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I increased my term + accident insurance policy

I recently maxed out the SAF Aviva group term insurance on both term life plan for $1M and accident plans for $600k, which costs me $47.42 and $77.37 per month respectively. This is on top of my existing whole life plans. I did this to ensure adequate insurance coverage in times of need. The only downside of this is that Aviva pays out a maximum of $20M per event, and it’s prorated accordingly, so don’t bet your house on this and have some other backup.

Term covers up to age 65-70 (your income generating years), and whole life covers your whole life (including your retirement years). In general whole life plans are alot more expensive per $ of coverage, compared to term plans, so you have to utilize both to get adequate coverage at a reasonable cost.

In Singapore where voluntary death isn’t an option, it could really bankrupt a family.

Some say to purchase a $1M term plan that covers you up to age 99. That means you can’t live past 99, but such plans are expensive, in the range of $3k/year. Let me explain why such policies are a big scam.

Starting at age 35, using a discount rate of 2.5% (CPF rate) for 64 years, the PV of the $1M portfolio is $206k. Which means if I had $206k today and put it into the risk free CPF account, I’d have $1M when I’m 99 years old. In this method, my funds will outlive me and will not goto a zero value if I live past 99yo. Why would anyone purchase such a term policy? Perhaps it’s the allure of paying the $206k in installments and whatever story the insurance agent tells you, but the numbers above tell the tale.

Don’t fall prey to such policies. Stick to the regular term insurance that’ll cover you during the years your family depends on you, and critical illness coverage that’s sufficient to not bankrupt your family when your health fails.

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