Comparing the Best Whole Life Plans (Updated 2020)
Remember your parents buying insurance for you yet you have no idea what insurance policy is that or what does it do, at best you know it's either from the "red or blue colour company"
In this article, let's compare 3 whole life plans from 3 different insurers.
- Aviva MyWholeLifePlan III
- China Taiping i-Secure
- Manulife LifeReady Plus
All of them have their strength and their differences, we will explore which whole life plan is most suitable for you!
Why Buy Coverage Now?
There are several reasons to act now:
1) Premiums increase with age.
For example, to cover Male, non-smoker for $75,000, 2x multiplier for death, TPD, and ECI
1 year old premiums: $1,968.99 x 15 years = Total cash outlay: $29,534.85
35 year old premiums: $3,704.90 x 15 years = Total cash outlay: $55,573.50
50 year old premiums: $6,116.76 x 15 years = Total cash outlay: $91,751.40
All 3 plans cover for $150,000 before the age of 70 and require very different amounts of total cash outlay.
Of course, when you are just new working adult, there is no need to purchase high sum assure immediately, instead just get yourself covered to based on your current income or affordability, and over time add on to your coverage.
These plans can be kept for life. And the earlier you start, by default you could accumulate more of the non-guaranteed cash values within the plan.
2) You are more likely to have pre-existing conditions in future.
As we grow older and due to our lifestyle and age, we may be afflicted with health conditions like high cholesterol, high blood sugar are some of the more common conditions.
Having pre-existing health conditions can affect the insurance being offered to us, resulting in higher premiums or being excluded for certain types of coverage.
Essentially as with all insurance, it is better to buy when we are still healthy.
What to Look Out For?
We select these 3 whole life plans out of the others because of certain unique features they have.
However, the 3 contenders all fulfill these criteria:
- Able to add on early stage critical illness coverage as a rider
- Have limited premium payment term feature
- Have multiplier benefit that allow the plan to payout more during the income earning phase (i.e. before 70 years old). AVIVA MyWholeLife used "additional cover".
Yes, most whole life plans in essence is a protection plan plus a wealth accumulation feature. It is much more complex than other protection plans such as term plans.
Let's look at the 3 plans individually and their features. In alphabetical order. After that, we will look at some of the premiums, surrender values, etc.
Aviva MyWholeLifePlan III
Premium payment term: Single premium or regular premium for 5/10/15/20/25 years
Multipliers benefits: up to 5x of sum assured (presented as additional 400% of base sum assured)
Multiplier benefit expiry: 65/70/75/80 age next birthday
Minimum sum assured: $50,000
Aviva MyWholeLifePlan III has a few features in this whole life plan that provides to some extend for life stages, for retirement planning, and for retrenchment/unemployment.
This plan allows policyholders to add on a term plan as a rider to the whole life plan without underwriting up to the base sum assured.
Aviva MyWholeLifePlan III is the only plan that allows you to add a MyMultipay CI rider to plan critical illness coverage differently.
This plan has income payout option, it allows policyholder to receive a monthly income to supplement retirement. The amount of monthly income is being limited by the amounts of guaranteed cash values and can only start from age 65.
If unemployed or retrenched, the plan allows policyholders to waive off the automatic premium loans interest up to 12 months.
As far as life plan goes, do consider this if having a cash payout is something you look out for. Previously, you (as policyholder) have to either surrender the entire policy or take up policy loans with interests in order to receive any cash from their whole life plans.
However, any amounts paid out also reduces the payout proportionately.
China Taiping i-Secure
Premium payment term: Regular premium for 5/10/15/20/25 years
Multipliers benefits: up to 4x of sum assured (presented as guaranteed benefit "GB" factor)
Multiplier benefit expiry: 71/86 age next birthday
Minimum sum assured: $50,000
This plan has perhaps (at this time of writing) the highest multiplier benefit expiry at age 86. It also has an extender option to have death cover to a lifetime coverage.
