Manulife launches annual renewable term insurance plan
IF you are shopping for an insurance plan that gives pure protection, consider one where the premiums are adjusted with every year that you age.
Manulife has just launched its annual renewable term plan, which it says is the most competitively priced.
Annual renewable simply means that the policy is renewed every year once a premium is paid. It also means that the premiums are adjusted every year according to your age.
Such plans are common in mature markets such as Australia and the US, but are not popular here. So far, only two other insurers offer such a scheme: Aviva and AIA.
The logic for such a protection plan is that you are charged exactly the premium that corresponds to your age, making it possible for a young person to buy a large amount of cover at a very affordable price. As he or she gets older, and children become financially independent, the amount of cover needed is typically less, and you can reduce the plan accordingly.
Individuals here typically buy level term plans where premiums stay the same throughout the term of five, 10 or 20 years, or even up to age 99. There are no adjustments for age. This is because the policy has already implicitly priced in a higher premium for younger ages, and a lower premium for older age bands, resulting in a level pricing.
Manulife's ChoiceCover is guaranteed renewable, which means that you remain covered even if your health has deteriorated.
Says Manulife chief executive Darren Thomson: "Research has clearly shown that Singaporeans are generally underinsured, meaning that many may unwittingly be putting their financial future at risk ... ChoiceCover offers tailored insurance that addresses each individual's protection gaps without putting a strain on their wallets."
According to Manulife, the plan is the most competitively priced based on the total premiums paid for five years, compared with four other insurers' five-year renewable term plans for ages 30, 35 and 40. A 40-year-old male non-smoker will pay $612 in annual premium for $500,000 in sum assured in the first year. This rises to $1,264 at age 50 and $3,703 at age 60.
Benefit illustrations will include a rate schedule based on the cost per $1,000 of cover. Simply adding up all the annual premiums shows that an annual renewable plan for this hypothetical male will cost a total of about $33,000 for 20 years. A 20-year level term plan from one of the most competitively priced insurers is expected to cost around $10,000 less. Still, in the early years, ChoiceCover's premiums appear to be significantly less than those of the competition, making protection affordable to those who need it most.
