial goals and time frames. For example, it can be used to provide additional coverage when a new child or dependent is added to your household, or to cover a mortgage loan in the event of death.

The cost-effectiveness of term insurance makes it a wise choice for ensuring financial stability and offering peace of mind. To meet your unique needs, there are numerous additional riders available to enhance your coverage for various aspects of your life. These riders can offer protection and replacement of income for your dependents in the event of death, critical illnesses at all stages, and disability.

With the right combination of riders, term insurance can be a comprehensive solution for securing your financial future.

There are several reasons why individuals may need term insurance

1. Financial protection for loved ones: Term insurance can provide a source of financial protection for the policyholder’s loved ones in the event of their death. The death benefit can help cover expenses such as funeral costs, outstanding debts, and living expenses.
2. Temporary coverage: Term insurance is ideal for individuals who only need coverage for a specific period of time, such as when they are starting a family or paying off a mortgage.
3. Affordability: Compared to other types of life insurance, term insurance has lower premiums, making it an affordable option for many individuals.
4. Flexibility: Policyholders can choose the length of the term that best suits their needs and budget. This allows them to adjust their coverage as their life circumstances change.
5. Estate planning: Term insurance can be used as part of an estate plan to help pay for estate taxes and other expenses.

Affordable Premiums

High Coverage for a low premium, they are suitable for all ages. Even for retirees that are starting to get themselves covered.

Comprehensive Coverage

Flexible Supplementary Benefits can be customised to suit your exact concerns.

Flexible Period Coverage

You can choose to decide on how long you want the coverage to last.

The Different Types of Term Insurances

Level Term Life Insurance

Level Term Life insurance, the most common Term insurance, is a type of life insurance that provides coverage for a specific period of time, typically ranging from 10 to 30 years. With a level term life insurance policy, the death benefit remains the same throughout the policy term, while the premium payments remain constant and are guaranteed to not increase. This type of policy is designed to provide coverage for a specific period of time, such as to cover the financial needs of a mortgage or to provide for one’s dependents. If the policyholder dies during the term of the policy, the death benefit is paid out to the beneficiaries tax-free. If the policyholder does not die during the term of the policy, the coverage will expire without any value being paid out.

Renewable Term Life Insurance

Renewable term life insurance is a type of life insurance policy that can be renewed at the end of a specified term, typically ranging from one to ten years, without the policyholder having to undergo a medical exam. The premium for a renewable term life insurance policy may increase at the time of renewal, based on the policyholder’s age and health status.

This type of policy is a convenient option for individuals who want to maintain their life insurance coverage without undergoing a medical exam at each renewal. However, it is important to note that the premium for a renewable term life insurance policy will likely be higher than a traditional term life insurance policy because the insurer is assuming more risk.

If the policyholder dies during the term of the policy, the death benefit will be paid out to the beneficiaries tax-free. If the policyholder does not die during the term of the policy, the policy can be renewed for an additional term, allowing the policyholder to maintain their life insurance coverage.

Reducing Term/ Mortgage Reducing Term/ Decreasing Term Life Insurance

Reducing term life insurance, also known as Decreasing Term Life Insurance or Mortgage Reducing Term Insurance, is a type of life insurance policy where the death benefit decreases over time while the premium remains the same. This type of policy is commonly used to provide coverage for a specific financial obligation, such as a mortgage, where the balance decreases over time.

The death benefit of a reducing term life insurance policy decreases over the policy term, typically aligning with the decreasing balance of the financial obligation being covered. For example, if a policyholder has a reducing term life insurance policy to cover a mortgage, the death benefit would decrease over the term of the policy to match the declining balance of the mortgage.

If the policyholder dies during the term of the policy, the death benefit will be paid out to the beneficiaries tax-free. If the policyholder does not die during the term of the policy, the coverage will expire without any value being paid out.

