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Should I Get Life Insurance in My 20s and 30s?
Many young Singaporeans in their 20s or 30s may not always think about buying life insurance plans because legacy planning is far beyond their line of sight.
However, what they fail to see is that unexpected situations can strike anytime to cause financial woes. What if there is an accident or diagnosis of critical illness that restricts the ability to work? What if a sudden death winds up generating insurmountable debts for family members?
The unforeseen does happen to anyone and at any age and life insurance payout offers a sound solution to cover outstanding debts so that loved ones do not have to be burdened.
Related: Best Life Insurance in Singapore
Benefits of Getting Life Insurance in Your 20s and 30s
Life insurance plans in Singapore promise to pay beneficiaries a sum of money upon the death of an insured person to lighten financial hardship in cases of mishaps. It is good to note that buying life insurance in your 20s offers much more benefits than if you purchase one in your 40s or later. Here’s why:
You Can Get Better Life Insurance Coverage
Even the best life insurance plans in Singapore will not cover pre-existing medical conditions. It is a common practice amongst insurers. This means you’re more likely to get comprehensive coverage when you’re younger and with fewer or no medical issues.
Premium Prices Increase with Age
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Premiums for whole life and term life insurance are closely tagged to your health and age. It becomes more expensive with each passing year since health tends to deteriorate and become more vulnerable to health risks over time. If you want to pay a lower premium, buying a policy when you’re in your 20s will be much cheaper than when you buy one in your 40s.
You’ll Be Protected Against Loss of Income
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Unexpected circumstances can sometimes strip away your ability to earn an income without warning. When this happens, a life insurance plan assures you of a regular income to tide you through difficult cash flow situations, clear debts or serve as reserve funds for your retirement.
It Provides Financial Compensation for Dependents
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One of the key objectives of buying life insurance in Singapore is for legacy planning and providing financial support for dependents when you pass on. The insurance payout can relieve your family of debts such as mortgage or car loans that you may leave behind and ensure they can continue to live comfortably without compromising their lifestyle.
Related: Get a Personalised Life Insurance Quote
Types of Life Insurance Plans
If you are ready to scout around for the best life insurance plan in Singapore, do take note that such policies are divided into two three categories: term life insurance, whole life insurance and investment-linked policies (ILP).
Term Life Insurance
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Unlike whole life insurance which covers the entire lifetime, term life insurance covers a specific number of years such as 20 years or 40 years. If you have a limited budget for the monthly premium, financial advisors will usually suggest starting with a term policy to get maximum coverage without incurring expensive monthly premiums.
Related: Best Term Life Insurance in Singapore 2022
Whole Life Insurance
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Whole life insurance refers to policies that provide coverage through the age of 99. Such policies allow you to grow your savings and enjoy maximum cash value returns when a policy is claimed or surrendered. Because life insurance premiums typically rise by an average of 8% to 10% for each year, signing up for a plan in your 20s is cheaper and offers wider coverage.
Related: Best Whole Life Insurance in Singapore 2022
Investment-Linked Policies (ILP)
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This is a hybrid financial product that comprises life insurance features and investment components. ILPs provide regular life insurance coverage while using part of the premiums to invest in funds of your choice. Bear in mind that ILPs do not have any guaranteed cash values because they fluctuate with the fund’s performance.
Best Life Insurance Plans in Singapore
In case you are ready to sign up for a life insurance plan, check out the following list of best life insurance plans offered by different insurers in Singapore:
Insurer | SingLife - MyProtector-Term Plan II | AIA - AIA Secure Flexi Term | Tokio Marine - TM Term Assure II |
|---|---|---|---|
Annual Premium | S$521 | S$448 | S$412 |
Coverage | Death, Total Permanent Disability (TPD), Terminal Illness | Death, Terminal Illness, Terminal Cancer | Death, TPD and Terminal Illness |
Term |
| 5, 10, 20 and 30 years renewable up to age 65, 75, 100 | 5, 10 years (renewable) 11 years up to age 85[/list} |
Features |
|
|
|
Insurer | SingLife - MyWholeLife Plan IV | Income - Star Secure | AXA - Life Treasure (II) |
|---|---|---|---|
Annual Premium | S$5,138 | S$4,915.20 | S$5,260 |
Coverage | Death, TPD, Terminal Illness | Death, TPD, Terminal Illness | Death, TPD, Terminal Illness |
Pay Premiums | Single, Between 5 to 25 years | 5 to 30 years up to age 64 | 10, 15, 20, 25 or 30 years |
Features |
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Conclusion
You shouldn’t be sitting on the fence when it comes to buying life insurance. These policies offer the most coverage and lowest premiums when you are in your 20s or 30s.
Even if you cannot afford a whole life insurance policy, consider getting a term life policy instead that can last for 10 to 30 years. That way, you’ll still be financially protected throughout your working life at a very low cost.
For more information on the different life insurance options available on the market, check out our life insurance page, where we analyse dozens of DPI (Direct Purchase Insurance) and traditional life insurance on the market to help you find the right life insurance plan for you.
Ready to purchase life insurance? Check out the best plans in the market currently and get a personalised quote for your desired plan.
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Read More:
Guide to Types of Life Insurance - How They Work and What To Get
Realistic Reasons Why You Should Buy Life Insurance In Your 20s (Not 40s)
Buy Term Invest the Rest: What it Means & Why People Are Opting For It
Cover image source: Pexels
The article originally appeared on ValueChampion.
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More From ValueChampion:
Guide to Types of Life Insurance - How They Work and What To Get
Realistic Reasons Why You Should Buy Life Insurance In Your 20s (Not 40s)
Buy Term Invest the Rest: What it Means & Why People Are Opting For It
