Life Insurance

For Life Insurance, there's various types of them namely:

1. Whole Life Insurance (Such insurance comes mainly with a much high cost but it does entitles you to the "Cash Values" that it builds up. "Cash values" is the amount you will get back should you decide to terminate the policy. If you are into such cash values and wanted to make use of it to save up as well as to be protected, or you wish to be covered and protected for the rest of your life. Then, this is your option)
   
   • Non-Participating
     This is the cheapest in term of premium under this category as the sum assured is fixed, with everything is guaranteed as listed in the contract. So far, I haven't encountered any of such policies available in Singapore yet. If you have seen any, let me know as I'm interested in looking at what's available.
     
   • Participating
     This type of insurance comes with bonus attached that is given and "locked-in" every year on policy anniversary. Which means, once the bonus is given to you, it will remain as part of your "Cash Values" or Sum Assured for the life of that policy. They either gives you bonus calculated purely based on the Sum Assured or calculated based on both existing bonus and the Sum Assured. But of course with such features, comes with a slightly higher price than the non-participating one. During in economic downturn, insurers might not give you bonus but they can't take away your existing bonus. So it's pretty "safe" for in my opinion. But due to the "non-guaranteed" component of things, it's still slightly risky just that it's not as much.
     [If you prefer the insurer to take at least half of the risk (why half? 'cos about 1/2 is guaranteed and half non-guaranteed mah) on your behalf and wants to be insured for life with some upsides in terms of bonus when the insurer makes profit, this may be for you.]
     
     
   • Investment Linked
     This is the riskiest under this category. But it comes with clarity in the expenses etc. However, for such policy, I always felt that one is better off buying the Unit Trust itself along with a Term Insurance especially so for those endowment Investment Linked Policies. 'cos the charges of the underlying unit trust is slightly lower and 100% of what u invested goes into the Unit Trust 'cos the coverage will come from the Term Insurance of course. But, when it comes to whole life policy, then it's a different story.
     [If you are looking for the upsides of "higher" potential returns, savings and insurance coverage for life and don't mind risks, then this may be for you. But I still think that buying term and invest the balance is a wiser choice. Read more on buy term and invest the difference.]
     
     
2. Term Life Insurance (Such insurance is relatively cheaply available in the market but is purely protection for your dependents in the event of death and total permanent disability only, DPS [Dependants’ Protection Scheme] is an example of a cheap Term Life Insurance but it only covers from 16 to 60 years old.)
   The thing about this type is that it does not cover for life. Usually up to age 65 but who really needs coverage after age 65? Your kids / dependents should have been independent by then.
   

In this section, only purely life component of the insurance will be addressed for. The critical illness part will be addressed under "Health / Critical Illness Insurance Coverage" section in the near future.