[2024 Latest] Understanding Singapore Term Life Insurance: Advantages & FAQs

Many foreigners often travel to Singapore to buy term life insurance, and even Hong Kong insurance experts praise it. These endorsements have made Singapore’s insurance products very popular. Compared to other Asian countries, Singapore’s term life insurance stands out with clear advantages. To help you understand more about Singapore insurance, especially term life insurance, this article will provide a detailed guide on the buying process and answer common questions.

What is Term Life Insurance?

Term life insurance is a pure protection insurance that provides risk coverage for a specified period.

For example, if you buy a 30-year term life insurance policy and a covered event occurs within those 30 years, the insurance company will pay the sum insured to the beneficiaries or their family. If no event occurs, the policy ends after 30 years without refund of premiums or cash value. This is a consumption-type insurance designed to transfer risk to the insurance company at a low cost.

Term life insurance is characterized by low premiums, high coverage, and significant leverage, making it ideal for the primary income earners of a family to ensure financial protection during crucial periods. In the event of an accident, the family can receive financial compensation to maintain their quality of life.

Features of Term Life Insurance

1. Consumption-Based: Pure protection with no cash value, extremely low premiums, and high leverage.
2. High Cost-Effectiveness: Singapore’s term life insurance offers better advantages compared to mainland China and Hong Kong.
3. Comprehensive Coverage: Covers a wide range of diseases and various stages (early, middle, late) of illness.
4. Permanent Disability Coverage: Can cover up to 99 years old (depending on the policy term).
5. Inability to Perform Activities of Daily Living (ADLs): Includes coverage for the inability to perform daily activities (3/6 ADLs).

Frequently Asked Questions (FAQs)

1. Can Term Life Insurance include Critical Illness Coverage?

Yes, it can. Singapore’s term life insurance mainly covers death and terminal illness as the primary benefits, with riders available to add coverage for permanent disability, late-stage critical illness, early to late-stage critical illness, and premium waivers for critical illness. Given the higher risk of critical illnesses, the premiums for critical illness coverage will be relatively higher.

2. What is the difference between Terminal Illness and Critical Illness Coverage?

• Terminal Illness: Refers to diseases diagnosed as likely to lead to death within 12 months.
• Critical Illness: Covers early to middle-stage treatable diseases and late-stage diseases where survival is possible for a long time, such as stroke, severe burns, heart bypass surgery, Parkinson’s disease, loss of speech, blindness, AIDS, etc.

3. What is a typical term of a Term Life Insurance Policy?

Term life insurance in Singapore can last from 5 years to 99 years. It’s usually recommended to get coverage until retirement age, like 65 or 70. If you have the budget, choosing a longer term is better. Statistics show that critical illnesses often start between ages 32 and 60, so it’s a good idea to add critical illness riders.

4. Do you need to travel to Singapore to sign insurance documents?

5. Is it necessary to sign at the Insurance Company?

No, you can sign anywhere in Singapore. A financial adviser must witness the signing to validate it, so there’s no need to queue.

6. Do you need a Medical Examination to buy insurance in Singapore?

Not necessarily; it depends on the insurer’s requirements. For example, most companies don’t require a medical exam for term life insurance policies under SGD 2 million for clients under 55 years old. Specific requirements vary based on the client’s age, coverage amount, and the insurance company.

If there are health declarations, a medical exam might be needed. Lifetime insurance usually requires a medical exam. Your advisor can schedule these exams in advance and provide details beforehand, typically taking about an hour.

For companies allowing remote signing, clients can complete their medical exams at designated hospitals or institutions in their home country without flying to Singapore.

7. Do you need to travel to Singapore for claims?

No, you do not need to visit the insurance company in Singapore for claims. Both local and foreign clients can submit claim forms and hospital diagnosis documents. Documents from your home country should be translated into English (if it is not written in English) and sent to your financial adviser or the insurance company. After verification, the insurance company will directly transfer the funds to you. Make sure the submitted materials are accurate and complete to ensure efficient claims processing.

8. How to pay premiums for Singapore insurance?

Premiums are paid after underwriting. You can pay the initial premiums via bank transfer, automatic bank deduction, telegraphic transfer or Visa/Master international credit card. The policy application form includes an authorisation for the insurance company to deduct premiums. Subsequent premiums can be paid via automatic bank deductions, online bank transfers or telegraphic transfer. Foreigners on tourist visas can also open a bank account in Singapore.

9. What is the maximum coverage amount?

The coverage you can purchase depends on your age and income. If you’re under 40, you can buy coverage up to 30 times your annual income. For term life insurance policies exceeding SGD 1.5 million, proof of income is required. If you don’t have an income, you can purchase coverage up to SGD 500,000. Insurance companies typically offer coverage to clients residing in major cities, excluding regions like Tibet and Xinjiang. While the list of major cities varies slightly between companies, exceptions may be possible upon negotiation with the insurance company.

10. Can retirees buy large amounts of term life insurance?

In principle, those without income cannot purchase large policies. Middle-aged children cannot buy insurance for elderly parents. Seniors can buy insurance for themselves, but policies exceeding SGD 1 million require a declaration of income and proof.

11. What currencies are available for term life insurance in Singapore?

Certain insurance companies offer term life insurance in SGD, USD, EUR, GBP, AUD, and HKD. Other companies typically offer term life insurance in SGD. Regular whole life insurance is generally available in SGD, while high-end whole life insurance can be purchased in USD.

12. What is Joint Life Insurance for couples? Is it cost-effective?

Joint life insurance is commonly used when purchasing property together. If either party dies, the insurance company pays the benefit, and the policy terminates. Joint life insurance is slightly cheaper than individual policies but provides half the coverage compared to having separate policies. It is recommended for both parties to have individual policies. Additionally, joint life insurance cannot specify beneficiaries, making it complicated in the event of a divorce.

13. What is the conversion of Term Life Insurance to Whole Life Insurance?

14. Is there a waiting period for Term Life Insurance?

There is no waiting period for death coverage. Some companies offer temporary accidental death coverage while waiting for underwriting results, up to a maximum of three months. If you add a critical illness rider, the critical illness coverage usually has a 90-day waiting period.

15. Can claims be made in case of DUI, Drug Use, or Criminal Activity?

Yes, Singapore insurance policies do not exclude such situations. The death exclusion clauses in some companies’ term life insurance policies typically only include suicide within the first year and death caused by war, terrorism, or exposure to nuclear or chemical weapons in the Middle East.

16. What happens if your Financial Adviser resigns?

17. Does Singapore have return-of-premium Term Life Insurance?

Yes, but they are rare. Return-of-premium term life insurance policies have higher premiums and limited coverage. While you get a refund of premiums if no claims are made by the end of the term, consumption-based term life insurance or whole life insurance is generally more cost-effective.

18.  What are other worthwhile insurance options in Singapore?

Apart from term life insurance, Singapore offers excellent whole life insurance, whole life critical illness insurance, SGD/USD savings insurance, and global medical insurance. High-net-worth individuals can consider single-premium dividend-paying whole life insurance and index universal life insurance with premium financing. Premium financing is a risk-free leverage financial tool that provides high death benefits and cumulative value growth.

19. What is the information needed to get a term life insurance quotation?

Primary information includes your name, nationality, residency, gender, date of birth, smoking habit, and estimated coverage amount / sum assured. I can give you a quotation based on these information.