Life Insurance - For Current Policyholders
What if you want to amend, replace or terminate your policy?
Switching - should you replace your policy?
Buying an insurance policy is a long term commitment. Any decision to replace a policy should only be taken after careful consideration. If you are being advised to replace your current policy with a new one, make sure you understand why. Are there benefits and advantages with the new policy which the old one does not provide? Are these justified by any additional fees or charges that you may incur?
There may be additional premiums or exclusions for health conditions which have developed since you first took out the policy. You may not get a similar level of protection in a new policy as you may be required to undertake a medical examination and any pre-existing conditions may be excluded from the new policy.
Remember that as you age, the cost of your insurance coverage increases too. If you wish to cancel your current policy and buy a new one, be careful not to cancel it until your new policy is in force, or you might not have coverage in the interim period.
What happens if you terminate your policy?You will have no insurance coverage against the risks you were concerned about. If you terminate your policy early, you could suffer a loss. In the case of a whole life policy, the surrender value (the cash value you receive for early termination) is usually zero in the first three years, or some proportion of the premiums paid in the later years.
Think carefully before terminating your policy. It is important to note the impact of termination or amending your policy on your insurance coverage needs.
Early termination of a policy may incur additional fees and charges.
What happens if you fail to pay premiums?
Most life insurance policies allow a 30- or 31-day grace period during which you can pay the premium with no interest charged. But if you do not pay your premium within this grace period, and if your policy has sufficient cash value, the insurance company will automatically pay your overdue premium by taking a loan against the policy’s cash value. This keeps your policy in force but you will have to pay interest on this loan.
Buying an insurance policy is a long term commitment. Any decision to replace a policy should only be taken after careful consideration. If you are being advised to replace your current policy with a new one, make sure you understand why. Are there benefits and advantages with the new policy which the old one does not provide? Are these justified by any additional fees or charges that you may incur?
There may be additional premiums or exclusions for health conditions which have developed since you first took out the policy. You may not get a similar level of protection in a new policy as you may be required to undertake a medical examination and any pre-existing conditions may be excluded from the new policy.
Remember that as you age, the cost of your insurance coverage increases too. If you wish to cancel your current policy and buy a new one, be careful not to cancel it until your new policy is in force, or you might not have coverage in the interim period.
What happens if you terminate your policy?You will have no insurance coverage against the risks you were concerned about. If you terminate your policy early, you could suffer a loss. In the case of a whole life policy, the surrender value (the cash value you receive for early termination) is usually zero in the first three years, or some proportion of the premiums paid in the later years.
Think carefully before terminating your policy. It is important to note the impact of termination or amending your policy on your insurance coverage needs.
Early termination of a policy may incur additional fees and charges.
What happens if you fail to pay premiums?
Most life insurance policies allow a 30- or 31-day grace period during which you can pay the premium with no interest charged. But if you do not pay your premium within this grace period, and if your policy has sufficient cash value, the insurance company will automatically pay your overdue premium by taking a loan against the policy’s cash value. This keeps your policy in force but you will have to pay interest on this loan.
If you are unable to continue paying premiums on your current policy, do consult your financial adviser representative. He should be able to explain the options available to help you. Some options may include reducing the sum assured or converting to a paid-up policy.
How do you make a claim?
Most life insurance companies’ websites will provide instructions on making a claim. Do visit their websites for more information.
In the case of a death benefit claim, the documents to be submitted will include (but are not limited to) the following:
In the case of a death benefit claim, the documents to be submitted will include (but are not limited to) the following:
- Death claim form
- NRIC(s) of claimants
- Proof of claimant’s relationship with deceased
- Original or certified true copy of death certificate
- A copy of last Will of deceased (if there is one)
Once all required documents are received, the insurer will process the claim, and advise the claimant on the outcome.
What general conditions do life insurance policies have?
Policy contract cannot be voided after some time
After your policy has been in force for a certain period of time, the insurance company cannot treat the policy as if it had never been issued.
The insurer cannot contest the policy unless it can prove fraud. If there is fraud, the insurance company may end (void) the policy at any time. The insurer may also void a policy contract if information provided in the proposal form was inaccurate or if certain information was not disclosed.
SuicideIf the insured commits suicide within a certain period as set out in the policy, the insurance company will not pay the policy proceeds to the beneficiaries.
