6 Factors That Affect Your Insurance Premiums

Factors that affect your insurance premiums

Pay a sum of money to an insurance company, and you get a bigger sum in return if bad things happen to you. That’s how insurance works, generally. We previously wrote about the different kinds of insurance premiums there are, and the modes of payment. However, have you ever thought about what affects the premiums for your plans? In this article, fundMyLife lists the factors that affect your insurance premiums.

Age

There’s a commonly touted saying that you should get your life insurance while you’re still young. When you’re young, there is a lower risk that your insurance company will pay you any time soon. On the other hand, once you’re older, there’s higher risk for the insurance company to need to pay out. As such, you would need to pay relatively higher insurance premiums if you get your insurance later in your life as opposed to earlier.

Does it mean you should get life insurance as soon as you’re born? Not necessarily, especially when you do not have dependents yet.

Sex

More specifically, your biological sex. Get your mind out of the gutter. Statistically, women live longer than men. As such, with the higher risk of dying, men will pay more than women at every age to reflect that relatively higher risk.

Lifestyle

Smoking status

Smoking is associated with a lot of health problems later in life. It ranges from respiratory diseases to coronary heart disease to the deadliest – lung cancer. As such, smokers pay a higher premium compared to non-smokers because smokers are likelier to die earlier.

Occupation

Not all occupations are dangerous, but conversely not all are safe either. Office workers are less likely to die during their work as opposed to, say, a firefighter. As such, depending on how risky your work is, your premiums may differ to reflect the level of risk your job brings.

Health status

If you’re unhealthy, you’re at risk of contracting more diseases and live a shorter life. For example, if you are overweight, you contract obesity-related diseases such as heart disease or diabetes. As such, if you’re not at the pink of health, your premium increases.

On a related note, in the recent years insurance companies are incentivizing consumers to get healthier via innovative solutions. For example, AIA Vitality gives you premium discounts and ManulifeMOVE gives you premium cashback when you hit a certain number of steps a day. This is a win-win because consumers reduce their rate of mortality, and insurance companies do not have face too many claims due to a pool of healthy insured individuals.

Coverage amount

At the risk of sounding obvious, one of the factors that affect your insurance premiums is the coverage amount. More specifically, the more you insure yourself for, the higher the premiums. Insuring yourself for $500,000 will definitely be more expensive than if you insured yourself for $100,000. This case is true for all kinds of insurance, not just life insurance.

Mode of payment

As mentioned in our previous article on different modes of payment for your insurance. Paying annually saves you a bit of money as opposed to paying monthly. This is because insurers are also unsure about how regular the payment will be if you do monthly as opposed to yearly. As such, the premiums are cheaper if you pay annually as opposed to monthly. While it’s cheaper to pay all at one go, you must carefully consider your existing liquidity and not end up having no cash when you need it.

Pre-existing conditions

When/if you have pre-existing conditions, you have a higher chance of being hospitalised or getting injured or even die.

As such, usually you get completely rejected when you want to buy insurance. However, if the pre-existing condition is not severe enough, sometimes the insurance company will increase the premiums to reflect the additional risk of taking you on.

Connect with fundMyLife financial advisers today!

There we have it, the factors that affect your insurance premiums, relative to other people who are getting the same product. For most parts, we here at fundMyLife believe that products are more or less competitive. The advisers on the other hand, are more crucial parts of your financial planning.

What’s that? Haven’t found a good financial adviser? Worry not – fundMyLife got you bro. You can connect with our panel of experienced and awesome financial advisers, curated by us. Head on over to fundMyLife and ask our awesome financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

Looking For Insurance For Pre-existing Conditions? Here Are 4 Options You Can Consider.

Insurance for pre-existing conditions

It sucks to have what insurers call pre-existing conditions. These conditions are defined generally any injuries or illnesses that affect you before you start your insurance policy. It can range from something you were born with such as asthma, or something that develops later in your like, such as diabetes.  At best, you have to pay extra premiums to account for the additional risk borne by the insurance company. At worst, the company denies you access to insurance.

It’s not the end of the world if you are one of those out there. If you are looking for insurance for pre-existing conditions, there are still options available to you. In this article, fundMyLife discusses what you can do to get yourself protection, even with pre-existing conditions.

