What is life insurance and why is it important for my dependents?

Life insurance may seem like a daunting and confusing subject, but not to worry, we are here to break it down for you.

What is life insurance?

To put it simply, life insurance is a contract between you and an insurance company, where you pay premiums in exchange for a lump sum payout from the insurance company to your dependents if any unforeseen situations were to happen to you. These situations could include terminal illnesses, death, or permanent disabilities. The assured will then be able to freely decide how they want to use the payout received. The life insurance is designed to ensure that if you meet with any of such situations, you and your family will be protected against the financial loss that may happen because of such scenarios. This is potentially one of the ways to help your family financially protected if anything unfortunate were to happen to you. In this article, we will be covering mainly on term life and whole life insurance.

What are the differences between whole life and term life insurance?

In general, some differences between term and whole life insurance are its coverage period, costs and returns that you can get back when your coverage ends.

Term life insurance covers you for a set period of time. The sum insured is paid only if you pass away or if you become totally and permanently disabled¹.  As these policies do not come with a savings portion, it is usually cheaper and more affordable.

On the contrary, whole life insurance covers you for your entire life. Premiums are paid throughout your life, but it can also be changed to a limited period. The payout received from the policy will be the sum insured and any other bonuses that have been accumulated upon your death or if you become totally and permanently disabled¹.

To get an even more comprehensive understanding of the difference between whole life and term life insurance, you can check out our blog article to find out if term life or whole life protection is better for you.

Why should I buy life insurance and why is it important for my dependents?

The next question on your mind would likely be: why should I buy life insurance? Life insurance is essential if you have family members that are dependent on you financially. With the unpredictable nature of life, having life insurance would help ensure that your loved ones are financially protected if any unforeseen situations were to happen to you. Here are some reasons behind the importance of having life insurance.

1. Financially protect your dependents

One key aspect of life insurance is about protecting your family members financially. In the event that something unforeseen happens to you, having life insurance would help ensure that your family will be able to continue living their life without financial problems. The payout received by them can help them financially across different needs. If your family depends heavily on your income for their living expenses, such as the payment of utility bills and buying of groceries, the sudden loss of your income would affect them financially. With the payouts received, your family can use the money they receive to pay for their living expenses, helping to take some financial stress away from them.

1. Pay off outstanding loans

If any unforeseen situations were to happen to you, having a life insurance would give your family members the flexibility and assurance to support them for any outstanding loans with the cash payout received. For example, if you were to purchase a house worth S$500,000, getting a life insurance with a sum insured of S$500,000 ensures that your family would have the support they need to pay off the outstanding loans with the cash payout if you are hit with an unfortunate episode.

1. Preparing for your child’s future

Starting a family and having children is one of the key milestones in our lives that most of us will go through. We all know that raising children in Singapore is not cheap, with the many expenses that comes with having children such as sending them for enrichment classes and saving up for their tertiary education.  As we plan our financials for raising them, we should also take into consideration unexpected scenarios. With life insurance, we will be able to ensure that they are able to grow up with minimal financial issues.

Stay financially protected with up to $1.5 million coverage

Purchasing your life insurance is now easier than ever with FWD Term Life Plus insurance. Simply apply online to get up to S$1.5 million coverage. Ensure that your loved ones are protected so that you can focus on what matters most. Find out more about FWD Term Life Plus and get a quote now.