1. Understand the Purpose of Term Insurance

Term insurance is primarily intended to replace lost income if the primary breadwinner passes away or becomes unable to work. These needs are usually temporary, ending once dependents become financially independent.

• Consider purchasing insurance until you no longer have dependents—for example, until your children are financially self-sufficient.

• Term insurance is usually cheaper than whole life insurance for the same coverage, making it ideal for temporary high-priority needs.

2. Choose the Right Duration of Coverage

Ensure the policy term is sufficient to cover:

• The period your dependents need financial support

• Loan or mortgage repayments

Examples:

• A woman in her twenties may choose coverage until retirement or for at least 30 years.

• A couple may purchase term insurance to cover a mortgage, which decreases as the loan is repaid.

Avoid paying premiums for coverage you no longer need.

3. Check for Renewability

If your future coverage needs are uncertain, choose a renewable term plan, which allows you to extend the policy without further medical underwriting.

Note:

• Premiums increase with age at each renewal.

• For longer protection, a fixed-term plan with constant premiums may be more cost-effective.

4. Consider Staggered or Diminishing Term Plans

• Staggered term plans: Provide higher coverage early on when responsibilities are greater, and lower coverage later when obligations decrease.

• Diminishing term plans: Coverage decreases over time, ideal for loans or mortgages that reduce with each payment.

5. Look for Convertibility

Some term plans allow conversion to a permanent life insurance plan after a specified period. This feature can be valuable if your long-term insurance needs change.

6. Pay Premiums on Time

Term insurance typically has no cash value, so missing premiums can cause the policy to lapse.

• Some plans offer a non-forfeiture provision, but it’s best to ensure premiums are paid on time.

• Reinstating a lapsed policy may require proof of good health, which can be expensive or difficult later.

7. Understand the Insured Event

Know exactly what the policy covers:

• Death

• Terminal illness

• Total and permanent disability

• Early-stage or advanced critical illness (if included)

Ensure that the coverage matches your family’s needs.

8. Choose Riders Wisely

Riders can enhance your term plan, but avoid unnecessary add-ons:

• Waiver of premium rider: Keeps your policy active if you develop a severe illness or disability.

• Critical illness rider: Pays a lump sum if diagnosed with covered critical illnesses.

Only select riders that add meaningful protection.

9. Consider Group Term Insurance

Group term insurance can be more affordable:

• Offered by employers or unions (e.g., Singapore Armed Forces, NTUC Union)

• Employer may cover the premium, making it cost-effective

• Verify your coverage amount, as it varies by role and organization

10. Compare Premiums and Features

Premiums vary based on:

• Age

• Gender

• Sum assured

• Policy term

Tips for better deals:

• Compare multiple insurers to find the best coverage and rates

• Check for discounts on higher coverage amounts (e.g., $1 million)

• Evaluate the features offered alongside premiums