The GB extender feature which allows the multiplier benefit to be extended for rest of the policyholder's life by deducting from the cost of insurance from the policy's cash value (see sum at risk table).
It will start at the end of the initial multiplier benefit expiry.
Click to view larger image
This is useful as Singaporean has the world's longest life expectancy at 84.8 years old beating countries like Japan and United States.
This extender option can only be applied to the main plan (i.e. death benefit) and not the TPD or critical illness riders.
And on a side by side comparison, it covers a total of 161 critical illness across the various stages. This is the highest out of the other 2 plans we are comparing today.
During the writing of this article, China Taiping's plan comes up to be the more affordable plan premium wise.
These factors adds up that makes China Taiping's offering worthy for consideration.
Manulife LifeReady Plus
Premium payment term: Regular premium for 10/15/20/25 years or to age 99
Multipliers benefits: up to 5x of sum assured (presented as Life Benefit Multiplier "II" )
Multiplier benefit expiry: 70th birthday of life assured
Minimum sum assured: $25,000
Manulife's offering is unique and flexible in several ways.
Upon purchase, standard life (non-smokers) enjoy some premium discount due to good health and can continue to enjoy premium discounts for the rest of the premium term if certain health targets are met withing this 2 years.
This plan allows policyholders to purchase a new term or whole life policy at various milestones in life without medical underwriting. This is a very interesting option, the ability to take on a whole life plan without medical underwriting is a very attractive offer.
And if policyholder or his spouse were to be retrenched, Manulife will waive premiums of this policy for 6 months.
Another key feature of this plan is the option to receive annual payout for 10 years from cash values, on top of that there is additional 5% interest (given to you, not owed to manulife) for this payout.
Annual payout are: minimum amount of $500 annually; 50% or 75% of cash-in values; can only start from insured's age 70.
Sum assured will be adjusted down accordingly following each payout.
If insured purchases early critical illness rider, insured's child is also covered for CI and legible for payout under this plan.
At this point, it is worthy to note that Manulife allows the lowest minimum sum assured (before multiplier benefit) of $25,000, Aviva and China Taiping has a minimum of $50,000.
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Before we conclude, lets look at why we purchase whole life plans.
Income is the Most Important Thing
Throughout our adulthood, our income is one of the most important components of our life. It funds our lifestyle.
We can lose our ability to earn income in several ways.
Temporary income loss:
- Quitting or getting fired from your job
- Short term injury
- Having kids (this is for the self employed mainly).
These temporary loss of income can typically be rectified within 6 months or less. You still did not lose the ability to work, and are still productive.
Permanent income loss:
- Serious injury
- Critical Illness
- Total Permanent Disability
These will take more than 3 years to cover from, and even so, you may not be able to return to your previous levels of productivity and resulting in lower or no income.
The question you should ask yourself is: how much to insure for?
Whole life plans covers mainly Death, Total Permanent Disability (for some plans it may be an optional rider).
A whole life plan is also the most affordable way to get Early Stage Critical Illness coverage as a rider that you can keep for life, something most pure CI term plans are not able to do.
Life Insurance Association Singapore recommends 3.9 times of your annual income to cover critical illness. CI may cause you to be unable to work and retire early due to health issues. Hence, getting a plan payout helps you massive in such a situation to ensure your family's long term expenses are alright
In Conclusion
Whole Life plans are great products for the fact that you can keep it for life and payouts are boosted by multiplier benefits when you are young.
Naturally, it may take some act of balance to determine how much coverage you want versus how much premiums you are willing to fork out, this is where you need to speak to a licensed financial adviser like myself.
Being able to distribute products from various insurer allows for unbiased advise.
All of the 3 products are unique in their own ways so it really depends on what you prefer in your financial planning portfolio.
If you are keen to find out more,
email me at josh.tan@promiseland.com.sg or WhatsApp me below
Click on WhatsApp button above or reach me on this page for comprehensive insurance planning
Last updated on August 15th, 2020 at 07:54 am
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