While the first weeks of January have already come and gone, it’s never too late to get on track with your resolution of protecting your family as best as you can in 2023. Whether you’ve vowed to sort out your family’s finances or resolved to proactively plan for your children’s future, purchasing life insurance policies can prove to be a worthwhile decision, according to the team at Expat Insurance. Here, the insurance broker in Singapore shares the benefits of buying a life insurance policy, and offers advice on the best life insurance for expats.
What is life insurance and why buy life insurance policies?
Life insurance is a protective measure designed to provide your family with financial continuity should something happen to you or your ability to earn income.
A life insurance policy is a legal contract between an insurance policy holder and an insurer. In exchange for the policyholder’s monthly premium payments, the insurer promises to pay a lump sum of money – known as a death benefit – to the policyholder’s designated beneficiaries upon the policyholder’s death. The beneficiaries can then use the money to cover medical, funeral and other expenses.
Therefore, purchasing a life insurance policy is key to ensuring the financial security of your family. The idea is to relieve your dependents of any financial burdens, with funds to replace future income loss.
But, what if I’ve got a life insurance policy through work?
Life insurance is a major must for any working adult with dependents while living in Singapore. But, even if your employee benefits package provides some level of life insurance, it’s likely not enough to cover your family for one or two decades of expenses should something happen to you. Purchasing a personal life insurance policy can offer the most appropriate type of financial safety net your dependents need, without having to rely on your employer-provided cover. Instead, you can treat the corporate cover as a bonus!
What’s more, employee benefits are not transferable if you lose your job. A personal life insurance policy, however, will guarantee that the coverage can be used anywhere you end up. This makes it ideal for expats, who are constantly on the move.
What are the different types of life insurance policies in Singapore?
There are two types of life insurance policies: permanent life insurance and term life insurance. Both types provide protection against financial loss in the event of death or permanent disability.
A key difference between the two is coverage duration. Permanent life insurance is designed to cover you for your entire lifetime, assuming you’re paying the monthly premiums. On the other hand, term insurance lasts for a set period of time that you choose when you buy the policy; for instance 10, 20 or 30 years.
Another main difference between the two types of policies is how much money you will get back if nothing happens to you. Permanent life insurance policies not only provides the death benefit to your beneficiaries, but also includes a savings component in which cash value accumulates over time. If you cancel your life insurance policy, you will receive the accrued cash value, called a surrender value, while you are still alive. Meanwhile, a term life insurance policy does not accumulate any cash value and is used purely as a protective tool. This means that there is no surrender value to the policy, which allows for premiums to be more affordable.
How do I know which type is best for my family?
The best life insurance policies are the ones that pay you when you need it! You’ll need to consider how long you need coverage for and how much of it you need. Of course, this means you’ll also need to consider your budget. Term life insurance is the most cost effective form of pure insurance, as it is not bundled with any savings or investment component.
The advantages of term life insurance for expats
For expats in Singapore, Expat Insurance recommends term life insurance. Here’s why, according to the insurance broker:
#1 It’s portable
It can transfer with you to your next overseas posting. This is, of course, key for expats who move around frequently or plan to move overseas in the future.
#2 It’s flexible
It can be amended at different stages of life. You can also purchase a policy with riders to provide additional levels of coverage. Critical illness cover, for instance, is a very popular add-on. It provides a lump sum payout in the event that the insured has a serious illness such as one of the following:
- cancer
- heart attack
- coronary artery bypass surgery
- stroke
- kidney failure
- major head trauma
- Parkinson’s disease
That said, critical illness cover can be a great source of financial comfort if you have to take time off of work or relocate due to your illness.
Total Permanent Disability (TPD) insurance is another optional rider that’s available for most life insurance policies. It provides protection in the event that the insured suffers a loss of limb or sight, or cannot perform a number of essential daily activities.
Find out more
For more information, speak with a reputable insurance broker like Expat Insurance. Their team is experienced in working with expats to determine the best term life insurance policies to suit their needs, and tailor the policies accordingly. In fact, Expat Insurance has over 2,000 insurance plans to choose from! Additionally, the Singapore insurance broker can help you make sure your family is fully covered with the right health and home coverage, too.
Written in collaboration with:
Expat Insurance
#B1-52 The Riverwalk, 20 Upper Circular Road
6401 9201 | expatinsurance.com.sg
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