Term Life Insurance: What It Is, Different Types, Pros and Cons

Term life insurance is a type of insurance that provides coverage for a specific period of time. This type of insurance is perfect for people who don’t need long-term coverage. Term life insurance can be a great way to protect yourself and your family in the event of an unexpected death. Unlike an endownment plan in Singapore, the purpose of term insurance is to protect your loved ones in your absence, while that of endowment insurance is to protect your loved ones along with building your wealth. Here is what you need to know in order to pick the best term life insurance in Singapore.

Types of Term Life Insurance

Level-Term

Level-term insurance, also known as level-premium insurance, is a type of permanent or term life insurance where the premium remains the same throughout the policy’s life. A level-premium policy assures that the initially paid premium remains the same throughout the duration of the contract. Therefore, this type of term insurance in Singapore is considered to have great benefits over time. Although the policyholder is paying a fixed amount, they will have access to a large death coverage once the policy has matured.

Yearly Renewable Term

A yearly Renewable Term is also known as an annual renewable term life insurance. As the name states, you are offered coverage on a yearly basis. With this, you are able to renew the policy each year without the hassle of a medical exam for the duration of the term. The only downside is that the price increases each year.

If you were to compare a Yearly Renewable Term to a level term policy, you would notice the initial premium to be a tad bit lower. But over a few decades, you will end up paying more for the yearly policy. The Yearly Renewable Policy can be recommended as one of the best term insurance in Singapore, especially for those who don’t want to commit to a lifelong plan.

Decreasing Term

If you’re looking for affordable term life insurance that offers flexible coverage, then a decreasing term policy is the best term life insurance in Singapore for you. This type of insurance generally pays out less as time passes. This is a great option to cover the balance of a repayment mortgage since the total balance of the mortgage reduces as time goes by, and is assured to be paid off entirely by the end of the term. To put it simply, if you have a 25-year mortgage, you can purchase a decreasing term life insurance policy that matches the coverage amount and length of the mortgage. Then, every year, the payout and mortgage amount will reduce simultaneously.

Increasing Term

Over the course of its life, your death benefit increases with increasing term life insurance. In an increasing term insurance policy, the coverage amount chosen by the insured at the beginning of the policy increases every year by a specified amount. When your family grows or you buy a new house, this type of policy can provide you with additional protection as the year’s pass. It can also protect your death benefit from inflation as well. When you think of taking out a long-term policy, you may be affected by inflation, especially if you are planning on receiving a large payout. It might be a good idea to consider increasing term life coverage if this is the type of policy you want.

If you’re thinking about buying life insurance, then you’ve come to the right place. Read on to discover the different types of term insurance in Singapore, as well as some of their pros and cons.

Pros 

There are many reasons to buy term life insurance and we have  narrowed them down to a few benefits:

• It is generally a safer investment than stocks or other forms of securities.
• Term insurance in Singapore offers peace of mind in the event of an unexpected death.
• It is considered an affordable way to protect your loved ones financially.

Cons

While term life insurance is often the cheapest form of term insurance in Singapore, there are some negatives associated with it too. Here are a few that you may need to note

• The policy doesn’t build cash value
• It has no surrender amount if you cancel
• If you have to renew, your premium is adjusted based on your current age and health, which can mean you will have to pay much higher rates

If you have significant health issues, you may not qualify for term life insurance.

Best Term Life Insurance In Singapore

These are the most common types of term life insurance that you need to know about. MoneyLine Singapore can help you compare insurance plan providers to help you choose the one most suited to your needs. Contact us today to learn more.