Why You Need a Whole Life Insurance Plan

Whole life insurance provides the life assured with insurance coverage for their entire life. In addition, whole life insurance also accumulates a cash value that is payable upon surrender of the policy.

While death may not be a subject people enjoy talking about, it is a certainty we need to plan for. A whole life insurance plan essentially provides what can be considered a guaranteed payout for your loved ones should the unforeseen happen to you and you are no longer able to provide for them.

Limited pay, coverage for life

When you choose to buy a whole life insurance plan, you will receive coverage for life, unless you choose to surrender the plan. This means regardless of when death will occur, your loved ones will receive a guaranteed payout, which will be at least equal to or more than the sum assured that you bought on the policy.

Most whole life insurance plans today, including the AXA Life Treasure, are limited pay policies. This means you only pay the premiums for the plan for a period of time but continue to enjoy coverage for life. For example, the AXA Life Treasure allows you to choose a premium term of 10, 15, 20, 25 or 30 years so that you can decide how long you wish to stretch the premium payments for.

This way, you can structure the payment terms such that you do not have to worry about paying the premiums after a certain age, due to plans to FIRE (Financially Independent, Retire Early) or when you may no longer be working. This flexibility allows you to select the payment period which is most suitable for you, depending on your retirement plans or cash flow preference.

Death benefit & multiplier effect

While the sum assured you buy is a guaranteed minimum payout that you or your beneficiaries will receive in the event of an insured event (i.e. death, permanent disability, terminal illness), you may also opt for a payout higher than the sum assured. This is because many whole life insurance plans today provide a multiplier benefit. Depending on the multiplier you choose, your cover can go up to x times of the initial sum assured. However, it is important to know that multipliers end after a certain age.

For example, the AXA Life Treasure allows you to choose a multiplier benefit of up to 7 times the basic sum assured. This multiplier benefit then expires after the policy anniversary nearest to the life assured’s 70th birthday.

If you want to leave your beneficiaries a sum assured of $100,000 after living a full life, you can purchase this amount and choose to go with a multiplier benefit of 5 while you are raising a young family and/or have elderly parents to support. This way, your beneficiaries will receive a payout of $500,000 if death occurs.

Other add-on riders

Another important component of whole life insurance is that it allows you to add on other important riders to complement your main plan, ensuring you enjoy a holistic coverage. These riders may include early critical illness (ECI) plan, critical illness (CI) plan and accidental death benefits. Typically, you also enjoy favourable premium rates when you add on a rider to your main whole life insurance plan, as opposed to buying them as separate standalone insurance plans.

Cash value

With whole life insurance plans, you are also building a cash value – which may comprise of both a guaranteed and non-guaranteed return – on top of your coverage.

The portion of guaranteed returns is what the insurance company is obliged to pay you. The non-guaranteed portion of the returns are based on the performance of the insurance companies’ participating funds.

You can buy whole life insurance plans for your life assured as early as the first month

Limited pay whole life plans may be best bought at an earlier age. That’s because at a younger age, mortality risk is lower and hence premiums will likewise be cheaper. With its limited pay feature, a person who has bought a whole life plan from young may be able to complete all of their insurance premium payments at a much younger age, while still enjoying lifelong coverage, without having to worry about the insurance premiums.

An additional benefit of completing payments from as young as possible is that the non-guaranteed component of the policy can compound for a longer time period, hence potentially distributing a higher payout return upon death.

On top of this, policyholders may also seek additional coverage with no underwriting at key milestones in their life, have the flexibility to add or remove riders that they may or may no longer need, and enjoy the multiplier benefit, while concurrently accumulating cash value in their whole life insurance plan over time.

All these advantages make a whole life insurance plan an attractive proposition to add to your insurance portfolio, especially when you buy the plan at a younger age.

The AXA Life Treasure is a whole life insurance plan that you can buy from as early as 1-month till age 65 years old. With a minimum sum assured from just $25,000, you can get coverage if you have a limited budget.

To find out more information about how such a whole life insurance plan can help protect you and your loved ones, you can read up more about the AXA Life Treasure plan here.

Disclaimer:

This article is for general information only and does not take into account the specific investment objectives, financial situation or needs of any particular person. The views expressed herein do not necessarily reflect the views of AXA Insurance Pte Ltd and should not be construed as the provision of advice or making of any recommendation. There is no intention to distribute, or offer to sell, or solicit any offer to purchase any product. We recommend that you seek the advice of a qualified financial advisory professional before making any decision to purchase an insurance or investment product. Whilst we have taken reasonable care to ensure that all information provided was obtained from reliable sources and correct at time of publishing, information may become outdated and opinions may change. We are not liable for any loss that may result from the access or use of the information herein provided.