What is term life insurance?

To assist Singaporeans in proactively identifying and addressing gaps in their financial planning, the Monetary Authority of Singapore (MAS), in collaboration with the Association of Banks in Singapore, the Association of Financial Advisers (Singapore), and the Life Insurance Association, has created a Basic Financial Planning Guide. This guide¹ offers practical rules of thumb to help individuals take proactive steps in managing their savings, insurance, and investment needs.

The guide advises that working adults who are 19 – 59 years old should consider term insurance plans² for affordable protection.

The definition of term life insurance

Have you heard of term insurance, term life insurance, or a term life policy? These terms all refer to the same concept: a type of life insurance that provides financial protection for a specific period , or a term, as the name suggests. If the policyholder passes away during this term, your beneficiaries will receive a lump sum payout that can help them manage financial burdens.

The purpose of term life insurance is to provide coverage while you have outstanding loans or depend on a steady income. After your loan obligations are fulfilled and you’ve accumulated enough for retirement, usually upon retiring, this insurance becomes less necessary.

What kind of coverage do term life insurance policies provide?

Most of the time, basic term life insurance policies provide coverage for death and total and permanent disability. The amount of death and terminal illness coverage needed depends on your needs.

How much coverage do I need?

When determining the appropriate amount of life insurance coverage, the Basic Financial Planning Guide suggests considering a death coverage amount equivalent to nine times your annual income. Ideally the amount of coverage should be sufficient enough to cover any outstanding liabilities to ensure your loved ones need not carry the financial burden by themselves should the unforeseen happen. You will also need to balance out your coverage needs and your budget to ensure you are not overspending on your insurance needs.

Types of term life insurance in Singapore:

• Dependent Protection Scheme (DPS)³: If you’re a Singapore Citizen (SC) or Permanent Resident (PR) between the ages of 21 and 65, DPS coverage is automatically extended to you upon your first CPF working contribution. This ensures that you have some level of financial protection without needing to take any additional steps. The Dependent Protection Scheme (DPS) coverage is basic and might be insufficient if you have dependents or are paying for a home loan⁴. Hence, you may need to consider getting an additional term life insurance policy to ensure that your insurance needs are met.
• Term life plans (Individual): These plans can be purchased from insurers like FWD Singapore⁵, either online for a streamlined process or through insurance advisors who can provide personalised guidance.
• Group term life plans: These plans are often offered by employers as part of their employee benefits package. They typically provide a basic level of coverage and may or may not require employees’ premium contributions. These group term life plans are often tied to your employment period with the company. If you are no longer employed under the company that provided the group term life insurance coverage, you won’t be entitled to the coverage anymore. Hence, it’s important to consider having your own personal protection plans

What kind of riders / add-on benefits can I attach to term life insurance plans?

• Critical illnesses: Such a rider pays a lump sum benefit if you are diagnosed with a critical illness listed in the policy, such as Major Cancer or Heart Attack of Specified Severity⁶. This can help you manage the financial burden associated with treatment and recovery.
• Premium Waiver Benefit: If you become totally and permanently disabled or are diagnosed with a critical illness, you can still continue your coverage without paying future premiums.

FWD’s Term Life Plus⁶ is a term life insurance plan that you can easily apply online from home or on-the-go. It offers flexible coverage of up to S$1.5 million*, which you can tailor according to your needs and goals. Furthermore, if you’re in the pink of health, medical examinations are not required. Additionally, your spouse is eligible for a complimentary insurance policy of up to S$250,000 without any underwriting for one year in the event of your death or terminal illness. For more comprehensive coverage, you can even add on riders such as Total and Permanent Disability Benefit6.

Explore FWD Term Life Plus⁶ to meet your insurance needs.