Before going further into discussing the limitations of a term life insurance, it is best to first know the definition of term life insurance and what it covers. Term life insurance offers coverage for a specific period of time. In the case of being an employee of a company, your term life insurance applies only during the duration of your employment.
As such, if unfortunate things happen to you, such as total permanent disability or death (most plans provide this kind of protection), you and/or your dependants will receive a pay-out. The amount, however, depends on the insurance plan that is provided by your employer.
An employer would generally offer term life insurance through the company’s group insurance plan, which comes with limitations. As briefly mentioned above, this term life insurance only provides coverage for the duration of your employment with your current company. In other words, if you resign from your current job or are being laid off, you will no longer be part of the company’s group insurance plan. There is no obligation from your former employer to continue paying for your coverage. Furthermore, your next employer may not offer the same term life insurance as part of their benefits.
Finally, it is usually the right of the employer to cancel the coverage should they want to minimize costs. When this happens, you will be left with no protection.
How Singapore professionals can overcome such limitations
Currently, there is no way we can predict and know what is going to happen to us in the future. If you do not develop serious health problems and can work until it is time for retirement, then life would be easier for you and your dependants. However, if you suffer from a work accident and can no longer work due to permanent disability or worst, you die from an accident or a disease (touch wood), then this will be a serious trouble for your dependants.
Since you cannot rely much on the company’s group life plan, you as a professional should overcome such limitations by acquiring your own individual life insurance. This way, our loved ones would have a much better have a financial protection.
Prior to buying an additional life insurance, you will need to know what type of insurance you need and how much coverage you want. If you are not sure or not able to decide on your own, you are advised to consult with a professional or a specialist in the sector.
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