By In theory, your insurance agent is supposed to check on you every six months. Unless you have an agent like mine. “Why, is she careless?” Nah. She stopped calling because I used every meeting to describe diseases I think I have. They typically feature words like “oozing” and “pustule”, and I have pictures from medical books. That I show her over lunch. But anyway, it’s a good idea to set up your own insurance reviews and actually figure out where you’re at. Here’s how:
Step 1: Set a Review Date
Set a review date for your insurance policies. This is usually done every three to five years. Any earlier, and you might not want to switch policies anyway (you might forfeit some returns).
Most insurance agents call every six months anyway, which makes them a perfect reminder system. When you talk to yours, make it a habit to end with this question:
“By the way, when was the last time we looked over my payouts, coverage, etc.?”
If it’s been five years or more, consider making an appointment. You’ll want them to walk you through the benefits, returns, conditions, etc. again. Because in a short while, you’ll be shopping around and seeing how it compares to current policies.
Step 2: Understand How Much Your Policy Costs
Quick, without checking: How much in commissions (approximately) are you paying the agent? How about the insurance company itself?
You can find these in the benefits illustration. That’s the reel of numbers the insurance agent gave you, donkey’s years ago when she cornered you in Burger King. There are five main columns to look at:
For insurance-linked plans, it’s common for the illustrations to assume returns of 5% to 9%.
For life insurance, it’s common to see assumed returns of 3.75% to 5.25%.
Here’s how you get a rough estimate of how much the policy costs:
First, add up your savings. Do this by adding the total premiums to the non-guaranteed surrender value. Always use the lower surrender value. For example:
Say my total premiums paid, in year 5, comes to $15,000.
My surrender value, at 5% returns, is $10,500.
My total savings would be ($15,000 + $10,500) = $25,500
Next, figure the percentage that the effect of deductions removes from the total savings. So, going back to my example:
On year 5, my stated effect of deductions is $7,500. So the percentage of savings paid to my insurer is ($7,500 / $25,500), or around 29.4%. Think of it as the insurer’s “service charge”.
Do note that 29.4% is a big chunk. Financially choosy types will tell you anything above 20% is too high.
Also, note that term insurance has no savings; 100% is paid to the insurer. That’s why it’s called “protection only” insurance.
Monthly Premium
S$26.15
Monthly PremiumPromotionCovers COVID-19
AVIVA MyProtector – Term Plan II
- Min. Death and TI Coverage
- S$100,000
- Min. Critical illness Coverage
- S$50,000
- Max. Renewable Age
- 75
- Monthly Premium
Reference Premium Profile
The Monthly Premium shown is for illustration purpose only. It is calculated based on an annual premium for a 30-year-old, male, non-smoker with a policy term of 20 years and S$500,000 sum assured. - S$26.15
Promotion: Get up to 20% perpetual discount on Term plan and riders for min. sum insured of $1 million!Valid until 31 Dec 2020Apply NowApply directly on MoneySmartMore Details
Key Features
-
The Monthly Premium shown is for illustration purpose only. It is calculated based on an annual premium for a 30-year-old, male, non-smoker with a policy term of 20 years and S$500,000 sum assured.
-
Get a lump sum payout upon death or diagnosis of Terminal Illness (TI) within the policy term
-
Choose from coverage term of 5 or 10 – X years up to 85 Age Next Birthday (ANB) at every 1 year interval
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Renew your basic policy every 5 or 10 years without additional medical underwriting
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Increase your basic policy coverage upon reaching key milestones in life
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Convert your basic policy to a new endowment or whole life policy without additional medical underwriting
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An Interim Accidental Death Benefit is included under the Policy
General Information
| Max. Renewable Age | ANB 75 |
|---|---|
| Coverage Terms | 5 years or 10 – X years up to ANB 85 |
| Total Permanent Disability (TPD) Coverage Limit | Age 85 |
| TPD Payout Limit | Up to S$2,000,000 |
Coverage Information
| Death and TI | Min. S$100,000 |
|---|---|
| Critical Illness | Min. S$50,000 |
| TPD | Min. S$100,000 |
| Interim Accidental Death Benefit | Max. S$500,000 |
| Terminal Cancer Benefit | |
| Quit Smoking Incentive |
Customer Service
| Application Method | Via Insurance Advisor |
|---|---|
| Medical Exam Required | |
| Policy Delivery Method | Hardcopy |
| Online Policy Management |
Now you know that, let’s move on to…
Step 3: Compare Prices with Other Policies
Talk to other insurance agents, and get benefit illustrations from them. Try to get at least three to five benefit illustrations, to compare.