Level or constant premiums throughout policy
As we age, there is an increasing risk of death, disability or of contracting a critical illness. The increasing cost (also known as mortality cost) is factored into how much premiums we pay for life insurance products.
We do not necessarily have to pay higher premiums as we get older. Most life insurance products, including regular premium ILPs, have premiums that remain constant throughout the life of the policy. In the case of ILPs, the cost of insurance will increase as you get older. Therefore, the proportion of premium used to pay for insurance coverage may increase over time.
Rider
For extra premiums, a rider can provide additional protection or enhance existing benefits payable under a basic insurance policy. For example, it is common to add critical illness riders but make sure you understand what is covered and what is not covered. Be aware that the terms relating to the riders can be different from those of the base policy, e.g. you might have a whole life policy and add a critical illness rider that covers you up to the age of 60 only.
Some riders allow you to stop paying premiums if you are unable to work due to a disability, although the policy still provides benefits. If you are finding it difficult to pay the premiums, ask your financial adviser representative about other options.
After your policy has been in force for a certain period of time, the insurance company cannot treat the policy as if it had never been issued.
The insurer cannot contest the policy unless it can prove fraud. If there is fraud, the insurance company may end (void) the policy at any time. The insurer may also void a policy contract if information provided in the proposal form was inaccurate or if certain information was not disclosed.
SuicideIf the insured commits suicide within a certain period as set out in the policy, the insurance company will not pay the policy proceeds to the beneficiaries.
Level or constant premiums throughout policy
As we age, there is an increasing risk of death, disability or of contracting a critical illness. The increasing cost (also known as mortality cost) is factored into how much premiums we pay for life insurance products.
We do not necessarily have to pay higher premiums as we get older. Most life insurance products, including regular premium ILPs, have premiums that remain constant throughout the life of the policy. In the case of ILPs, the cost of insurance will increase as you get older. Therefore, the proportion of premium used to pay for insurance coverage may increase over time.
Rider
For extra premiums, a rider can provide additional protection or enhance existing benefits payable under a basic insurance policy. For example, it is common to add critical illness riders but make sure you understand what is covered and what is not covered. Be aware that the terms relating to the riders can be different from those of the base policy, e.g. you might have a whole life policy and add a critical illness rider that covers you up to the age of 60 only.
Some riders allow you to stop paying premiums if you are unable to work due to a disability, although the policy still provides benefits. If you are finding it difficult to pay the premiums, ask your financial adviser representative about other options.
Other examples of rider benefits are personal accident, double indemnity and hospitalisation benefit. However, do note that the premiums of such benefits may not be guaranteed and may increase at each renewal. The renewal of such benefits may not be guaranteed and is subject to the insurer’s decision.
Interim cover against death by accident
Most life insurance policies provide temporary insurance cover against the risk of death caused directly and solely by an accident in Singapore, between the time the insurance company receives your completed application form together with full payment for the first premium and the actual commencement of that policy cover. The duration and amount of this cover against accidental death differs from company to company.
Paid-up valueIf your policy has built up sufficient cash value, it may be changed to a paid-up policy. In this case, you can stop paying premiums and your policy will stay in-force for a reduced sum assured for the rest of the policy term.
Grace period for paying premiums
The company will give you extra time (usually 30 days), after the premium due date, to pay your premium. During this period, the policy continues to be in force as the insurance company expects that you will pay the premium. However, if no premium is paid at the end of the grace period, your policy may terminate if there is insufficient cash value.
Reinstating your policyIf your policy lapses, you may reinstate it within a certain time (usually two years), as long as you meet certain conditions which may differ from insurer to insurer.
Automatic premium loan (APL)This feature is found in some insurance policies, but not term insurance. If you have not paid your premium within the grace period (usually 30 days after the premium due date) and as long as your policy has sufficient cash value, the insurance company will automatically pay your overdue premium by taking a loan against the cash value of your policy.
The APL feature allows the policy to be kept in-force, so that you continue to be covered under the policy. The APL also helps prevent early termination of a policy, which may involve high costs. You will have to pay interest on this loan.
Policy loanSome insurance policies allow you to apply to your insurance company for a loan as long as the policy has a cash value. You will be charged interest on the policy loan.
14 day free-look
All insurance companies grant a 14 day free-look period. It starts from the date you receive your policy document. During this period, you should review your policy carefully to see if it meets your needs.
