One moment, life is running smoothly, maybe a minor hiccup here or there but otherwise, it’s just smooth sailing. And then suddenly, one cruel act of fate can instantly turn our entire existence upside down. Such is life and we can do nothing but be prepared for when the worst might strike. Life insurance is one effective way to be be financially prepared for the uncertainties of the journey of life.
What is Life Insurance?
Life insurance is basically a financial safety net which has been designed with the purpose of protecting you and your family against any unforeseen personal losses like permanent / total disability, critical illnesses or death. In case the insured passes away then the insurance company is required to provide the beneficiaries with a lump sum payment known as the Death Benefit.
In order to purchase an insurance policy, one is required to pay premiums. The flexibility of premium payment differs with each policy and depends on various factors like your age, your health status, family history, etc. The cost of premiums can also differ if an individual is susceptible to any serious / critical illness like cancer, heart disease, industrial accidents, etc.
Why do you need Life Insurance?
Life insurance is necessary for a variety of reasons.
- While money can never replace a person, it can help ease the financial burden in already difficult times of dealing with a personal loss.
- Life insurance can help contribute to your peace of mind when you know that your loved ones will be well provided for in case the unforeseen happens.
- Being unpredictable is one of the defining characteristics of life. Hence, all the more reason to safeguard ourselves and our loved ones against whatever life might have in store for us.
- When it comes to improving your credit score, a life insurance policy can be considered an asset. Timely premium payment can contribute positively to your credit score making it easier for you to obtain a loan in the future.
- Some insurance policies like annuities are designed specifically to provide retired individuals with a regular stream of income in lieu of a lump sum amount which they are required to invest in the policy.
- Insurance isn’t just meant to protect individuals. It can also be taken to safeguard your business from any potential or unforeseen financial risk, liability or instability.
- The passing away of a loved one is a very difficult time which also brings with it the burden of some sudden expenses. Life insurance can help reduce the monetary stress when your family is undergoing an already difficult time.
Types of Life Insurance
Term Life Insurance
As the name suggests, term insurance has been designed with the purpose to provide financial protection but only for a certain pre-determined number of years. Under term insurance, the premium amounts remain stable till the term of the policy, say 10 or 20 years. However, once the policy term is over, customers are given the option of continuing their coverage but at a hiked premium. Term insurance is ideal in cases where you would like to ensure the general financial safety of your family / beneficiaries and also meet financial commitments like debt repayment, upkeep of business, children’s education, etc.
Universal Life Insurance
Universal life insurance is more permanent in nature than term insurance. This particular type of life insurance provides flexibility when it comes to flexible coverage which is usually for a lifetime, along with flexibility in terms of premium amount. The two most popular uses of universal life insurance are: (i) flexible estate planning strategy where the wealth is preserved in order to be transferred to beneficiaries in the future, and (ii) when the need for coverage extends beyond an individual’s working years, Universal life insurance acts as long term income replacement. The most commonly found types of universal life insurance are:
(i) Policy is designed to allow the holder to build cash value while providing death benefit coverage.
(ii) Provides guaranteed Death Benefit coverage
Whole Life Insurance
Whole Life insurance is of a relatively permanent nature as it provides lifetime coverage. It is due to this reason that premiums for whole life insurance policies tend to be higher as compared to term life insurance. However, the premium value for these policies remains unchanged while the policy also enables you to create tax-deferred savings. Whole life insurance policies are also employed in situations where wealth requires to be preserved in order to be transferred to beneficiaries at a later stage.
Investment Linked Insurance
Investment linked insurance serves a dual purpose of protection and investment. These insurance plans not only provide insurance cover but also allow you to invest units in a managed fund. The performance of your preferred investment shall decide the price of your units. Investment linked insurance plans may or may not provide Death Benefit.
List of Companies Offering Life Insurance
Following are some of the leading life insurance providers in Singapore.
- AIA Singapore Private Limited
- AVIVA Life Insurance
- AXA Life Insurance
- Great Eastern Life
- Tokio Marine
- NTUC Income
- Manulife Financial
- Generali International Life
FAQs – Life Insurance
- When is the right time to apply for a life insurance policy?
Since life insurance aims to protect you and your loved ones against any unforeseen loss, it is advisable to apply for a life insurance policy when any major life event takes place, like for instance purchase of a new house / apartment, marriage, birth or adoption of a child or a getting a new job.
- My employer provides life insurance at my workplace. Do I still need to get a separate life insurance policy for myself?
It is extremely beneficial if your employer provides life insurance cover. However, such insurance policies should just be treated as a starting point. By purchasing an additional life insurance policy, you can customize the cover and other important factors of the policy to specifically suit your needs.
