Key considerations of different age groups when buying life insurance

Insurance

Young people

After leaving school and landing your first job, you may be approached by your relatives/friends who work at insurance companies who will try to sell you insurance policies. It is certainly alright to buy insurance from relatives/friends working in the insurance industry but make sure you are putting your own needs first.
Learn to manage your income and expenses so that you can afford your insurance.
Keeping up with your regular insurance premiums is very important. Insurance coverage will lapse if you do not keep up payments.
Remember that insurance is a long-term financial commitment.
Young people can consider taking out a basic insurance first and add on coverage when required.
Understand the insurance coverage that is being provided by your employer to determine if you need additional coverage.

Getting married / having children / buying property

You may have more liabilities and dependants as you enter different life stages and decide to get married, have children and buy property. Assess your financial ability thoroughly as life insurance is long term commitment and could be costly.
If you require a big coverage but are constrained by budget, you may consider the lower premium term life policy that offers a bigger coverage.
Alternatively, consider using both term life and whole life policies, e.g. take out a whole life policy with lower coverage but a premium that you can afford as basic protection, and then add a term life with bigger coverage to achieve the objective of offering protection to your family at different life stages.
Consider getting mortgage insurance (usually term life product which coverage reduces in line with your outstanding mortgage balance) when you take out a mortgage loan.
Consider whether you have other insurance needs, like medical, critical illness, accident etc.
Note that the cost of life insurance increases with age, and future health problems may make the purchase of future additional insurance more expensive and/or harder to obtain.

Elderly people

Elderly people usually have less life protection needs as they may have less (or no) liabilities and dependants. However, you should consider other insurance needs like medical and annuity.
You should review your existing life insurance policies.
- Term life insurance as you get older can be very expensive. So if you have bought some term life insurance before, you may consider whether you still need them or not.
- If you have bought whole life policies for a long period of time, the accumulated guaranteed cash value plus the dividends may exceed the premium that you paid. Some whole life policies may offer premium offset option, i.e. further annual premiums may be paid by the dividends. But as dividends are not guaranteed, premium offsets cannot be guaranteed either. Also, since dividends have been used for paying premiums, the accumulated dividends will be reduced and may not be sufficient to offset premium in the future, i.e. you may need to pay premium again.
- Insurance indemnity will be separated from your estate if you have named beneficiaries. You can contact your insurance companies to ensure that beneficiaries are named in your policy.

Tips for taking out life insurance

Be sure to shop around and compare life insurance policies before making a decision. Even after you have made a decision, you are entitled to a cooling-off period during which you can change your mind to obtain a refund of the insurance premium. The cooling-off period is 21 days after the delivery of a life insurance policy or issue of a notice to you or your representative, whichever is earlier.
When choosing an insurance product, don’t just look at the premium amount. The premium amounts normally reflect the difference in policy coverage and terms. Take note that the value of a life insurance policy with a savings component comprises of two parts, i.e. guaranteed (also known as "guaranteed cash value") and non-guaranteed (the "dividends").
Be aware of your commitment to paying premiums and the consequences of not keeping up with your payments.
Don’t depend solely on what the insurance intermediary tells you. Read the policy carefully and make sure you fully understand the scope of coverage, terms and conditions etc. Don’t sign on a blank/incomplete application form.
Ensure that the insurance intermediary whom you deal with is registered or authorised. See the Golden rules for choosing intermediaries.
Question whether the policy provides more coverage than you actually need. Ask your intermediary whether there are lower-cost, simpler alternatives available (e.g. pure insurance coverage, i.e. term life products).
You are likely to have different insurance needs at various stages of your life. Revisit your insurance needs when you approach different life stages.
It is a good habit to review your life insurance policy periodically, say every five years, to ensure that it remains relevant to your insurance needs.
Don’t just casually surrender or replace a policy. If the policy has a savings or investment element, early cancellation of the policy may involve high penalty charges. Check the Insurance Authority’s “Life Insurance Policy Replacement – What You Need to Know” leaflet for details.
Read the leaflet “Tips on buying insurance” jointly developed by the Insurance Authority and the Chin Family for more insurance tips.