Now, repeat the process in step 2 for each benefit illustrations. Ideally, you want the insurance policy with the lowest percentage of savings deducted. Again, the ideal is around 20%, although few policies are that cheap.
If you only buy term insurance, comparison is much easier. Just compare the premiums, and pick the cheapest.
Monthly Premium
S$26.75
Monthly Premium
Tokio Marine Term Assure II
- Min. Death and TI Coverage
- S$100,000
- Min. Critical illness Coverage
- S$100,000
- Max. Renewable Age
- 80
- Monthly Premium
Reference Premium Profile
The Monthly Premium shown is for illustration purpose only. It is calculated based on an annual premium for a 30-year-old, male, non-smoker with a policy term of 20 years and S$500,000 sum assured. - S$26.75
Apply NowApply directly on MoneySmartMore Details
Key Features
-
The Monthly Premium shown is for illustration purpose only. It is calculated based on an annual premium for a 30-year-old, male, non-smoker with a policy term of 20 years and S$500,000 sum assured.
-
Choose from coverage terms of 5 or 10 – X years up to ANB 85
-
Enjoy guaranteed renewal of 5 or 10 year policies upon expiry without further medical underwriting
-
Have the flexibility to increase your coverage upon reaching key life milestones
-
Convert your policy to a whole life or endowment plan up to your policy’s coverage amount
General Information
| Max. Renewable Age | Age 80 (5 year policy) or Age 75 (10 year policy) |
|---|---|
| Coverage Terms | 5 or 10 – X years up to ANB 85 |
| Total Permanent Disability (TPD) Coverage Limit | Age 85 |
| TPD Payout Limit | S$4,500,000 |
Coverage Information
| Death and TI | Min. S$100,000 |
|---|---|
| Critical Illness | Min. S$100,000 |
| TPD | Min. S$100,000 |
| Interim Accidental Death Benefit | |
| Terminal Cancer Benefit | |
| Quit Smoking Incentive |
Customer Service
| Application Method | Via Insurance Advisor |
|---|---|
| Medical Exam Required | |
| Policy Delivery Method | Hardcopy |
| Online Policy Management |
But as you’re making comparisons, you’ll realize “cheap” isn’t the only consideration. The next thing you need to compare is…
Step 4: Who Invests in Funds You’re Comfortable With?
The returns on your policy are gained by investing your money. All those premiums you pay? The insurer takes that money, and puts it into different funds to grow it.
The performance of the funds, which your premiums are invested in, determine the size of your eventual payout. Now you know why the surrender values are “non-guaranteed”.
Some insurance agents will ask you how you want your premiums invested (e.g. what percentage do you want in equities, and what percentage in fixed income funds?) Which, if you’re a layperson, is like having your surgeon ask how you want your appendix removed.
But you might be asked anyway, and then you need to consider: Are the funds you’re investing in risky?
You don’t want to pay premiums for 20 years, then find out the funds were crap. And your returns after the effect of deduction are, like, two bucks.
To find out more about equities and investing, follow us on Facebook. Or if you just aren’t comfortable with the idea, consider switching to term insurance. There are no payouts, but there are no investment decisions either; and it’s often less than $50 a year.
Monthly Premium
S$34.12
Monthly Premium
AXA Decreasing Term Assurance
- Min. Death and TI Coverage
- S$100,000
- Min. Critical illness Coverage
- S$20,000
- Max. Renewable Age
- N.A.
- Monthly Premium
Reference Premium Profile
The Monthly Premium shown is for illustration purpose only. It is calculated based on an annual premium for a 30-year-old, male, non-smoker with a policy term of 20 years and S$500,000 sum assured. - S$34.12
Apply NowApply directly on MoneySmartMore Details
Key Features
-
The Monthly Premium shown is for illustration purpose only. It is calculated based on an annual premium for a 30-year-old, male, non-smoker with a policy term of 20 years and S$500,000 sum assured.
-
Protection against Death, Total and Permanent Disability and Terminal Illness, so that your loved ones can use the policy sum assured to meet any outstanding housing loan payments.