- Should I replace my existing life insurance policy?
It is not always advisable to replace a policy that is in force as it may attract new charges and fees. Also, in case of declining health, a new policy might require you to pay higher premiums or you may find yourself ineligible for certain beneficial riders with policies. Instead of replacing your existing life insurance policy, you could opt for riders to attach to your policy in order to enhance the protection it provides.
- I don’t have any dependents? Do I still need a life insurance policy?
In case of no dependents, a life insurance policy can serve as a great investment tool. You can chose between a savings policy or an investment linked policy, both of which yield returns which are higher than bank interest rates. If you are a young individual, you can opt for a whole life insurance policy which features low premium amounts.
- How much cover is enough cover for insuring myself and my family?
Insurance needs change from person to person. While a certain amount of cover may work for one person / family, it may not be adequate for another. Hence, the recommended thing to do is consult a financial adviser who can best assess your needs and give suggestions on the amount of cover you need accordingly.
- Given that I do not have a fixed amount of income each month, is there a provision where I need not pay fixed premiums towards my life insurance policy?
In case you do not have a fixed amount of income flowing in each month, it would be advisable to go for a universal life insurance policy. This type of life insurance allows you the freedom to decide the amount of premium, how you would like to pay I and at what intervals. Additionally, not only do universal life insurance policies feature the Death Benefit but also allow you to earn interest on your cash value.
News About Life Insurance Singapore
Sony Life to sell Life Insurance products in Singapore
Sony Life has set up a subsidiary in Singapore that aims to sell Life Insurance and financial advisory services in Singapore. It plans to do so by setting up agencies in malls. The Japanese insurer plans to set up over 50 agencies in a span of 10 years with the first agency to be set up and running by as early as the summer of 2018.
When it comes to selling financial advisory services, Sony Life is in the process of establishing a local joint venture between themselves and the Tokyo-based Starts Securities Co Ltd. This joint venture will be a subsidiary of Sony Life’s Singapore subsidiary.
Sony Life believes that sale of insurance products will go on smoothly as their strength lies in sophisticated consulting. Targeting Malls to capitalise on Singapore’s dense population will also help them find potential customers.
This isn’t Sony Life’s first overseas venture. Back in 1990’s they had entered the Philippines market but due to poor earnings it was later shut it 2012. Now Sony Life has revamped their strategy and is now targeting developed markets.
18th July 2017
China Life Insurance Singapore to be title sponsor for SNAG
This year, the Singapore National Age Group Championships (SNAG) has a bigger reason to celebrate the 48th edition of the event. It has received a shot in the arm as China Life Insurance Singapore joins the list of its sponsors. The online portal will be the main sponsor for this swimming event.
Similar to the last year's meet that happened in Kuala Lumpur, this year also the China Life Insurance Singapore SNAG 2017 will witness local swimmers fight it out to reserve a place in the SEA games team. This team will strive to get laurels for the Republic just like back in the 2015 Games where it bagged 23 gold medals.
The event will be organized from March 10 to 19 at the Singapore Sports Hub's OCBC Aquatic Centre.
Chief Executive of China Life Insurance Singapore, Tony Chow said that the entity is excited to sponsor among the more important and awaited sporting events in Singapore. He also added that through this
20th February 2017
Provident introduces robot-adviser for life insurance products
Provident, a fee-based retirement planning company, has introduced the first life insurance robot-adviser in Singapore. This tool is available on its website for life insurance packages: DIYInsurance.com.sg. The tool is known as Selfcheck and it allows users to evaluate their life insurance requirements.
Selfcheck will guide users by telling them what insurance product will suit their requirements, how much to invest, and also explain if they have an excess or deficit in their coverage. The tool will also explain insurance-related particulars and their features such as healthcare, long-term care, critical illness, and disability income.
Selfcheck advisers are not paid based on commissions. Hence, they will not force customers to buy products. DIYInsurance deals in after-sales service also. It gives up to 50% commission rebate and this will help customers save well. DIYInusrance does not sell insurance products offered by Great Eastern Life, Prudential, and AIA. However, Provident states that the assortment of products is sufficient for comparison.
10th December 2016
China Life will raise overseas investments to 15% of the assets
China Life Insurance Co. Ltd is planning to boost its overseas investments to 15% of the total assets from the current 2%. The company posted a 67% drop in the profits in the first half net profit due to the lower investment income. The main overseas investments will be logistics, property, hotels and retails. The insurer is also planning on teaming up with the large international private equity firms for investments. The names of the potential private equity partners were not disclosed.
