An Overview of Participating and Non-Participating Whole Life Plans

1. An Overview of Participating and Non-Participating Whole Life Plans Whole life insurance is coverage that lasts for the entire lifespan of the insured person. This differs from term life insurance which is set for a fixed period. The benefits of the whole life plan are paid out on the policyholder’s passing or them being diagnosed with a terminal or critical illness or total/permanent disability. Whole life policies also come with a cash component. If the policyholder decides to surrender their policy before its term ends, they can do so and receive this amount. Surrendering a life insurance policy is not recommended as one never knows the future. Leading insurance providers in Singapore offer a range of whole life plans that are truly flexible and provide customised critical illness and death benefit coverage, choice of payment terms, and multiple payouts. Customers are also given the choice of opting between participating and non-participating whole life plans. Let’s understand the differences between these two types of whole life policies to help you choose.

2. Participating whole life plan A participating whole of life insurance plan covers you for life while also allowing you to benefit from dividends through funds and investments. The payout of this plan is the combination of two parts – the sum assured as well as a non-guaranteed bonus amount. If the policy is surrendered before term, the cash value will include a pre-decided sum (as per policy) and a bonus. The amount received in the bonuses depends on the performance of participating bonds and equities which are associated with the policy.

3. Non-participating whole life plan A non-participating whole life insurance plan covers you for life with a fixed sum assured as payout. There are no non-guaranteed bonuses with this plan. Even the cash component given on surrender is a fixed amount that is stated in the policy.

4. Choosing the right whole life plan People often wonder whether a participating plan is better than a non-participating one, or vice versa. The truth is that there is no fixed answer to that decision. Just as each individual has varying needs and expectations from their insurance coverage, the definition of the right plan can vary from one person to the next.

5. When choosing a whole life plan, it is important to keep the following points of consideration in mind: • Amount of personal debts that will need paying off if you suddenly pass on or have to take a break from work due to an illness • Number of dependents in your household (such as senior parents and children) • Affordability of premiums • The best way to select the right coverage is to have a detailed discussion with an insurance provider to understand what the plan entails. Do remember to also compare policies offered by 2 to 3 providers so that you are sure of making an informed decision. Never choose a policy with premiums you cannot afford; at the same time, do not try to cut corners by underinsuring yourself. Discuss the options of whole life insurance with your spouse and make the right choice. • All the best!

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