Temporary vs. Permanent Life Insurance Policy

It is time to stop thinking about life’s uncertainties and start embracing long-term predictability.  People invest money in mutual funds, property, land etc. but investing in an insurance policy can also be a great way to protect your family members, even after your departure. Whether you are planning to purchase a policy or just looking for quotes, it is important to understand the types of policies available so that you can select the one that meets your requirements.  There are two general types of insurance policies – temporary and permanent.

Temporary Insurance
Universal Life

It is a type of insurance policy that provides coverage for a limited period, or specified ‘term’ of years. If the insured dies during the specified time, then the death benefit will be paid. Factors to consider while opting for term policy –

–    Term of the policy
–    Premium amount
–    Death benefit

Permanent Insurance
Universal Life Insurance plans

Permanent life insurance provides insurance for your entire life (in most cases). As long as your premiums are paid, your beneficiaries will receive the proceeds, no matter when you die. The main types of permanent insurance are variable, whole and universal. Factors to consider while opting for a permanent policy –

–    Tax advantages
–    Age
–    Cash Value

Term or Permanent – Which Is Better
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Before buying a policy, it is important to categorize your insurance needs. Term insurance is appropriate for an average individual looking to insure themselves against unforeseen events. On the other hand, permanent life insurance can be beneficial for someone who wants both living and after death benefits.

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Reasons to Opt for Universal Life Insurance in Singapore

Universal Life Insurance is a specific type of flexible permanent life insurance, prevalent mostly in the United States and some other parts of the world, such as Singapore. In this type of policy, the excess premium over and above the current cost of insurance is credited to the cash value of the policy every month along with the interest accrued. In universal life Singapore insurance, the cost of insurance (COI) charge and other charges and fees are drawn from the cash value of the policy.

Life insurance singapore

The insurer determines the insurance to be credited to the account but has to deliver a contractual minimum rate of 2%. The policy is termed as an “Indexed Universal Life” contract, when the earnings rate is pegged to a stock, bond or any other financial index.

The relevance of Universal Life Insurance is on the rise globally, as life insurers in some of the booming Asian economies are challenged to introduce products reflecting the needs and requirements of the customers of today. The customers can opt for Universal Life Singapore insurance policy for wealth creation, wealth distribution, legacy planning, and even in the instance of protecting their interests as shareholders in family businesses.

Many people in different parts of the world are realizing the various Benefits of Universal life insurance plans that offer both the low cost protection of term life insurance, as well as a savings element providing a cash value buildup. The policyholders are also free to alter the death benefits, savings, and premiums as per their circumstances. The interest accrued from policy savings can even be used to pay premiums. Customers can also make the most of a growing cash value of investments, where the rate of growth is variable and adjusted monthly.

Permanent life insuranceUniversal life Singapore insurance would remain in force for the period of guarantee even when the cash value drops to zero. Such plans come with a no lapse guarantee and would not lapse if certain minimum premium payments have been paid. Owners can also use these plans to bring down their premium outlays to a minimum.

Given all the merits, more people looking to enhance and protect their wealth are opting for Universal life plans from leading insurers that have considerable experience in the domain. The policy holders have everything going in their favor. They have a guaranteed return throughout the life of the policy, and a cash value from which withdrawals can be made without having any effect on the lump sum benefit.

Generic Characteristics of Universal Life Insurance

life insurance SingaporeUniversal life insurance is a type of interest sensitive whole life insurance policy that offers flexibility in the amount, method, and timing of premium payments. Cash value is created with time, and policy holders have the option to borrow or withdraw from the same. There are a few plans that guarantee a minimum interest crediting rate and are popular among high net worth individuals. Policy holders can use these plans for wealth creation, wealth transfer, estate distribution, and legacy management purposes.

In Singapore, Universal life policies are registered and approved by the Monetary Authority of Singapore (MAS).  This organization endeavors to promote sustained and non-inflationary economic growth in the country through carefully designed monetary policies and macroeconomic evaluation. Universal life insurance in Singapore has come a long way since it was introduced in the country back in 2003, with many local companies today coming up to cater to the increasing demand.

To get a better understanding of this product, you would need to understand its generic characteristics, some of which are mentioned below.

life insurance Singapore

• Caters to a target market – This is a product created for high net worth clients in both local and global markets.

• Offers high permanent coverage – The coverage for these policies are really high starting at about $ 500,000.

• Comes with a high age of entry – Applicants up to the age of 60 can apply and use the plans for estate and wealth management purposes.

• Premium financing possible – You can invest single or regular premiums and work with banks to finance the amount.

The option for interest crediting exists, with accounts earning interests at rates that change with time. Most plans come with a minimum interest rate, which is generally better than the interest rates being paid on bank deposits.  If the cash value or the premium payments are not sufficient to cover the cost of the insurance, the death benefits might not be available. However, you can add a guarantee to your policy to keep it effective when certain premium payments have been made. The policy would not lapse even when the cash value drops to zero.

Improve Returns and Reduce Risk with ‘Living Benefits’ of Permanent Life Insurance

permanent life insurance

Sometimes in life, we feel that we see things clearly, but we might be missing some vital elements. Life is uncertain, and we never know what the future may bring. In a world of uncertainties, it is important to ensure that we live a happy life, and our families remain financially secure even if we are no longer there with them. There are numerous ways to invest and have a secure financial future; however, most investments are ‘subject to market risks’. In contrast, a life insurance policy, if chosen correctly, can be remarkably beneficial in the long run.

Whether you are seeking additional, new or alternative life insurance, you could easily be confused by the marketing strategies and arguments of insurance agents. Life insurance policy is quite similar to buying a property because it depends solely on the needs and finances of the buyer. However, when it comes to buying life insurance, there are various merits of Permanent Life Insurance as compared to Term Insurance Policies. In fact, permanent insurance also provides numerous living benefits because the cash value builds overtime, and once it amasses, it can be used to improve your family’s life and secure their future.

The ‘living benefits of a permanent insurance policy

Permanent insurance is a win-win because it provides huge ‘living benefits.’  Some important ways in which you can use these benefits are:

Education
Every parent wishes to give the best education to their children; however the high fees involved with higher education often puts an end to this desire. If you have a permanent policy, college and other living expenses can be paid using insurance cash value. Various parents buy permanent insurance plans to be able to pay high college fees in the future.

Generating Business Cash
If an opportunity arises or your business requires instant cash, you can access the cash value of your permanent policy instantly, without any lengthy applications and approval processes. It is a great way to avoid business loans and the interests involved.

Funds for Emergencies
Whether it is illness, home repair, or any other need that requires instant cash, you can speak with your insurance agent and include a financial security plan that manages risks in your policy.

With correct planning, protection and accumulation, a Permanent life insurance policy can help you build a stable foundation for life. Find an instant policy quote online and get in touch with our financial representatives to discuss your requirements today!