#1 Corporate group insurance plans

If you or your spouse works in a medium to large-sized company, chances are that your company has a group insurance plan, be it for yourself or your spouse. Some corporate schemes have a thing called medical history disregard. As its name suggests, employees (and their partner, if available) under this group plan can join no matter what their health condition is.

You should check with HR if the group insurance covers individuals with pre-existing conditions. The only downside is that you have to stick with the company to maintain coverage. That is a risky decision, since your coverage is now at the mercy of your employers. However, if it’s a good company, why not stay?

#2 Moratorium underwriting

When you apply for insurance, you under go medical checkups and complete questionnaires about your health. This is because insurance companies require these to assess the risks involved when covering you.

Moratorium underwriting is when the company does not require you to undergo checks and questionnaires. Instead, a waiting period is declared. If you do not undergo any treatment or get ill from your pre-existing condition during the waiting period, your application for insurance will be approved by the insurance company.

This move is risky, since you won’t have coverage until the moratorium period is over. Not all companies provide moratorium underwriting. At the point of this writing, only Aviva officially provides moratorium underwriting so you’ll have to speak with your own adviser.

#3 Non-conventional products

There are global insurance for pre-existing conditions offered by local companies, such as AXA’s GlobalCare Health Plan and AXA InternationalExclusive. Providing health insurance for individuals with pre-existing conditions is, from the perspective of a local insurance company, risky. The potential downside about international health plans is cost, i.e. it costs more to get yourself insured under these international plans.

In the recent years, insurance companies took the initiative to design specialized products for those looking for insurance for pre-existing conditions. Critical illness plans are typically out of reach for individuals with chronic diseases, such as diabetes. However, with rising cases of diabetes each year, it means more people are excluded from getting adequate coverage. AIA Diabetes Care is a critical illness plan for individuals who are pre-diabetic or have Type II diabetes aged between 30 to 65 years old.

In addition, most travel insurance do not cover claims from individuals with pre-existing conditions as well. NTUC Income has Enhanced PreX plans that provides coverage for those incurring medical expenses while they are overseas.

#4 MediShield Life

This is almost a no-brainer (since every Singaporean has access to it), but a point worth putting in this list. If all else fails, there is MediShield Life for basic coverage. Those with pre-existing conditions are still eligible, but have to pay 30% more premiums for ten years before the premium goes back to normal that corresponds to the age group. That said, according to MOH those who control their pre-existing conditions, or have mild ones, do not have to pay the extra premiums.

Ask fundMyLife financial questions today!

If you have a pre-existing condition, we hope this article is reassuring. There are still options out there if you are looking for insurance for pre-existing conditions.

If you don’t know who to ask or where to find amazing financial advisers, we got you. If you want to engage more financial advisers, or if you haven’t found the right one, why not consider advisers of fundMyLife? You can head on over to fundMyLife and ask our pool of financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

The Best Insurance Policies At Your New Life Stages

The right policies when transitioning to new life stages

Life is a long journey. Typically, advancing into new life stages can be scary since each new life stage comes with its own special challenges and intricacies. Which you may or not be prepared for.

However, fear not. In this article, fundMyLife explores the insurance policies you need to get as you enter different new life stages. Typically, an individual in Singapore first goes through student life, followed by working adult life as unmarried, followed by marriage and family, and finally retirement. Do bear in mind that this guide accounts for more common life stages.

#1 Student

As a student, the minimum protection you should get is hospitalization plans for yourself. This is because you have do not have dependents, and you still relatively low risk for critical illnesses,  For students in tertiary institutions, your school usually has a group insurance plan.

The only downside to that is that those are group insurances, and the payout may not be adequate. A quick look at the group hospitalization NUS scheme for students reveals that the limit is B2 ward. As a student, you can also consider personal accident plans if you are active in sports.

#2 Working adult

Congratulations, you’re gainfully employed in a company! Often, being employed comes with corporate benefits such as group insurance. Similar to what we mentioned earlier for pre-graduation students, group insurances do not have high payouts and you typically need other plans to cope with new challenges. For example, on top of your hospitalization plan, you’ll need to get critical illness. Now that you’re older, you’re at higher risk of contracting critical illnesses, especially cancer (touch wood). The lump sum from critical illness plans will help you get back on your feet in those events.