Singlife Elite Term Plan

Product Features and Benefits at a Glance

• High sum assured at a low premium cost for Death, Total Permanent Disability (TPD), Terminal Illness and Critical illness (CI) of all stages including Early CI and MultiPay CI.
• Very flexible – Wide range of premium term from a minimum of 5 or 10 for renewable term. Or 11 years onwards up to 85 years old with a year of interval in between (12, 13, 14 years etc..)
• Guaranteed Renewable Option (GRO) – For 5 and 10 years policy term, GRO renews your policy at the end of every 5 or 10 years automatically. No medical questions or health underwriting needed.
• At Key Life Events, have the option to increase coverage of your basic protection coverage without the need of medical underwriting nor providing any proof of insurability, guaranteed:

Key Life Events:

• Change of marital status (Marries or divorces)
• Becomes a parent – newborn or legal adoption
• Graduates from Tertiary Education
• Purchases a property
• Convert the MyProtector Term II insurance into an Endowment or Whole Life insurance without medical underwriting.
• Interim Accidental Death Benefit
• Early CI Rider is Additional payout and will not reduce sum assured

Additional Supplementary Benefits (Riders) to Enhance Your Coverage

Covers for Life

• Total and Permanent Disability
• Advance Stage Critical Illness
• Early Critical Illness Cover II – Covers from Early To Advance Stage Critical Illness (Single CI Payout)
• MultiPay Critical Illness (CI) Cover IV – Pays out Early to Advance Stage CI multiple times up to 900%

Premium Waiver Riders (coverage during premium term)

• Critical Illness Premium Waiver
• Payer Critical Illness Premium Waiver
• Payer Premium Waiver Benefit

Etiqa Essential Term Life Cover

Features At a Glance for The Essential Term Life Cover

Policy Term Available

• 5 years renewable term – with guaranteed renewability of every 5 years. Have the option to renew until 90 years old without showing health status
• 10 years term until 86 years old – choose the number of years available with a year of interval)
• Until 100 years old Coverage Term

Flexibility to Increase Sum Assured

Choose to increase your sum assured without showing good health status upon Life Milestone of:

• Graduation from tertiary education
• Changes in marital status
• Purchase of a property
• Birth or adoption of a child
• You or your child’s enrolment into tertiary education

Source: Etiqa

Guaranteed Convertibility Benefit

Choose to convert this term insurance to any of Etiqa’s participating policy of endowment or whole life insurance coverage plan (Available upon conversion) without showing status of health.

Supplementary Riders Available

Advanced CI (Critical Illness) rider

Pays out the basic sum assured (same as death) should any of the 36 advance stage critical illness were to be diagnosed.

Early CI (Critical Illness) Rider

Pays out the basic sum assured (same as death) should any of the 35 early and intermediate stage critical illness were to be diagnosed.

This rider also has a waiver function and will waive off future premiums for any remaining sum assured for critical illness if early or intermediate CI claims have been paid out.

Additionally, receive 12 months of monthly payouts upon advance stage of critical illness diagnosis.

The rider also covers 23 special conditions additionally.

Extra Disability Care rider

Pays out the basic sum assured (same as death) should total and permanent disability occurs on or before the policy anniversary of 86 years old.

Extra Secure Waiver Rider

Upon diagnosis of the 37 advance stage of critical illness before 86 years old or when the premium ends, future premiums will be waived off.

HSBC Life Term Protector

Product Features and Benefits at a Glance

Coverage Term

• Chose coverage term until age 50, 55, 60, 65, 70, 75 or 99 years old Or Renewable Term of 5, 10, 15, 20, 25, or 30 years.

Automatically renewed at the end of the coverage term

• Guaranteed regardless of health condition.
• No check-ups nor medical questionnaire required.
• Premiums re-calculated at the renewed age.

Inflation Protection

Protect your loved ones/family members from inflation with Axa’s Indexation Option. Seems like an interesting concept with Axa’s effort to help policy holders fight rising costs that is moving with time.

How it works is your sum assured will increase together with the prevailing Singapore CPI  (Consumer Price Index) or at a fixed 5%, whichever is higher. Thus, your premium will also increase together along with the increased Sum Assured with your then age at the time of indexation. Indexation needs to be activated.

Axa will inform you accordingly as your premium and protection sum assured increase.

This is only available on for to age option (Chose coverage term until age 50, 55, 60, 65, 70, 75 or 99 years old)

Converting Your Policy

Option to convert them into another regular premium life insurance before turning 60 years old.

No medical underwriting needed

Subject to terms and conditions.

New policy’s sum assured will remain the same as the current Term Protector’s sum assured.

