Should I get life insurance in my 20s and 30s?

Many young Singaporeans in their 20s or 30s may not always think about buying life insurance plans because legacy planning is far beyond their line of sight.

However, what they fail to see is that unexpected situations can strike anytime to cause financial woes. What if there is an accident or diagnosis of critical illness that restricts the ability to work? What if a sudden death winds up generating insurmountable debts for family members?

The unforeseen does happen to anyone and at any age and life insurance payout offers a sound solution to cover outstanding debts so that loved ones do not have to be burdened.

Benefits of getting life insurance in your 20s and 30s

Life insurance plans in Singapore promise to pay beneficiaries a sum of money upon the death of an insured person to lighten financial hardship in cases of mishaps. It is good to note that buying life insurance in your 20s offers much more benefits than if you purchase one in your 40s or later. Here's why:

You can get better life insurance coverage

Even the best life insurance plans in Singapore will not cover pre-existing medical conditions. It is a common practice amongst insurers. This means you're more likely to get comprehensive coverage when you’re younger and with fewer or no medical issues.

Premium prices increase with age

Premiums for whole life and term life insurance are closely tagged to your health and age. It becomes more expensive with each passing year since health tends to deteriorate and become more vulnerable to health risks over time.

If you want to pay a lower premium, buying a policy when you're in your 20s will be much cheaper than when you buy one in your 40s.

You'll be protected against loss of income

Unexpected circumstances can sometimes strip away your ability to earn an income without warning.

When this happens, a life insurance plan assures you of a regular income to tide you through difficult cash flow situations, clear debts or serve as reserve funds for your retirement.

It provides financial compensation for dependents

One of the key objectives of buying life insurance in Singapore is for legacy planning and providing financial support for dependents when you pass on.

The insurance payout can relieve your family of debts such as mortgage or car loans that you may leave behind and ensure they can continue to live comfortably without compromising their lifestyle.

Types of life insurance plans

If you are ready to scout around for the best life insurance plan in Singapore, do take note that such policies are divided into two three categories: term life insurance, whole life insurance and investment-linked policies (ILP).

Term life insurance

Unlike whole life insurance which covers the entire lifetime, term life insurance covers a specific number of years such as 20 years or 40 years.

If you have a limited budget for the monthly premium, financial advisors will usually suggest starting with a term policy to get maximum coverage without incurring expensive monthly premiums.

Whole life insurance

Whole life insurance refers to policies that provide coverage through the age of 99. Such policies allow you to grow your savings and enjoy maximum cash value returns when a policy is claimed or surrendered.

Because life insurance premiums typically rise by an average of eight per cent to 10 per cent for each year, signing up for a plan in your 20s is cheaper and offers wider coverage.

Investment-linked policies (ILP)

This is a hybrid financial product that comprises life insurance features and investment components. ILPs provide regular life insurance coverage while using part of the premiums to invest in funds of your choice.

Bear in mind that ILPs do not have any guaranteed cash values because they fluctuate with the fund's performance.

Best life insurance plans in Singapore

In case you are ready to sign up for a life insurance plan, check out the following list of best life insurance plans offered by different insurers in Singapore:

Best term life insurance policies

Best whole life insurance policies

Insurer	SingLife - MyWholeLife Plan IV	Income - Star Secure	AXA - Life Treasure (II)
Annual Premium	S$5,138	S$4,915.20	S$5,260
Coverage	Death, TPD, Terminal Illness	Death, TPD, Terminal Illness	Death, TPD, Terminal Illness
Pay Premiums	Single, Between 5 to 25 years	5 to 30 years up to age 64	10, 15, 20, 25 or 30 years
Features	Cash value Four times sum multiplier Potential bonus payouts Supplemental retirement income Retrenchment benefit Wide range of optional riders	Cash value Five times sum multiplier 200per cent sum assured upon accidental death 6-month retrenchment waiver Rider for future unknown diseases like Covid-19	Cash value Seven times sum multiplier Fourteen times sum assured accidental death benefit Increase coverage at milestones Critical illness rider

Conclusion

You shouldn't be sitting on the fence when it comes to buying life insurance. These policies offer the most coverage and lowest premiums when you are in your 20s or 30s.

Even if you cannot afford a whole life insurance policy, consider getting a term life policy instead that can last for 10 to 30 years. That way, you'll still be financially protected throughout your working life at a very low cost.

ALSO READ: Buying insurance during a recession

This article was first published in ValueChampion.