Term vs Whole Life plans – which is right for me?

Find out more about term and whole life insurance and which one suits your needs


Thinking about ... What your dependants – aged parents, spouse and/or children – would do with an unpaid mortgage, outstanding bills and education fees, if you were no longer around, is uncomfortable for most.
 

Death coverage can help provide peace of mind knowing that if anything did happen, your family would be taken care of.
 

The two most common plans that serve this purpose are Term Life and Whole Life insurance. While both pay out a lump sum if anything should happen, they differ in very distinct ways. Find out the difference between Term and Whole Life plans here.
 

Type Term Life Whole Life Participating Whole Life Investment-linked
Purpose Pure protection. In exchange for premiums, the insurer promises to pay out a fixed sum of money if you die within the insured period. Protection plus savings. A portion of your premiums paid goes towards insuranceprotection which pays out a lump sum if you die, while the remainder is paid into a fund and invested by the insurer, growing your money for the future. Protection plus investment. A portion of your premiums paid goes towards insurance protection which pays out a lump sum if you die, while the remainder is invested into funds of your choice (depending on risk appetite), growing your money for the future.
Coverage Period Up to a specific age or term (e.g. up to age 65, 75 or for 10/20 years). Entire life or up to age 99.
Payout Pays out a lump sum upon death Pays out a lump sum of money or accumulated savings (whichever is higher) upon death, or accumulated savings minus any fees upon surrender. Pays out a lump sum of money or accumulated cash value (whichever is higher) upon death, or any accumulated cash value minus any fees upon surrender.
Advantages Premiums are usually lower than whole life plans. Accumulates cash value; helps with financial discipline in saving. Premiums are usually fixed throughout policy. Option to withdraw cash value before death.
Can take out loans from the cash value of your policy. Option to suspend premium payments available.
Disadvantages No cash value. Premiums may increase with age upon renewal. Potentially may not meet short to medium term savings goals, as there is no cash value in early years, since whole life plans are designed to work for the long-term.
Example

MyProtector 

DIRECT- Aviva Term Life 

MINDEF & MHA
Group Insurance

MyLifeChoice 

MyWholeLifePlan II

DIRECT- Aviva Whole Life

MyLifeInvest

Updated in February 2018

Find out more about life insurance today

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