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While investing to grow our wealth is often seen as the more exciting part of financial planning, getting insurance policies to protect ourselves financially against adverse events in life just as death and terminal illness is just as important, if not more so.
After all, it doesn’t matter if we have the potential to be great investors, if circumstances deny us time to invest and compound our returns for ourselves and our families in the long term.
Life insurance is an important component of insurance planning that most working adults should have, or at least think about buying. As explained by MoneySense, life insurance helps to provide financial protection for our loved ones when we pass on or become completely and permanently disabled, or are diagnosed with a terminal illness. In fact, even the government recognises the importance of having life insurance, as seen by how the Dependants’ Protection Scheme (DPS), an opt-out term-life insurance scheme allows CPF members to use their CPF savings to pay for insurance protection.
Unlike health insurance policies, when we purchase a life insurance policy, it gives our loved ones such as spouse, elderly parents and young children the added financial protection in their lives. This is because if any insured event (e.g. death) occurs to us, the policy will pay out a cash benefit to our surviving loved ones.
Whole Life vs Term Life Insurance Policies
Life insurance can be categorised into two main types: whole life insurance policies and term life insurance policies.
|Whole Life Plans||Term Life Plans|
|Provides coverage against events such as Death, Total & Permanent Disability and Terminal Illness with the options to enhance coverage through riders (ie. Early Critical Illness and so on)|
|Protects you for your entire lifetime||Protects you up to a specific age or over a specific term period|
|Accumulates cash value over the policy term||Generally have no cash value|
|Provides some cash value when you surrender the policy||Generally do not provide any form of cash value when you surrender the policy|
|Generally more costly as the coverage term is longer plus there are savings and investment features.||Generally more affordable as the coverage term is shorter and does not have savings element and investment features|
While we can buy a whole life insurance policy to give us coverage for life, term life policies can give us an added boost in coverage during stages of life when we are likely to require more coverage.
For example, at age 30, before having any children, the insurance coverage I need may not be that high and a whole life policy could be sufficient. However, at age 35, with three children, the level of insurance coverage that I require would increase significantly.
One of the reasons we purchase a term life insurance policy is to get the protection coverage (or additional protection coverage) that we need to protect ourselves and our loved ones for a specific period of time. If an unfortunate insured event such as death occurs during that period, our loved ones will receive the additional death benefit payout from our term life policy to tide through the difficult financial period, on top of any payouts that we may also get from our whole life plans.
If no such insured event occurs during the term coverage period, that means we are (thankfully) still around. That, by itself, is a huge win that we should be happy about.
Choosing (Not) To Buy A Term Life Insurance Policy Could Be Risky
Some of us may not like the idea of buying term life insurance because the policy will only pay out when devasting events such as death or terminal illness occurs. We may prefer to have a more optimistic view in life that nothing bad will happen to us during the prime of our lives, and to save money on insurance policies.
However, a different way of thinking about this is that by not buying a term life insurance policy, or any other life insurance, we are actually taking a bigger risk. We are hoping that nothing will happen to us, but if death does occur to the breadwinner, not only would the family lose a treasured loved one, neither will they have the financial support they need to continue living life the same way.
While insurance cannot replace a loved one, it can provide the family with the financial support they would need to weather through this difficult period, and to give them the time they need to get back on their feet. And this is what a term life policy aims to do.
How GREAT Term Guard Can Support Us In Both Bad & Good Times
This is where GREAT Term Guard comes into the picture. GREAT Term Guard is an online term life insurance offered by OCBC and underwritten by Great Eastern that offers full refund of premiums if you make no claim during the policy term.
Not only does GREAT Term Guard cover us for death, total and permanent disability and terminal illness, but it also protects us against 53 critical illness conditions in critical stages, which is more than the standard 37 critical illnesses listed under Life Insurance Association Singapore 2019 definitions1.
For a 35 age next birthday, male, non-smoker, opting for a $100,000 coverage over a 30-year period, my yearly premium will be $932.50.
In the unfortunate event that an insured event (whether it’s death, total and permanent disability, terminal illness or the critical stages of critical illness) occurs during the term coverage period, my family or myself will be financially supported during this bad time.
But what if nothing bad happens to me?
The good thing about GREAT Term Guard is that we are not just supported if an insured event occurs, but also if no such events occur during the coverage term period.
If I am fortunate enough to live through the term coverage period without an insured event occurring, GREAT Term Guard rewards me by giving me a full refund of my premiums. For example, if the annual premiums I pay is $932.50 for 30 years, I would have paid a total of $27,975 in premiums for my coverage.
At 65 age next birthday, if I have not made any claim, I will receive this full amount and the policy will be terminated. The money can be useful for me to deploy in any way I want during my golden years, whether it’s to invest for even higher returns, purchase an annuity plan that can give me passive income, top up my CPF Retirement Account, or to be passed down as part of a legacy for my children.
This way, whether it’s in sickness or in health, GREAT Term Guard will give us a payout, regardless of whether we make a claim during the policy term, or are getting a full refund of our premiums when the policy has expired, so long as we pay our premiums and hold the policy till the end of the policy term.
However, do note that to qualify for the full premium refund, you will need to hold your policy till the end of the policy term. If you cancel after year 10, you will get some premium back but not all of what you have paid. If you cancel before and during year 10, you will not get any premium back.
If you are keen to find out more about GREAT Term Guard, you can check out the product on the OCBC website. You can also purchase this insurance plan online via the OCBC Digital app.
Read Also: CareShield Life Supplementary Plan: Why We Think Every Working Adult Should Consider Applying For One
- LIA Critical Illness (CI) Framework 2019. https://www.lia.org.sg/media/2160/mu5819-part-2-of-4-_lia-ci-framework-2019_lia-definitions-for-37-cis.pdf
- GREAT Term Guard is underwritten by The Great Eastern Life Assurance Company Limited, a wholly owned subsidiary of Great Eastern Holdings Limited and a member of the OCBC Group. This plan is not a bank deposit and OCBC Bank does not guarantee or have any obligations in connection with it.
- This document does not take into account your particular investment and protection aims, financial situation or needs. You may want to seek advice from a financial adviser before committing to buy the product. If you choose not to seek advice from a financial adviser, you should consider whether the product is suitable for you.
- As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid.
- This document is for general information only. It is not a contract of insurance or an offer to buy an insurance product or service. It is also not meant to provide any insurance or financial advice. The specific terms and conditions of the plan are set out in the policy documents. If you are interested in the insurance policy, you should read the product summary and policy illustration (available from us) before deciding whether to buy this product.
- We do not guarantee, represent or warrant that any of the information provided in this document is accurate and you should not rely on it as such. We do not undertake to update the information or to correct any inaccuracies.
- All information may change without notice. We will not be liable for any loss or damage arising directly or indirectly in connection with or as a result of you acting on the information in this document.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
Policy Owners’ Protection Scheme
This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the Life Insurance Association (LIA) or SDIC websites (www.lia.org.sg or www.sdic.org.sg).