Supplementary Riders Available

Early Critical Illness (CI) Payout

Protection of critical illness from early to intermediate to advance stage is covered for, including Special benefits and Juvenile conditions.

Accelerated payment means your total sum assured will be reduced, as the Early CI payout is accelerated from the total sum assured.

Advance CI Payout

Protection of critical illness only for advance stage is covered for. Same as early CI, this coverage is accelerated and only total sum assured will be reduced, as the CI payout is accelerated from the total sum assured.

Advance Total and Permanent Disability Payout

Protection for total and permanent disability (TPD), 3 out of 6 ADLs or loss of 2 limbs, TPD payout is accelerated.

Disability Cash Benefit

An annual cash benefit will be paid out when TPD occurs.

Critical Illness Plus Benefit

Add this to protect the other benefits of your main plan. In the event of a critical Illness diagnosis, a lump sum will be paid out without affecting the main sum assured and other benefits of the main plan.

Personal Accident Benefit

A payout will be received without affecting the main sum assured and other benefits of the main plan when accident occurs, be it injuries or death.

Guaranteed Survival Payout

Be reimbursed with the sum assured when you outlive the policy. Guaranteed issuance for this rider without medical questionnaire nor underwriting needed. Only for premium term until age 99

Premium Waiving Riders

Critical Illness PremiumEraser – Future premiums be waived when critical illness is diagnosed. Only for advanced stage critical illness.

Payer PremiumEraser – Future premiums will be waived off in the event of total and permanent disability, critical illness from early to intermediate to advanced stage, or death of the payer.

You have the choice to be covered in the event of involuntary loss of income, so your premiums for the next 6 months will be waived.

Tokio Marine Term Assure II

Product Features and Benefits at a Glance

Premium and Policy Term

Renewable and Convertible – 5 or 10 years – Choice of getting a 5 or 10 years term insurance and should you need it at the end of 5 or 10 years, have the option to renew it for another 5 or 10 years without medical underwriting. Premiums will be calculated based on the new older age now.

Level and Convertible – from 11 years up to age 85 – 

Together, the term plans provide protection for:

• Death
• Total and Permanent Disability(TPD) and
• Terminal Illness (TI)

Choice of plan currency – SGD, USD, GBP, AUD

Guaranteed Insurability for Additional Insurance

Increase your coverage without medical underwriting at important milestones in life, guaranteed:

• Marriage or divorce
• Parenthood (newborn or legally adopted child)
• Graduation (Tertiary education)
• New Home/ Property

Guaranteed Conversion Privilege

Have the choice of converting your term insurance to a whole life insurance/endowment plan.

Guaranteed Renewal Privilege

• Automatically be renewed at the end of the coverage term. This is guaranteed regardless of health condition. No check-ups nor medical questionnaire required.
• Premiums will re-calculated at the renewed age.
• What we like is that even after your original term coverage has ended, this is still applicable.

Supplementary Benefit Riders Available

Critical Illness (CI) Accelerator Rider

Pays out the death benefit by advancing the amount forward, upon diagnosis of Advance Stage CI, or covers up to the rider’s maximum sum assured.

For example, if the death benefit is $500, 000 and the CI Accelerator Rider for Advance stage CI is $300, 000 coverage, upon diagnosis of the Advance Stage CI, $300, 000 will be paid out and if death were to occur afterwards, the remaining payout will be $200, 000.

If both the CI Accelerator Rider and Death Sum assured is $300, 000, then upon the diagnosis of advance stage CI or death will activate a payout of $300, 000 by the insurer and the plan will be terminated thereafter.

Waiver of Premium Rider & (Enhanced) Payer Benefit Rider

In the event of Death, Total Permanent Disability and diagnosis of the covered Critical Illnesses, premiums for the payer will be waived off. This is especially helpful for 3^rd party insurance, for example a parent paying for child, a child paying for their parents or husbands paying premiums for their wives.

Early Critical Illness (ECI) Accelerator Rider

Pays out the death benefit by advancing the amount forward, upon diagnosis of Early to Intermediate to Advance Stage CI. Covers Special and Juvenile Conditions as well.

KidAssure GIO Rider

KidAssure GIO Rider to cover for death, hospitalization and juvenile/child-related illnesses. Additionally, 80% of your premiums paid will be refunded back to you at child’s age 19 upon the rider’s maturity.

