Understanding the key features of different types of life insurance policies

There are different types of life insurance policies and they have different features to fit various insurance objectives.

	Term Life Insurance	Whole Life Insurance	Endowment Insurance
Coverage period	In general, a fixed period, e.g. 10 or 20 years.	Whole life, e.g. up until 100 years old.	A specific period as stated in the policy, e.g. 10 years.
Death benefits (for the same amount of premium)	High	Lower than a term life policy.	Lower than term life and whole life policies.
Premium	Gradually increases with age; younger people pay a lower premium, but this may increase significantly as you get older.	Level premium for the whole premium paying period (however some insurers retain the right to adjust premium). The principle is to average the higher premium of the senior years to the lower premium at the early life stage. Some policies requires the policy owners to pay the premium for the whole life.	High
Savings component	None	Yes, but only becomes evident after a long period of time.	Higher savings, provided that the policy is maintained until maturity.
Features	The policy can be renewed upon expiry.	Part of the return depends on non-guaranteed dividends (some endowment policies offer guaranteed dividends). If a policy is cancelled in the short or medium term, a rather big loss may occur. The value of the policy can be used as collateral for a loan, but you have to pay interest. You can add riders (e.g. medical, critical illnesses, personal accident etc.) to the whole life or endowment policies.
Suitable for	Younger adults and those who need bigger coverage, e.g. for repaying mortgages and supporting dependents, etc.	Those need to be covered for a longer period, or can afford to pay a higher premium, and wish to have a policy with a savings component.	Those whose main objective is to save money.

Apart from the above, Investment-linked assurance schemes (ILAS) also provide death benefits but they are generally more complicated in structure. An ILAS is a life insurance policy with investment elements that provides both insurance protection and investment options. Check our ILAS sitelet if you want to know more about this type of insurance.

The above information is by no meant to replace the professional advice of the insurance intermediary. But they help you understand more about your needs and the key points that you should take note when you can discuss with your insurance intermediary the appropriate amount and type of life insurance coverage suitable for your specific situation.