20th September 2016
Life Insurance sales shoot up by 20% for the second quarter!
Consumers sought after single premium non linked, life insurance policies in order to remain stable amidst rising volatility in the investment market. This proved to be good news for the life insurance sector as sales went up by a whopping 20% for the second quarter. Life Insurance providers booked new business premiums worth $844.9 million from April to June this year as compared to $703.3 in the same corresponding time last year. The life insurance industry recorded an increase of 54% in weighted single premiums to $282.1 million driven by non-linked policies.
19th August 2016
States in USA are Making Insurance Companies Locate Beneficiaries for Unclaimed Life Insurance
Almost 2 dozen states in USA have passed laws that require insurance companies to locate beneficiaries for unclaimed life insurance policies. Many beneficiaries of these unclaimed policies have already received payments in billions and the rest are next in receiving extra cash. This has been the direct result of actions from the state that have forced life insurance companies to locate heirs of unclaimed life insurance policies and pay them the owed money.
The laws concerning the unclaimed life insurance policies were followed when multi state investigations and long audits were done on leading 40 insurance companies which revealed that many life insurance companies held on to benefits even after knowing that the insured person had already died. This discovery led to over 40 insurance companies in the country to settle with their states. Illinois is the latest state to consider laws pertaining to unclaimed life insurance.
These new laws require each company to check their database against that of the federal database of deceased persons even though there is a difference on when each of them start those checks. The laws in Florida require checking of policies that date all the way back to 1992.
14th July 2016
Free Life Insurance for NSMen and NSFs
In an effort to recognize the contributions of our national servicemen, NSFs and NSmen will receive free personal accident and life insurance cover starting from this month. This coverage aims to benefit all NSFs and NSmen who are serving the SAF (Singapore Armed Forces), Singapore Civil Defence Force and (SPF) Singapore Police Force. They will also receive a maximum sum assured of S$150,000 for pre-existing medical conditions.
In addition to national servicemen, Home Team uniformed officers, SAF and Mindef regulars will receive group personal accident and term life insurance cover during their service period. Volunteers of SF, SAF Volunteer Corps, Civil Defence Auxiliary Unit and SPF Voluntary Special Constabulary will also receive similar insurance during their period of official duties.
01st July 2016
CIMB Group Holdings and Sompo Japan Nipponkoa Holdings Enters into a Bancassurance Partnership
To distribute the non – general or life insurance products of Sompo Japan Nipponkoa Holdings of Japan, CIMB Group Holdings of Malaysia has entered into a bancassurance partnership with the company. The products will be distributed through the distribution network of CIMB in Southeast Asia. CIMB has around 961 branches in Malaysia, Singapore, Cambodia, Thailand and Indonesia. This type of partnership has been beneficial for banks as insurers are ready to invest a lot to enter the market and increase their customer base using bank networks. In Singapore, CIMB already has such partnership with 3 life insurance companies.
08th June 2016
Manulife Financial Corp makes its First Debt Transaction in Asian Capital Markets
For the first time, Manulife taps into the Asian capital markets as a way to expand its funding and their investor base. Manulife Financial Corp is Canada’s largest life insurer and has issued SGD 500 million of subordinated debt with 3.85% in Singapore with a coupon date set for 2026 as per a statement released by the company. Until 25 May, 2021, the notes will have a fixed rate when they will convert to a rate of 1.97% over the 5 year Singapore Dollar swap rate. The notes will be callable after 25 May, 2021.
According to Steve Roder, the Chief Financial Officer of Manulife, this is the first debt transaction in the Asian capital markets and is important for their global strategy which involves diversification of funding sources and broaden their investor base.
17th May 2016
Life Insurance Receives a Resilient First Quarter
The Life Insurance sector booms this first quarter to $682.1 million with weighted new business premiums up by 5%. This figure includes the 6% increase of single premium products to $215.9 million and 5% increase of weighted annual premium sales to $466.2 million as released by the LIA (Life Insurance Association). The total sum procured this quarter provides insight into the protection cover for new businesses that grew by 11% leading to a total of $22.1 billion in 3 months up to March 31 in comparison to the same period a year ago.
Around 44% of the total assured sum has been generated from sales by tied representatives, 22% accounted from bank representatives and 30% from financial advisory representatives. During this period, 209 DPI or direct purchase insurance were sold, bringing in an approximate of $180, 000 in weighted new premiums. DPI products are sold without financial advice as they are basic life plans and can be bought directly from the insurers websites or customer service centres. Most of the leading insurance companies have completed their annual bonus declarations.
11th May 2016