Term Insurance


Term insurance provides you with insurance protection for only a fixed period of time. This makes sense if you plan to provide for your dependants for a limited time, for example, only until your youngest child completes university or is financially self-reliant.

It pays the sum assured only upon the death of the insured or if the insured becomes totally and permanently disabled (if this benefit is provided) during this period.

There is no savings or investment feature, so there is no cash value if the policy ends or is terminated prematurely. Term insurance costs less than whole life and endowment insurance policies for the same level of coverage.

The fixed term of coverage may range from 5 to 40 years. Choose the term you want carefully. If you choose too short a period, your dependants will have no coverage to benefit from after the term expires. If you want to buy another term insurance policy after the first policy expires, you will be subject to medical or financial underwriting. The premiums also cost more with age, so it will be increasingly costly to purchase term insurance policies over time. Do consider buying a term insurance product for a longer period of coverage when you are younger.

Do pay premiums on time as unlike investment linked policies and participating whole life and endowment polices, there are no cash values to draw from to help you pay the premiums. If the policy lapses, a reinstatement of policy is subject to underwriting.

Below are two term insurance policies, arranged by CPF and SAF.

  • Dependants’ Protection Scheme (DPS)

    DPS is an optional term insurance plan that covers CPF members for a maximum sum of $46,000. DPS aims to provide CPF members and / or their families with some money to tide them over the first few years after the death of the insured member or confirmation of permanent disability. The coverage is worldwide.

    DPS works on an automatic opt-in basis. Unless you opt out, the annual premium is automatically deducted from your CPF account. The scheme is extended to CPF members when they make their first contribution to CPF. Read more on the CPF website.
  • SAF Group Term Life Insurance Scheme

    The insurance pays for all forms of death (except suicide within the first year of insurance coverage), total and permanent disablement or permanent partial dismemberment due to illness or accident. All SAF National Servicemen (NSmen) aged 55 and below are eligible to apply for this scheme. Dependants of the SAF NSmen (spouse and children, subject to age limits for the latter) enjoy lower premiums for the same cover. Its portable feature allows NSmen and their spouses to continue to be covered up to the age of 70, long after the NSman leaves employment with SAF, ORD or completes serving his NS liabilities. Read more on the Mindef website.

 

The above information is prepared in collaboration with the Central Provident Fund Board, Ministry of Defence and Life Insurance Association of Singapore.