Legacy Planning in Singapore: When is the right time to plan for your family?
It is never too early to start planning for your family. Many unexpected events can happen and you can’t afford to be taken by surprise.
The Ministry of Health estimates that a staggering “1 in 2 Singaporeans who are healthy at the age of 65 is at risk of having a long-term disability over their lifetime.” This is a worrying situation. What happens to your family when you are unable to earn a living or when you are gone?
The answer to that question is legacy planning.
To put it simply, legacy planning is distributing your hard-earned money according to your wishes. This involves identifying, preserving and distributing your wealth in a thoughtful manner.
Legacy planning ensures that your wealth and hard-earned money is preserved to support your family and future generations. This is especially important when your children are young and you want to ensure that they have the best education to meet their aspirations.
In essence, legacy planning involves thinking of how to preserve your money for your family.
With proper legacy planning, you can better secure and pass your wealth to your loved ones in an unfortunate event.
Income’s TermLife Solitaire can make your legacy planning easier by providing a financial safety net should the unexpected happen with your preserved wealth. It is a term life insurance plan that provides coverage* for death or terminal illness during the policy term to protect your legacy for your loved ones. You can choose to enhance your coverage with the total permanent disability (TPD) and dread diseases (DD) protection by attaching different riders with additional premiums.
* If the insured becomes terminally ill or dies during the term of the policy, TermLife Solitaire will pay the sum assured. The policy will end when payment is made.
To illustrate how life insurance works, let’s look at the case of Mr John Tan, a 40-year-old engineer and his wife Ann, 40, who is a homemaker.
At 70 years old, Mr Tan dies of liver cancer and leaves the following assets and liabilities for Mrs Tan.
| Assets | Amount | Remarks |
|---|---|---|
| Bank Savings + Central Provident Fund (CPF) | $15,000 | Mr Tan has nominated his wife to receive his CPF savings. |
| Investment | $80,000 | |
| Total | $23,000/strong> |
| Liability | Amount | Remarks |
|---|---|---|
| Housing loan for condominium unit (excluding interest) | $25,000 | The loan has to be paid off in 5 years’ time. |
While Mrs Tan has $150,000 in cash at her disposal, she is stretching it thin for multiple purposes – her living and medical expenses, paying off the housing loan and Mr Tan’s funeral expenses, just to name a few. As the cost of living continues to rise, these expenses will increase accordingly.
While Mrs Tan can liquidate her husband’s investments, she may make a loss if the market is doing poorly.
If Mr and Mrs Tan bought TermLife Solitaire on each other’s life, the situation will be different.
As indicated in the infographic, Mrs Tan can use the payout to defray her living expenses and pay off the debt concurrently.
40 years old | |
 | Mr and Mrs Tan, both age 40, non-smokers, sign up for TermLife Solitaire, insuring each other’s lives with a sum assured of $1,000,000 each and a policy term till age 100. They add a Payor Premium Waiver rider1 with a maximum term till age 84. They also choose to pay premiums on a yearly mode. |
POLICY 1 | POLICY 2 |
Mr Tan purchases TermLife Solitaire on the life of Mrs Tan. Yearly premium = $4,771.45 (including premium for Payor Premium Waiver rider1) | Mrs Tan purchases TermLife Solitaire on the life of Mr Tan. Yearly premium = $5,970.40 (including premium for Payor Premium Waiver rider1) |
70 years old | |
 | If Mr Tan passes away at the age of 70, Mrs Tan will receive the payout of $1,000,000 from Policy 2, which can be used to pay off any outstanding loans and help the family maintain their current lifestyle. Policy 2 terminates. Policy 1 insuring Mrs Tan will remain inforce with future premiums waived until the rider term expires1. |
100 years old | |
 | End of policy term for Policy 1. |
The above figures are for illustrative purposes only. 1 Payor Premium Waiver rider waives future premium payments on the policy for the remaining term of the rider upon death or diagnosis with total and permanent disability (TPD before age 70) of the policyholder during the term of the rider. This rider is applicable only if the policyholder is not the insured. © 2017 Income. All rights reserved | |
Since Mrs Tan can use the lump sum payout and existing savings to pay for her expenses, she can continue accumulating wealth from Mr Tan’s investments.
To find out how you can benefit from TermLife Solitaire or how life insurance works, refer to the details here or speak to one of our financial advisors today. You can also learn more about protecting and planning your finances for your family.
So, what are you waiting for? Start planning for your legacy now, while you are young, healthy and have the resources.
Important Notes:
This article is meant purely for informational purposes and should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income products mentioned are specified in their respective policy contracts. For customised advice to suit your specific needs, consult an Income insurance advisor.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Income or visit the GIA/LIA or SDIC websites (www.gia.org.sg or www.lia.org.sg or www.sdic.org.sg)
Information taken from The Income Blog on 25 07 2021, read article in full here.
Apex Group is a group of authorized representatives of Income Insurance Limited | UEN:202135698W .
Disclaimers: All opinions expressed here are of my own and do not reflect that of Income Insurance Limited. Income is not responsible nor liable to any party for the content of this website and intellectual property used on this platform. Information and opinions provided do not constitute an offer, recommendation, solicitation or advice to buy or sell any product(s); you may seek personalized financial advice to determine product suitability.
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