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Choose the right plan for the best buy

Updated: Apr 8, 2020

Choose the right plan for the Best Buy

Lorna Tan, 2 sep 2018, The Sunday times

Buying a life insurance plan can be a bewildering experience for consumers as there are many products in the market. Insurance is a long term commitment, so it is important to make an informed decision after taking into account your financial circumstances and objectives.

Here are some tips for consumers:


#1 Do not buy on impulse


Ensure that you can afford the premium over the tenure of the policy. Premature terminations are likely to result in not getting back the premiums you have already paid, so take your time to understand the products.

The Bundled Product Disclosure Document offers a checklist for you to assess if the product is indeed suitable. It comes with other documents that the financial advisory representatives gives to you, like Policy Illustration and Product Summary. Understanding them helps you make an informed choice.

Shop around and compare products. Look up the CompareFirst website. Www.comparefirst.sg


#2 Buying a Bundle Product


Some life insurance products are bundled, that is, they provide both insurance protection and build up cash values over time. If you do not need to build up cash values, you might prefer to invest in other financial products like unit trusts or shares, for example. You could also consider term insurance, which offers protection against death with no cash value upon maturity.

If you are considering a bundled product, make sure it covers your insurance needs first. Part of the premium will pay for insurance coverage and the rest will be invested, after meeting certain charges.

While trying to keep premiums low, do not accept lower insurance coverage in return for building up cash values, or your dependents may not be adequately protected.


#3 If you need only Protection Coverage


If you need a plan that offers only protection against death, consider an insurance-only term plan instead of one bundled with investment component. Direct Purchase insurance term products may fit the bill. These can be bought directly from the customer service centers or websites of life insurance companies. As they are sold without financial advise, no commission is charged and you pay generally lower premiums.


#4 Free look Period


All insurance firms grant at least a 14 day “free look period” that starts from the day you get your policy. Take the time to read your contract carefully to see if it meets your needs. If you decide that the policy is not suitable, the insurer will refund all premiums less medical and administrative expenses incurred.

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