Friday, June 10, 2016

SAF GTL vs DIRECT Purchase Insurance (DPI)

The SAF Group Term Life Insurance is quite infamous in Singapore for being cheap. But just how cheap is it? Is it cheaper than DPI insurance? Well, that's what we'll find out today!

Based on my recent rebate with them, the annual cost of insurance for $100k death, TPD and $100k CI costs $213.99. Without rebate, it is $273.60.

The cheapest DPI comparison is actually GE at $246, but I have AXA which costs $286.

Wow, so fast and simple. SAF GTL is cheaper lor! But wait, things are not so simple and straightforward.

1) SAF GTL is a group plan. As a group plan there are risks which are extra to an individual plan. Common risks are insurer insolvency. But specific risks that a group plan has is that the plan is contingent on the SAF continually renewing its group policy with Aviva. Also, there are limitations to the total amount to be paid out by Aviva in the event of a group claim.

2) SAF GTL CI rider premiums increases starting from age 46, while AXA is level and does not. At age 46, the annual CI premium explodes for $120 to $270! And after that it increases steady every year. At age 64, the annual premium of the SAF GTL CI rider is a whopping $1290, which the premium for the AXA CI rider is kept level at $165 the entire term.

So in conclusion, yes the SAF GTL is actually rather cheap. But, that is if we are only talking about the death and TPD part and we include the insurance rebate. They have managed to keep the premiums level regardless of age, and together with the rebate, makes for a very unbelievably cheap term life insurance.

However, the CI rider that it comes along with isn't cheap after age 46. Before that, I would say that the premiums are rather competitive. However, beyond that, I would say that it becomes very expensive.

Looking at how things are panning out, if I ever need more life insurance, I would probably increase it with Aviva. However, if I do feel that I need more CI coverage in the future (due to rising medical costs or risk factors), I would instead go for DPI to increase my CI coverage. I think its entirely foreseeable that I double up my existing $100k death / TPD/ CI with another plan for the same amount to get $200k coverage.

Unless, does anybody know any cheap standalone or bundled CI plans?

6 comments:

  1. Hi,

    Aviva was having a 50% (i think) discount on term premiums for death / TPD coverage for amounts $1m and above. This was a few months back and I am not sure if the offer is still valid. Me and my wife recently signed up for it in view that we have just bought a new property. We were contemplating between having a term vs mortgage insurance and decided to go for the term policies for a more holistic coverage. Might not be applicable to you at this point in your life but good to KIV this I guess.

    RT

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    1. Hi RT,

      Thanks for that pro-tip. The normal term policy does sound a lot more holistic than a mortgage one, and I will keep these in mind. When the time comes for me (hopefully soon!) I will definitely compare my findings and put it up here :)

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  2. With a new property, we signed up for the SAF group insurance plan instead of the mortgage insurance plan too

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    1. Hi Starlight, with the new changes to the SAF plan soon, your premiums is gonna to drop a lot when it takes effect in Oct! Seems like you made a good choice!

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  3. Hi GMGH, yes you are right for most people the attractiveness of being the "cheapest" by buying group term or DPI is the best plan. However if you were to look a dig further where you have correctly mentioned on the premium increase. A normal level term plan will may make more sense depending on how much coverage you are looking at. Also from my understanging, DPI and group term CI covers 30 CI while a level term + CI as a rider covers 37. You may wished to verify just in case i am wrong.

    anyway this may be of an interest to you and your readers too where I bought a level term due to fact that are listed on this link too.
    https://secure.fundsupermart.com/insurance/learn-about-insurance/article/home-loan-protection-mrta-or-term-life-insurance--50

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    1. Hi Jovan,

      Thanks for the link! Very relevant to what the others were talking about! It also seems to confirm what we think.

      I think the expanded 37 is, of course, better coverage compared to the traditional 30, but it must be noted that 95% of CI claims are for 5 major CI, while the rest are very rare. The extra 7 illnesses which are excluded in DPI (but included in the SAF GTL) make up for just 1.5% of claims.

      For a normal person, evaluating which CI are they most at risk of is essential, to know if they should even get CI coverage! The next step would be to determine if they want expanded coverage, and what would be the expense of this extra. For someone without the specific risk factors to those extra 7, it might not be prudent to get that extra coverage and pay higher premiums.

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