Hi Mr Tan,
Most of the insurance advice I see available seems to be around the two extremes:
- whole life policy
- term policy + invest the difference
Whole-life: Pro:whole life coverage with bonuses, Con: expensive
Term: Pro: cheap, Con: no coverage beyond end of term (high chance of outliving the policy)
Why is it that nobody mentions a hybrid solution? e.g. for a desired 100k sum assured, buy 50k whole life, 50k decreasing term. Over the course of the two policies, the bonuses added to the whole life plan will balance out with the decreasing term coverage. Costs are kept reasonable and coverage will last the entire lifetime.
Your hybrid solution is quite good. Well done.
Under the buy term and invest the difference, it is likely that the savings with capital gains will be more than the sum assured at the end of the term of 20 years. So, there is no need to have any more insurance cover.
For example, if you are insured for $100,000 and you save $4,000 a year, the total savings with capital gains should be more than $100,000 at the end of 20 years
Tan Kin Lian
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