Depending on the nature of your occupation, it’s a good idea to thinking about disability income as well. Of course, office work has relatively lower risk of disability-causing injuries, compared to a physically-demanding job like working in a warehouse.

What if you’re a freelancer? Almost 9% of Singapore’s workforce consists of freelancers. This number is set to increase over the years as the gig economy expands in Singapore. While the freedom of time is a plus as a freelancer, it may also be slightly trickier. Being a freelancer has various challenges. Firstly, freelancers often have irregular and unpredictable cash flow. Secondly, when freelancers fall sick or get injured they do not earn money at all. Furthermore, there is no company insurance benefits that employees enjoy.

From our research, how some freelancers cope is purchasing personal accident insurance with income protection riders. However, this can be an expensive option. Earlier in 2018, GigaCover launched Freelancer Income Protection (FLIP) Insurance to provide freelancers who are unable to work with daily cash benefits.

#3 Married

With marriage, you now have dependents, i.e. people who depend on you. At the risk of sounding grim, with additional responsibilities, your life is now not just your own.

As such, you can consider more policies at this stage. On top of hospitalization, critical illness, and/or disability income plans, breadwinner(s) should strongly consider life insurance. In the case that the breadwinner(s) pass away suddenly, the life insurance payout can tide his/her family by. Mortgage insurance will also be important as well if you have a loan for your house, as in cases of unforeseen circumstances, mortgage insurance covers the remainder of your housing loan.

Mothers-to-be can think about maternity insurance for the peace of mind during your pregnancy. When your kid is older, consider getting a personal accident plan for him/her, since children are prone to injuries.

#4 Retirement

Now that you’re older, and the children have flown the nest, it’s time to scale back on some policies. Keep your personal accident insurance, as the elderly are accident prone. As always, make sure you have hospitalization plans for yourself to cover hospital and medical bills. On top of that, once you’ve retired, you’ll be less exposed to occupational hazards that causes disabilities. Your children are fine on their own – you can focus less on life insurance and focus more on life.

Ask fundMyLife financial questions today!

That’s all we have for you, folks! We hope this article was useful for your journey in life ahead. Whether you’re still going to be in one life stage, or is moving on to a new one, you’ll need to be aware of several constants. Hospitalization plans should be a lifelong mainstay, as there is a chance of you being in hospital at any point in your life. Furthermore, another constant is that in each life stage, you have new responsibilities. As such, your new policies should align with those new additions.

Getting your insurance done when you enter new life stages can be scary, but that’s what we’re here for. If you don’t know who to ask or where to find amazing financial advisers, we got you. If you want to engage more financial advisers, or if you haven’t found the right one, why not consider advisers of fundMyLife? You can head on over to fundMyLife and ask our pool of financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

I Already Know Which Insurance Policy I Want. Is There A Difference Who I Buy It From?

Does it make a difference who to buy insurance from?

You’ve definitely done your homework on which insurance policy to buy. You’ve read through every article in finance media sites like DollarsAndSense, scoured through every HardwareZone forum post, and tried all the financial calculators out there. Now that you’re equipped with all the knowledge you need to make a decision, it’s time to buy the policy you want. Wait a minute, who to buy insurance from?

Fortunately for you, there are plenty of places you can purchase your policy. You can get your policy from tied agents, independent financial advisers, personal bankers, and if all else isn’t your cup of tea, you can even DIY. You might be wondering if each of these places make a difference. Spoiler: it does. In this article, fundMyLife looks at the different channels where you can purchase insurance for comparison.

#1 Tied agents

What is it?

Tied agents are appointed representatives of one single insurance company and thus can only sell policies from their respective companies. They also form the most common of agents you will encounter out there.

Is it any different?

They are unable to sell insurance from other companies. That means if you want to purchase products from other companies, you’d need to engage another tied agent from a different company. There are pros and cons regarding that.

In addition, due to the fact that they can only sell their company’s products, there is an impression of biasedness. However, the best ones can offer their opinion regarding competing products and tell you the pros and cons of products outside their companies. Make sure you do your own homework as well.

#2 Independent financial advisers (IFA)

What is it?

Independent financial advisers, as opposed to tied agents, have access to greater variety of products from several companies. Their draw is that they can recommend you products from different companies, and provide comparisons for these products. Thus the term “independent” in their titles.

