Things you didn't know about Aviva's MINDEF Group Insurance (v.s. private term insurance)

This article will help you address whether you would be better off getting private term insurance or Aviva’s Mindef group insurance for your coverage needs.

A crash course on Aviva's Mindef Group Insurance

Pros

• Cost is cheap for death and personal accident insurance coverage till the age of 65

• Policies are accumulative and not accelerative (e.g. claim in CI coverage will not reduce the sum assured of death coverage)

Cons

• Coverage only last till the earlier when either your spouse reaches the age of 70 or your children reach the age of 25 or get married

• Early Critical Illness coverage is not comprehensive - only 10 conditions.

• Low claim limits for early and late-stage critical illnesses – which may not be enough

• Premiums for critical illness coverage are not levelled and increase with age

Maximum claim/coverage limits:

• Death: $1,000,000

• Personal accident: $600,000

• Early-stage critical illness: $300,000

• Late-stage critical illness: $350,000

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Premium behaviour

Mindef Group insurance vs Term life insurance

From the chart above, it is evident that:

1. Mindef Group insurance is not a sustainable option after the age of 45

2. Based on the total cost of policy from purchase age till age 65, purchasing private insurance will always be cheaper than Mindef group insurance

Basis of comparison:

• Male, non-smoker

• Coverage duration from age 21 to 65

• Coverage: Death: $1,000,000 & Late stage CI: $350,000

ECI and Personal Accident plans will be removed from consideration as they are not an apple-to-apple comparison.

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Summary

Aviva's Mindef Group Insurance is good for their death coverage given the cost payable and benefits receivable.

As to the use of Mindef Group Insurances for Early and Late-stage critical illness coverage, it is not beneficial to you as:

1. Cost increases based on age band

2. ECI coverage is not comprehensive

Personally, I would prefer the use of private term insurance as:

1. Coverage is more comprehensive

2. Cost is levelled and calculated based on the age of entry

3. Flexibility in selecting your insurance duration – the ability to tailor to your needs

Let’s not forget that we have yet to consider the option of whole-life insurance.

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If you do not know how to get started or if you do not have the time to do your market research, you can consider engaging an Independent Financial Advisor who can help you make sense of the market and shortcut your insurance planning process.

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Daniel is a Licensed Independent Financial Consultant with MAS and a Certified Financial Planner (CFP®)

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Disclaimer:

This article is meant to be the opinion of the author and is for information purposes only.

This article should not be seen as financial advice

This advertisement has not been reviewed by the Monetary Authority of Singapore