For the longest time frame, very existence insurance and insurance savings plan (endowment plans) were the only thing I know which existed on the market. 9 years back while I was at age 18, I had formed my first encounter with insurance. I was still students in the past and was approached by a financial expert on the streets while I had been venturing out. I’m sure a lot of you have been contacted before too.
I decided to hear more about insurance and sat at a MacDonalds with this specialist for the next 1 hour plus hearing what insurance is focused on. I was launched a cost-savings plan and was told the interest will certainly be more when compared to a bank’s interest. Besides that, this plan also has loss of life, total, permanent impairment (TPD), and critical illness coverage.
It kinda is practical that I can put in money, get higher earnings for my money but still get the coverage. It sounds so attractive, which I signed up on the spot. To this day, I still have the policy that I am paying for days gone by 9 years. 10,000. That is definitely not enough must I have dependants or easily need to give my parents in the foreseeable future. My next few encounters with financial consultants was on this issue of whole life insurance.
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This time round, I required my time to decide whether to take up an insurance policy as the monthly premiums weren’t cheap. A year 2400. I only just started working back then and didn’t have a high starting salary. 2400 a year is still quite a big sum of money to me. 2400 that I was recommended. Why is such a huge difference in the premiums there? Disclaimer: Before I continue, this post is not just a recommendation for just about any insurance policies as I’m not here to achieve that. I will only list down the facts of what term insurance or life insurance is and enable you to see for yourself which is a better choice. Term Insurance Or Whole Life Insurance?
During NTUC Income’s 40th anniversary supper, Senior Minister Goh Chok Tong supported the use of term insurances and even asked insurance providers to place more focus on it. Let’s see the rationale behind term insurance and very existence insurance and find out which is a better choice? VERY EXISTENCE insurance premiums are definitely a lot more expensive than that of term insurance for a similar coverage. For very existence insurance, you get something back when you terminate your plan but for a term insurance, you’ll get almost nothing back again. This is actually the argument put forth which discourages term insurance.
However, let’s realize why we would get something back for a complete life insurance rather than for term insurance? For a whole life insurance coverage, every buck you pay as a premium for your life plan, some will go into paying the mortality charge that provides you the cover you will need.