Legacy Planning in Singapore: When is the right time to plan for your family?

By Elena Owyong, 24 January 2018 17847

It is never too early to start planning for your family. Many unexpected events can happen and you can’t afford to be taken by surprise.
 
The Ministry of Health estimates that a staggering “1 in 2 Singaporeans who are healthy at the age of 65 is at risk of having a long-term disability over their lifetime.” This is a worrying situation. What happens to your family when you are unable to earn a living or when you are gone?
 
 
The answer to that question is legacy planning.
 
To put it simply, legacy planning is distributing your hard-earned money according to your wishes. This involves identifying, preserving and distributing your wealth in a thoughtful manner.
  

Why is legacy planning important? 

 
 
Legacy planning ensures that your wealth and hard-earned money is preserved to support your family and future generations. This is especially important when your children are young and you want to ensure that they have the best education to meet their aspirations.
 
In essence, legacy planning involves thinking of how to preserve your money for your family.
 
With proper legacy planning, you can better secure and pass your wealth to your loved ones in an unfortunate event.
 

How TermLife Solitaire helps your legacy planning

 
Income’s TermLife Solitaire can make your legacy planning easier by providing a financial safety net should the unexpected happen with your preserved wealth. It is a term life insurance plan that provides coverage* for death or terminal illness during the policy term to protect your legacy for your loved ones. You can choose to enhance your coverage with the total permanent disability (TPD) and dread diseases (DD) protection by attaching different riders with additional premiums.
 
* If the insured becomes terminally ill or dies during the term of the policy, TermLife Solitaire will pay the sum assured. The policy will end when payment is made.
 
To illustrate how life insurance works, let’s look at the case of Mr John Tan, a 40-year-old engineer and his wife Ann, 40, who is a homemaker.
 
At 70 years old, Mr Tan dies of liver cancer and leaves the following assets and liabilities for Mrs Tan.
  

What Mr Tan leaves his family

 
Assets Amount Remarks
Bank savings + Central Provident Fund (CPF)  $150,000 Mr Tan has nominated his wife to receive his CPF savings.
Investment  $80,000  
Total  $230,000  
 
Liability Amount Remarks
Housing loan for condominium unit (excluding interest)  $250,000 The loan has to be paid off in 5 years’ time.

While Mrs Tan has $150,000 in cash at her disposal, she is stretching it thin for multiple purposes – her living and medical expenses, paying off the housing loan and Mr Tan’s funeral expenses, just to name a few. As the cost of living continues to rise, these expenses will increase accordingly.
 
While Mrs Tan can liquidate her husband’s investments, she may make a loss if the market is doing poorly.
 
If Mr and Mrs Tan bought TermLife Solitaire on each other’s life, the situation will be different.
 
As indicated in the infographic, Mrs Tan can use the payout to defray her living expenses and pay off the debt concurrently.
 

40 years old

infographic-image

Mr and Mrs Tan, both age 40, non-smokers, sign up for TermLife Solitaire, insuring each other's lives with a sum assured of $1,000,000 each and a policy term till age 100.

They add a Payor Premium Waiver rider1 with a maximum term till age 84. They also choose to pay premiums on a yearly mode.

POLICY 1
infographic-image
POLICY 2
infographic-image

Mr Tan purchases TermLife Solitaire on the life of Mrs Tan.

Yearly premium = $4,771.45 (including premium for Payor Premium Waiver rider1)

Mrs Tan purchases TermLife Solitaire on the life of Mr Tan.

Yearly premium = $5,970.40 (including premium for Payor Premium Waiver rider1)

70 years old

infographic-image

If Mr Tan passes away at the age of 70, Mrs Tan will receive the payout of $1,000,000 from Policy 2, which can be used to pay off any outstanding loans and help the family maintain their current lifestyle.

Policy 2 terminates. Policy 1 insuring Mrs Tan will remain inforce with future premiums waived until the rider term expires1.

100 years old

infographic-image End of policy term for Policy 1.

The above figures are for illustrative purposes only.

1 Payor Premium Waiver rider waives future premium payments on the policy for the remaining term of the rider upon death or diagnosis with total and permanent disability (TPD before age 70) of the policyholder during the term of the rider. This rider is applicable only if the policyholder is not the insured.

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Termlife Solitaire protects the wealth you accumulated

 
 
Since Mrs Tan can use the lump sum payout and existing savings to pay for her expenses, she can continue accumulating wealth from Mr Tan’s investments.
 

Getting a peace of mind

 
To find out how you can benefit from TermLife Solitaire or how life insurance works, refer to the details here or speak to one of our financial advisors today. You can also explore more about protecting and planning your finances for your family in Financial Planning for Savvy Parents.
 
So, what are you waiting for? Start planning for your legacy now, while you are young, healthy and have the resources.

 

    

Important Notes:
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. 

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