Life Insurance VS Term Insurance - Which Is Better?
What is the difference between whole life and term life policy? What happens if a policy lapses? Answered by Phylise Er
Insurance policies may all look similar, but different policies offer different benefits. Ms Phylise Jia Er Li, from AXA, provides insurance advice to parents who need it.
What is the difference between whole life and term life policy? What happens if a policy lapses?
Life insurance gives you and your family financial protection against the financial loss that can happen after your death or if you suffer from total and permanent disability (if this benefit is provided).
For a whole life insurance policy, you can either pay premiums throughout your life or for a limited period, yet enjoy life-long protection (do note that total and permanent disability coverage usually ceases at age 60 or 65).
There is usually a surrender value after a stipulated period of time. In the event of a claim, the policy will pay out the sum insured and any bonuses you have accumulated over the years.
A term policy aims to provide a higher sum assured at an affordable premium. You can choose to be covered for a specific duration or up to a certain age, and you have the flexibility to choose if you want to pay premiums for a limited period or throughout the policy term.
Normally, the term policy does not have surrender value. However, some term policies allow you to attach a cash back rider so that you can get back the premiums paid upon the end of the term, if there is no claim on the policy.
A policy will cease to provide coverage when it lapses. You may reinstate it within a certain period of time as long as you meet the conditions set out in the policy contract.
Ms Phylise Er Jia Li
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This commentary expresses the views of Phylise Er Jia Li, CFPcm representing AXA Life Insurance Singapore Pte Ltd. It is not made with regard to the specific investment objectives, financial situation and particular needs of any person. You may wish to seek advice from a financial adviser before making a commitment to purchase the product.
In the event that you choose not to seek advice from a financial adviser, you should consider whether the product in question is suitable for you. The precise terms and conditions of the plan are specified in the policy contract. Buying a life insurance policy is a long-term commitment.
An early termination of the policy usually involves high costs and the surrender value may be less than total premiums paid. Buying health insurance products that are not suitable for you may impact your ability to finance your future healthcare needs.
A product summary is available and may be obtained from AXA Life Insurance Singapore Pte Ltd and the participating distributors’ offices. You should read the product summary before deciding whether to purchase the policy.