Is it any different?

The variety provides flexibility for your financial needs. However, don’t buy too strongly into the whole we-are-independent branding they commonly espouse. Just as you have great tied agents, you also have lousy IFAs. You can have the most “independent” of IFAs, but the independence counts for nothing if they’re terrible at what they do. If the IFA is terrible and they have access to five companies’ products, it also means you have access to five times unsuitable products.

As such, it’s important that you do your homework as well.

#3 Personal bankers

What is it?

Once in a while, you will get a call from your bank asking if you’re interested in purchasing insurance. On other occasions, it can be when you’re meeting your relationship manager in the bank and he/she asks if you’ve bought insurance yet. Banks occasionally form partnerships with insurance companies, e.g., DBS and Manulife, UOB and Prudential, etc. In these partnerships, banks act as a distribution channel to capture consumers.

Is it any different?

To some, it is a good way to do everything at once – banking, insurance, and investments all under one roof. There is an advantage in getting your insurance via a bank. Innovative bank accounts such as DBS Multiplier involves the purchase of insurance through the bank. We wrote something on the account, by the way.

However, the turnover rate in the banking industry is notoriously high. When it is time to claim, be mentally prepared to do some legwork to correspond with the assigned representative in the bank. In addition, when the partnership between an insurance company and the bank ends, you’ll also have to do some legwork to contact the representative from the insurance company.

#4 DIY

What is it?

DIY, as its name suggests, refers to you getting insurance without the need of any external human parties, i.e. agents or advisers. The DIY approach depends on what sort of insurance you’re purchasing. Certain kinds of policies are relatively straightforward. Personal accident and travel insurance are examples of this class of insurance. Those, you can purchase online.

For other insurance policies like direct purchase life insurance, some insurance companies do not allow you to purchase online. In those cases, you typically have to trek down to the company’s office to get your insurance.

Is it any different?

The DIY insurance experience is divided into two parts: the purchase and claims. Typically, the purchase experience is hassle-free and easy if it is online. After all, in the age of e-commerce, user experience is everything. However, the second part, claims, has more variability. The claims experience of DIY insurance depends largely on the company representative you’re assigned to.

For direct purchase insurance, we wrote an article on the pros and cons of direct purchase insurance, and questions you should ask yourself before you purchase a DPI.

Connect with our advisers today!

The matter of who to buy insurance from is definitely crucial, and we hope that this article helped you make a decision. In the end, it is up to you to decide who to buy your insurance from and it’s not an easy choice. However, you can also consider asking our pool of financial advisers who were carefully curated to ensure that you’re engaging with advisers of high caliber.

Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

What You Need To Know About Insurance Premiums

What you need to know about insurance premiums

Written by Jing Xuan

Premiums are no stranger to a policyholder when one has to part with his money to get insured. However, the topic of premium payment usually surfaces only when you have sat through a long policy explanation by your financial adviser so by the time you have to select your premium payment method, you would probably just agree with your adviser’s suggestions, trusting that it would be the ideal choice for you. Well, that is true most of the time, but paying premium is not as simple as forking out money every month and here are things you need to know before agreeing to that monthly premium payment!

For those who are unfamiliar with the term, an insurance premium is the amount of money an individual or corporation has to pay for purchasing an insurance policy. In short, the cost of your insurance. For the insurers, it represents a liability that they must provide coverage for any claims made under the policy.

Mode of premium payment

The mode of premium payment determines the frequency and method of payment that the policyholder needs to pay to the insurer for the insurance plan.

Difference in premium payments – Single vs regular premium

Although the choice of single or regular premium payment may not be applicable for all policies, it is good to understand what each payment entails.

Single premium requires one to make an upfront payment – that is, pay the entire premium for the policy in one shot. This may be too overwhelming for some as they have to fork out such a large sum of money at one go. Most people are unable to afford such a hefty sum, especially when a longer policy term means more premium required in total.

On the other hand, as the name suggests, a regular premium would require payment at regular intervals be it annually, bi-annually, quarterly, or monthly. For regular premiums, you must be able to keep up with the payments over the long term. Otherwise, the policy may lapse and the policyholder may be at a disadvantage without the desired coverage at critical times. Hence it is always essential to ensure that you are able to upkeep the premium amount throughout the policy term.