Protect 1 Lite Rider

Perhaps the most unique rider of all, the Protect 1 Lite Rider from Tokio Marine is the only one of its kind in the market in Singapore. It pays out monthly benefits for 6 years upon the loss of ability to perform 1 out of 6 Activities of Daily Living (ADLs). The payout ranges from $1, 000 to $10, 000.

China Taiping i-Protect Term Plan

Flexible Policy Coverage Term

Have the option to choose your coverage until 65, 75 as well as 85 years old, or take up the coverage and choose from 11 to 40 years of coverage duration.

Yearly Renewable Term is Guaranteed

With the 5 and 10 year premium term option, they will be yearly renewed automatically and this coverage is until 85 years old, regardless of health condition. However, premiums will be revised based on the age at the end of 5 or 10 years.

Convertibility option

Choose to convert your China Taiping term plan to a life plan should your needs change. This is to cater to our ever changing needs in life as we age over the years. This can be done without any further medical underwriting.

Comprehensive Early Critical Illness

China Taiping has one of the most competitive and comprehensive early critical illness coverage around with a total of 161 covered conditions from early to intermediate to advance stage critical illness, along with the special conditions.

Riders Available

The optional riders add on supplementary coverage to further make the plan comprehensive to cater to your concerns:

EarlyCare Rider

With a total of 161 covered conditions from early to intermediate to advance stage critical illness, along with the special conditions, you can be assured that the EarlyCare rider is certainly one of the more comprehensive critical illness condition rider available in the market.

The critical illnesses across early, intermediate to advance stage cover 149 of them. Additionally, there are 12 special conditions covered:

AdvancedCare Rider

This rider covers up to 55 advance stage critical illness, beyond the 37 critical illness listed by the LIA (Life Insurance Association). This includes blindness, deafness, burn, kidney failure, heart attack, stroke as well as major cancer.

DisabilityCare Rider

In the event of TPD (Total and Permanent Disability), receive a lump sum payout that can be equivalent to the main sum assured.

AIA SECURE FLEXI TERM

• Premiums stay the same throughout the coverage term and will not change.
• Covers Death, Terminal Illness and Terminal Cancer
• Lifetime Protection
• Choose 5, 10, 20 or 30 years for Renewable Term Option
• Level Term Coverage up to age 65, 75 or 100
• AIA Vitality
• Earn points and get rewarded for eating healthy and exercising more
• Waiver of premiums – upon diagnosis of Critical Illness or Disability, future premiums will be waived off to protect family members and loved ones from additional expenses and costs.
• Ability to Convert into Endowment, Investment- linked or Whole Life Insurance – Before age of 70
• Critical Illness Coverage for 43 Conditions
• No early Stage CI
• No Multipay Options

Premium Breakdown

Profile: Age 30, Non smoker.

Sum Assured of $1, 000, 000 Death and Total Permanent Disability with $500, 000 Critical Illness Coverage to 65 years old

Insurer	Annual Premium – Male	Annual Premium – Female
Singlife	$1,302	$1,182
AIA	$1,932	$1,875
China Taiping	$1,654	$1,635
Etiqa Life	$1,895	$2,075
HSBC Life	$1,272	$1,206
Tokio Marine	$1,485	$1,488

Conclusion

In conclusion, term insurance is a simple and cost-effective way to provide life insurance coverage for a specific period of time. It’s an ideal option for individuals who are looking for a temporary solution to protect their loved ones and ensure that they are financially secure in the event of the policyholder’s death. However, it’s important to carefully consider the length of the term and the death benefit amount to make sure that the policy meets the policyholder’s needs and budget.

It’s important to note that the various types of term life, renewable term and reducing term life insurance is a specialized type of insurance and may not be suitable for everyone’s needs. It’s best to consult with a financial advisor or insurance professional to determine if a reducing term life insurance policy is right for you.

Got a query? Contact us below today to see how much cover you require and learn about how Term Insurance’s flexibility and how it can work around your needs and concerns.

Our partnered financial advisors will only use your information submitted for communication with you to provide a personalised consultation and comparison –  jargon and hassle free.

Subscribe to our Telegram & Email Newsletter for immediate updates!