Insurance companies process numerous death claims every year. We experience constant changes throughout our lives. Although birth, aging, sickness and death are natural stages of life, we still grieve when our loved one passes away from an illness or an accident. If unfortunately, a deceased family member is the breadwinner, the children cannot help but feel perplexed and concerned about their future expenses such as living costs, mortgage payments, education, and so on. For your beloved family members, it is always best to consider purchasing suitable life insurance in advance. With this security in place, when you pass away or get involved in an accident, your family members’ lives can be better protected and their financial burden will be lessened.

There are three common types of life insurance: term insurance, whole life insurance and endowment insurance. Each type of life insurance has its own characteristics and suits different needs of policyholders. In simple terms, some term insurance offers highly leveraged protection (i.e. high level of protection at a low premium) that pays out when the insured person passes away within a limited coverage period (e.g. 10 years); whole life insurance, in general, provides insurance for life or up to the age of 100; while the main objective of endowment insurance is savings. If the insured passes away within a specified period of time, accidental death compensation will also be given. However, at the same premium, the sum insured may generally be lower than that of term insurance and whole life insurance. Therefore, if the policyholder would like to secure comprehensive life protection, in addition to accumulating savings, he/she must also consider a life insurance-oriented insurance plan to be safe and secure.

Compared to term insurance, whole life insurance can contain a savings function with possible non-guaranteed bonus. Therefore, at the same premium, its sum insured may be generally lower than that of term insurance. In terms of premium, most term insurance policies increase with age. In fact, for all life insurance products, applicants need to strike a balance between premium, sum insured and savings amount. That means the lower the premium is, the lower the sum insured and savings amount will be. Before choosing suitable life insurance plans, applicants first need to understand their own needs and affordability. They should also pay attention to the terms, conditions and risks including non-coverage.

According to the claims data¹ released by BOC Life in 2019, the oldest death claim case was for an 88 years old person, while the youngest insured person was only 16 years old. The data shows that no matter what stage of life we are in, we all need life insurance. However, the amount of insurance will be adjusted according to the different needs of the policyholder. If you are a young member of society, have little working experience and have not started a family yet, then perhaps your main financial responsibility is supporting your parents. Therefore, the coverage you may need is your parents' future medical and living expenses. It will also be different if you are in the prime of your life. You are the breadwinner of your family and need to support your parents, wife and children, and even pay the mortgage. If you encounter any accident and can no longer support the living expenses of your family, their lives will be significantly affected. Hence, you may need to purchase life insurance with a higher sum insured to safeguard the living needs of your family members without any worries.

As for the appropriate amount of insurance needed, it will depend on factors such as the financial situation of the insured person and the financial needs of the dependent family members. There is a Life Protection Coverage Calculator on the financial education platform "The Chin Family" from the Investor and Financial Education Council. After inputting information such as personal assets, monthly income, fixed expenses, debts, etc., you will obtain the approximate life insurance amount needed for your reference. Of course, before applicants apply for a life insurance policy, a financial needs analysis will usually be conducted. Insurance agents will make a comprehensive analysis based on the provided information such as the objectives of purchasing insurance, financial status and family conditions. They will then provide professional advice on the insurance scheme and amount, etc.