Premium Payment period (sometimes dependent on policy terms)

Premium-paying term is the total number of years the policyholder is required to pay the premium. Usually, the premium-paying term would be the same as the policy term. However, some policies grant the policyholder some flexibility in premium-paying term. A shorter term would allow you to complete your premium payments earlier while a longer term enables you to fork out a smaller amount for each payment. Regardless of the term chosen, you will still enjoy the coverage for the entire policy term. However, a shorter premium-paying term means that the policy would be able to accumulate more cash value and hence give a higher surrender value.

Frequency of payment

The most common dilemma would be the frequency of premium payments. Does it matter if you pay annually, bi-annually, quarterly or even monthly? Of course it matters! As a general rule of thumb, a higher frequency payment entails a smaller denomination per payment BUT higher total cost. Paying annual premium helps to cut down on policy costs as annual payments have better rates than monthly payments. You can actually save up to 7-9% in total costs when you pay annually instead of monthly!

The rationale behind the cost difference is the uncertainty in cashflow for the insurers when payments are made in intervals as compared to a lump sum payment. The higher cost also includes the additional collection cost required to process frequent payments.

How to choose the frequency of premium payment?

While the argument for annual payment is appealing, there are other factors of consideration you should think about before making your choice.

Factors of considerations:

#1 Cashflow (liquidity)

If you are a student or fresh graduate trying to get by with your monthly income or starting salary, a large lump-sum payment would limit your cashflow significantly. Also you never know when you might need some additional cash after you have made your annual payment!

#2 Opportunity cost

If you can find a way to grow your money such that the returns are greater than the extra costs of monthly payment, maybe it would be wiser to go ahead and invest your money instead.

#3 Refund after termination

Most insurers would not refund your paid premiums so you might run the risk of losing your paid premiums after making annual payments (or even single premium) if you terminate your policy later on. As such, it is important that you are 100% sure that you need this policy before committing to an annual payment.

Other things you should know about

#1 Level premium vs flexible premium

Whether the premium is level or flexible is usually embedded in the policy so it would not be dependent on the policyholder.

Stepped premiums: insurance premium increases each year as you get older. Stepped premiums are usually cheaper at the beginning but the increasing costs may mean that level premiums are likely to be cheaper in the long run.

  • More suitable for those who intend to get a new plan as they age or those who are financially tight in the short term and prefer more economical premiums at the beginning of a policy.

Level premiums: insurance premium stays the same throughout the policy term. It is generally more expensive than a stepped premium in the beginning and may have slight increases due to inflation adjustments.

  • More suitable for those who would want a greater control of costs over time and those who would have the same life insurance for a long time.

#2 Failure to pay premium

What happens if you are unable to pay your premiums on time?

Grace Period

If you fail to pay your premiums, insurance companies typically have a one-month grace period with no interest charged.

Automatic Premium Loan (APL)/ Non-forfeiture Loan (NFL)

However if you exceed the grace period, the insurer will automatically take a loan against the policy’s cash value (if the policy has sufficient cash value) to pay for the overdue premium. While this keeps the policy in force, interest would have to paid on this loan.
If the NFL together with accumulated interest is more than the cash value of the policy, the insurance company terminates the policy.

Premium Holiday

As its name suggests, a premium holiday is when you take a break from paying your premium for a certain period of time (for as long as the policy has sufficient cash value to keep it in force).

Paid-up value / Reduced Sum Assured

A policy with sufficient cash value may be converted into a paid-up policy whereby you need not pay any more premiums and your policy would still be in force for a reduced sum assured for the rest of the policy term.

Reinstating your policy

After your policy lapses, you may choose to reinstate it within a given period, as long as certain conditions (as stipulated by the insurer) are met.

Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

Basics of Insurance

Basics of Insurance

Written by Letitia Jinghui Lean, edited by Jackie Tan and How To Adult. This was a guest post for How To Adult.

Self-sufficiency, or in easier terms, being able to cover your own ass just in case. What else does this remind you of? Yup, you guessed it – insurance. Think about having insurance as the ability to build your house from the ground after it gets blown away by the big, bad wolf. With insurance, you’ll save yourself the monetary stress!