If you decide that the policy does not suit your needs and you do not want to keep it, write to the company to give them notice of your intention to cancel the policy. Written notice must be given to the company within 14 days from the date you received your policy. The company will refund all your premiums less medical and other expenses they have already incurred. If your policy is an investment-linked policy, the insurance company may, after deducting any medical expenses, adjust for any change in the market value of the units the policy holds when working out how much to return to you.
Tracking your policy’s value
After the policy has been incepted, you may receive statements annually, or at more regular intervals when the policy is placed under non-forfeiture loan or if you have an outstanding policy loan. Premium statements may also be issued. These inform you of the premiums received by the insurer for the year. All of these statements are provided whether the policy is non-par or par. In the case of term insurance, except for premium statements, the other statements do not apply.
If you have an ILP, you will receive an annual statement on the units you hold in your policy.
Always check the statements and read the letters and notices sent to you by your insurance company. If there is anything that you do not understand, ask your insurance company or financial adviser representative immediately.
Policy Owners’ Protection Fund (PPF)
Life insurance policies benefit from the PPF Scheme. In the event of a failure of an insurer, the PPF Scheme will cover 100% of guaranteed liabilities on all life policies, including accident and health policies, subject to caps for different types of policies. For individual life policies, the cap is S$500,000 for sum assured and S$100,000 for cash value per life assured per insurer.
Interim cover against death by accident
Most life insurance policies provide temporary insurance cover against the risk of death caused directly and solely by an accident in Singapore, between the time the insurance company receives your completed application form together with full payment for the first premium and the actual commencement of that policy cover. The duration and amount of this cover against accidental death differs from company to company.
Paid-up valueIf your policy has built up sufficient cash value, it may be changed to a paid-up policy. In this case, you can stop paying premiums and your policy will stay in-force for a reduced sum assured for the rest of the policy term.
Grace period for paying premiums
The company will give you extra time (usually 30 days), after the premium due date, to pay your premium. During this period, the policy continues to be in force as the insurance company expects that you will pay the premium. However, if no premium is paid at the end of the grace period, your policy may terminate if there is insufficient cash value.
Reinstating your policyIf your policy lapses, you may reinstate it within a certain time (usually two years), as long as you meet certain conditions which may differ from insurer to insurer.
Automatic premium loan (APL)This feature is found in some insurance policies, but not term insurance. If you have not paid your premium within the grace period (usually 30 days after the premium due date) and as long as your policy has sufficient cash value, the insurance company will automatically pay your overdue premium by taking a loan against the cash value of your policy.
The APL feature allows the policy to be kept in-force, so that you continue to be covered under the policy. The APL also helps prevent early termination of a policy, which may involve high costs. You will have to pay interest on this loan.
Policy loanSome insurance policies allow you to apply to your insurance company for a loan as long as the policy has a cash value. You will be charged interest on the policy loan.
14 day free-look
All insurance companies grant a 14 day free-look period. It starts from the date you receive your policy document. During this period, you should review your policy carefully to see if it meets your needs.
If you decide that the policy does not suit your needs and you do not want to keep it, write to the company to give them notice of your intention to cancel the policy. Written notice must be given to the company within 14 days from the date you received your policy. The company will refund all your premiums less medical and other expenses they have already incurred. If your policy is an investment-linked policy, the insurance company may, after deducting any medical expenses, adjust for any change in the market value of the units the policy holds when working out how much to return to you.
Tracking your policy’s value
After the policy has been incepted, you may receive statements annually, or at more regular intervals when the policy is placed under non-forfeiture loan or if you have an outstanding policy loan. Premium statements may also be issued. These inform you of the premiums received by the insurer for the year. All of these statements are provided whether the policy is non-par or par. In the case of term insurance, except for premium statements, the other statements do not apply.
If you have an ILP, you will receive an annual statement on the units you hold in your policy.
Always check the statements and read the letters and notices sent to you by your insurance company. If there is anything that you do not understand, ask your insurance company or financial adviser representative immediately.
Policy Owners’ Protection Fund (PPF)
Life insurance policies benefit from the PPF Scheme. In the event of a failure of an insurer, the PPF Scheme will cover 100% of guaranteed liabilities on all life policies, including accident and health policies, subject to caps for different types of policies. For individual life policies, the cap is S$500,000 for sum assured and S$100,000 for cash value per life assured per insurer.