-
Flexible premium payment terms: Choose single or regular payment terms ranging from 10-30 years. Enjoy 3 years premium waiver with regular premium payment terms.
-
Wide range of policy term options: Choose from coverage term between 5-30 years for single premium payment term, or 10-30 year for premium payment term.
-
Choose your interest rate in 1% intervals, ranging from 0% to 15%, to best suit your protection needs.
-
Double protection with Joint Life Coverage
-
Other benefits include: Personal Accident Benefit, Living Accelerator Benefit, Waiver of Premium Benefit
General Information
| Max. Renewable Age | N.A. |
|---|---|
| Coverage Terms | Depends on premium type |
| Total Permanent Disability (TPD) Coverage Limit | Up to S$6Mil (SGP,SPR and Valid Pass holder). $4mil for Foreigner. |
| TPD Payout Limit | S$6,000,000 |
Coverage Information
| Death and TI | Min. S$100,000 |
|---|---|
| Critical Illness | Min. S$20,000 |
| TPD | Up to age 65 |
Customer Service
| Application Method | Promiseland Adviser |
|---|---|
| Medical Exam Required | Standard |
| Policy Delivery Method | Email, Standard Mail |
| Online Policy Management |
Step 5: Check “Per Day” Benefits
Some life insurance policies have a “per day” benefit. This is the amount of money you can get per day, in addition to schemes like Medisave, when you end up attached to an IV tube.
Monthly Premium
S$157.10
Monthly PremiumCovers Dengue
China Taiping I-Secure
- Min. Death and TI Coverage
Terminal Illness (TI) Coverage
TI Coverage is applicable when the illness is expected to lead to death within 12 months. - S$50,000
- Critical Illness Coverage
- Add on
- TPD Payout Limit
- S$3,000,000
- Monthly Premium
Reference Premium Profile
The Monthly Premium shown is for illustration purpose only.
It is calculated based on an annual premium for a 30-year-old, male, non-smoker with a policy premium term of 20 years and S$100,000 sum assured and X2 multiplier. - S$157.10
Apply NowApply directly on MoneySmartMore Details
Key Features
-
The Monthly Premium shown is for illustration purpose only. It is calculated based on an annual premium for a 30-year-old, male, non-smoker with a policy premium term of 20 years and S$100,000 sum assured and X2 multiplier.
-
Protection against Death, Total and Permanent Disability and Terminal Illness
-
Option to enhance your protection up to 4 times
-
China Taiping I-Secure offers 4 premium term options: 10, 15, 20 or 25 years
-
Choice of paying premiums on a monthly, quarterly, semi-annual or annual basis
-
Enhanced Coverage options are available
General Information
| Premium Terms | 10, 15, 20 or 25 years |
|---|---|
| Multiplier | X2/ X3/ X4 |
| TPD Coverage Limit | Age 70 |
| TPD Payout Limit | S$3,000,000 |
| Participation Type | Whole Life Insurance |
| Build Cash Value |
Coverage Information
| Death and TI | Min, S$50,000 |
|---|---|
| Critical Illness | Add on |
| TPD | Min. S$50,000 |
| Accidental Death Benefit | |
| Retrenchment Benefit |
Policy Materials
| Product Brochure | Read More |
|---|
Customer Service
| Application Method | Via Agent |
|---|---|
| Medical Exam Required | |
| Policy Delivery Method | Via Post |
| Online Policy Management |
If your health is becoming a major concern, shop around. Look for the best “per day” benefits, and do some homework on the claims process. Google the insurer’s name, and look for any complaints about issues such as slow payouts.
Step 6: Check Co-Insurance, Deductibles, and Deferred Periods
Remember that medical insurance might not completely cover the cost of operations or hospital stays. Also, some policies don’t cover specific costs (e.g. medication costs, or radiology).
Have the insurance agent walk you through these. If you’re uncomfortable with any of the terms, check out other insurers and see if they have a more appropriate policy.
You also want to pay attention to the deferred periods. This refers to the length of time involved, when it comes to making claims. If you’re working on a tight budget, you might want to switch to a policy that’s faster with benefits.
Image Credits:
kevin dooley, Pargon, ThisParticularGreg, Menage a Moi, Iman Mosaad, Jose Goulao
