When buying life insurance, you get to choose between two options – whole life insurance and term life insurance. Whole life insurance offers coverage that spans the entire course of your life whereas term life insurance covers you for a fixed period selected by you.
Now, each of these two forms of life insurance comes with its own set of benefits. While comparing them, you may notice one main difference between the two – whole life insurance is usually costlier than term life insurance. This might make you wonder whether you should opt for this form of life insurance coverage, given the higher cost.
To help you reach a decision, we have listed down 4 advantages that you can look forward to when you opt for whole life insurance.
Advantages of whole life insurance
- Lifelong coverage
Perhaps the biggest advantage of buying whole life insurance is that you usually receive coverage for the entirety of your life. Leading insurers in Singapore cover you against death, terminal illness, critical illness, and total permanent disability in their whole life insurance plans. If you chose a limited term life insurance plan, your coverage ends on the stipulated date. If you want to stay covered for a few more years, you will have to buy a life insurance plan once again (and probably at a higher cost).
- Option for multiplied coverage
Some of the best whole life insurance plans in Singapore offer you the benefit of multiplied coverage. Under this benefit, the insured individual may choose to boost their coverage up to 5 times up to a certain age (usually around 80 years).
- Potential for bonuses through participating whole life insurance plans
When you buy whole life insurance, you can either get a participating whole life insurance plan or a non-participating whole life insurance plan. If you opt for a participating whole life insurance plan, you stand a chance to earn added returns in the form of bonuses or dividends based on the insurer’s profits. Non-participating plans offer pure protection with no bonuses.
- Cash value of the plan
Unlike term life insurance plans, whole life insurance plans have cash value. This cash value accumulates over the years that you keep the plan active. If you choose to terminate your coverage for some reason, you can claim this cash value – depending on the plan’s terms and conditions. This amount is also called the ‘surrender value.’ If you have opted for a participating whole life insurance plan, the cash value will also include your bonuses (if any). Do bear in mind that the cash value (surrender value) does not equal the death benefit or claim payout.
It is important to state that term life insurance too has many benefits. The primary one among these is the lower cost of coverage. Term life insurance can prove handy at offering coverage for very specific milestones in life – such as covering your home mortgage till it has been paid off. Do evaluate your needs and expectations from life insurance and choose a plan accordingly.
It is considered wise to always read the plan’s fine print before buying coverage. If you need any help in understanding any of the life insurance terms or jargon, you may consider reaching out to a financial consultant. Major insurance companies in Singapore usually have their own professional financial consultants who can guide you with buying life insurance.