How Do You Choose The Right Protection Plan?
Insurance can protect you when the unexpected happens, and give you peace of mind and the strength to face challenges life may throw your way. It is also a key pillar of financial security to help preserve your financial masterpiece.
There are many protection plans on the market, and searching for one that will meet your coverage needs and budget can be daunting. In addition, each product has different features, making it difficult to compare. So, how do you know if you have the right protection plan?
While we do not have a foolproof solution for you, we have shortlisted 3 key factors to consider when evaluating if a protection plan is right for you.
Coverage period: How long do you need protection for?
Coverage period is crucial to consider when choosing a protection plan. Narrowing down the coverage period you need can significantly reduce the number of products you need to consider. Generally, whole life plans give you coverage for life or up to age 100, and term life plans give you coverage for a fixed time period (depending on the plan’s coverage period, which can also be up to age 100).
While deciding on the coverage period you need, it’s good to focus on your objective of buying a protection plan. If you need help deciding whether you should get a whole life or term life plan, here’s a table showing the features of each.
In summary, the general opinion is that if you’re looking for lifetime coverage and cash value on your policy, a whole life insurance policy would be appropriate for your needs.
On the other hand, if you need coverage only for a certain duration, look at getting term life insurance instead. For instance, if you have children who are still students, you might want to get life insurance coverage only as long as they are still financially dependent on you.
Seemingly similar insurance plans often differ in terms of coverage. Focus on your main objectives and aim to find insurance plans that most closely meet your specific needs.
Coverage: What does my protection plan cover?
In order to figure out just what sort of coverage you need, consider your own financial needs as well as those of your dependents.
For instance, if you have children and/or aged parents who depend on you financially and you do not have much passive income, you might need more extensive insurance coverage to ensure they are financially supported if you are unable to work.
On the other hand, if you have no dependents or if they have already achieved financial independence, such as in the case of retirees with enough passive income to meet all their financial needs, you might need lower insurance coverage as you would have the ability to cushion any financial impact that may arise from unfortunate events.
You’ll also want to examine the features of any life insurance policy you’re considering to understand just how you would be covered in case of events such as death, total and permanent disability, terminal illness or critical illness (dread diseases). Not all insurance policies offer the same extent of coverage or cover all of these events. You can also opt to beef up your protection with riders to enhance coverage in one or more of these areas according to your needs.
Another point for consideration is whether you view your protection plan as a means to grow your savings while receiving coverage at the same time. To achieve this, you might opt for a whole life insurance policy with an investment component. Alternatively, you could get a term life insurance policy with no investment component, and then invest money separately.
Premium term: How long should you be paying your premiums for?When assessing the affordability of insurance, it’s important to consider not only the insurance premiums, but also the premium term—the period of time during which you will pay premiums. Premium term is not always the same as policy term, which is the period during which you will be covered under the policy.
It is crucial that your premiums remain affordable for you throughout the premium term, as not being able to pay your premiums could mean a lapse in your insurance coverage.
So consider your future earnings, your desired retirement age and whether you intend to take any breaks from work in future. You will need to ensure the premium term is compatible with your income as it changes over the years.
For instance, if you wish to take a sabbatical or leave the workforce for a few years to raise children, you will need to be able to pay your premiums during this period. Likewise, if you intend to retire sometime in the foreseeable future, you will need to ensure your retirement income is sufficient to enable you to continue paying your premiums throughout the rest of the premium term.
If you need coverage that extends beyond the day you stop work or retire, you have the option of picking a policy with a shorter premium term than the coverage period. This enables you to front-load your premium payments so as to be free of financial commitments later on. That said, the shorter your premium term, the more expensive these premiums will be for the same coverage amount.
Finding the right protection plan is easy with Income.You have completed the first step of understanding what factors are important to consider when choosing life insurance. The second step is to take this information and compare various products. We understand that this might sound like a daunting task, so we’ve simplified the process for you:
Shortlisting insurance plans based on the above three factors is easy when you use Income’ OnlineLife Insurance platform.
Simply input your needs pertaining to coverage duration, protection needs and premium term, and the platform will offer a list of results that fit your criteria.
Products will be shortlisted based on the features you have indicated so you don’t have to comb through all of Income’s product pages to find the right ones!
If you’re still unsure of which product would best suit your needs, there is also an easy comparison feature which allows you to compare specific factors and narrow down your choices to a product that is best suited for you.
Getting a protection plan that meets your needs ensures that your loved ones will be taken care of should unfortunate events occur. You do so much to ensure our loved ones always have the best in life. You also should also ensure they have the best protection coverage, which goes beyond your lifetime.
Find a protection plan that suits your needs today.
This article is meant purely for informational purposes and should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income products mentioned are specified in their respective policy contracts. For customised advice to suit your specific needs, consult an Income insurance advisor.
This advertisement has not been reviewed by the Monetary Authority of Singapore.