nil conscire sibi, nulla pallescere culpa
to have a clear conscience and not pale at any charge

CHEAPEST TERM INSURANCE

Save $10 a month & you may have just lost $123,474 or more

I read with disgust a person’s claim that they are “… educating consumers about making the right choice about their financial planning…”.  However, all they ever talk about is how cheap they are compared to their competitors, blah, blah, blah…

Is premium the most important thing when you are buying insurance?
You will be shocked only to find out that it’s too late.
Shouldn’t the coverage, terms and conditions (a.k.a. the fine prints) be more important?

2 Questions You NEED TO ASK!

1) What is the Definition of Total and Permanent Disability (“TPD”)?
While there is no difference in the definition of Death and Critical Illnesses (since the standardization) from 1 company to another, the definition of TPD surely differs. Generally, to be considered for TPD claim, the insurance companies have a set of TPD definition. One occurance (to be considered for TPD) is that the insured suffered the lost of 2 limbs. Physically? Read on.

While some companies need the limbs to be physically severed, others only require that 2 limbs losses their effective use. Below are just some examples:

NTUC Income defines it as “…the loss by complete severance at of both limbs at or above the wrist or ankle” (Read Details)

AIA defines it as “… loss by severance of two limbs at or above wrist or ankle”.

Great Eastern‘s definition is “…loss by complete severance of two limbs at or above the wrist or ankle”. (Read Details)

Prudential: “… loss of the effective use of any two limbs at or above the wrist or ankle…”.

I leave it to you to decide which definition would admit the claim more easily.

2) How am I PAID if I submit my claim for TPD?
Some companies would payout by instalment basis (eg 10% of the sum assured in the first 4 years and the remaning 60% in the 5th year) while some other companies pay the full amount (up to a certain limit like $650,000) on admission of the claim.

Do you know how much you stand to loose? If you take out a $500k policy, you claim only $50k for Company XYZ (which pays via instalment) in year 1, while $500k from the companies which pay a lump sum. Invest $300k (from the lump sum of $500k) which earns a 9% pa returns and at the end of the 4th year, you’ll be getting $423,474. That’s $123,474 more.

Now do you know why certain company can claim that they charge the lowest premium?
Well, it’s my bet that they keep the payout and reinvest them.

The following companies, as far as I know, pays TPD claims via instalment basis:
NTUC (see details)

The following companies, as far as I know, pays TPD claims via lump sum (up to a certain limit like $650,000 and the remaining on the 2nd year):
Prudential

I will add on to the list when I know which company uses what payment method.

One Response to “CHEAPEST TERM INSURANCE”


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