You will be able to choose a cover term that ends when the people and debts it protects no longer need it.
Ryan's first quote for Jun Hao was term cover to age 65, because "that's what most people take". Jun Hao is 34. Cover to 65 runs 31 years. But Elise will be independent long before then, and the flat will be paid off. So why 65? Ryan didn't have an answer beyond habit, and it turned out the habit would cost Jun Hao money for years of cover nobody needed.
The sum assured from lessons 2.1 and 2.2 answers how much. This lesson answers for how long.
Life cover protects people and debts. The need for it starts when someone depends on you, and it stops when they don't, or when the debt is gone. So set the term from two dates:
the year your youngest dependant becomes independent, which you define, for example finishing university or reaching a set age the year your home loan or other shared debt is due to be repaid
Cover should last until the later of the two. If your parents rely on you, add the years you expect to support them, and use the latest of the three.
Jun Hao's dates, all examples: Elise turns 22 in 20 years, when he will be 54. The HDB loan has 24 years left and ends when he is 58. The later date is 58, so a single policy would run to 58, not 65.
Between 58 and 65, cover to 65 would protect nobody. Elise would be grown, the loan paid, and his savings and CPF would be larger. Yet he would be paying for seven extra years of cover at the ages when cover is most expensive. With a level premium that cost is spread across every year of the policy, so even his premium at 34 is higher than it needs to be.
You can see this for yourself. Ask an insurer's website or compareFIRST for two quotes, identical except for the term, and compare them. The difference is the price of protection you have no use for.
There is a fair counter-argument. Life rarely goes to plan. A second child, a later loan or a parent who needs support could push the end date out. Some people add a few years as a margin. That's reasonable if you choose it on purpose and know what it costs. Choosing 65 because it's the default is not the same thing.
Your need doesn't stay level until the end date and then drop to zero. Each year Elise is closer to independence, the years of support left get fewer. Each year the loan is repaid, the debt gets smaller. At 44, Jun Hao's support need would be 10 years times S$42,000, or S$420,000, half of what it is today.
A decreasing term policy is one whose sum assured falls over the term, usually in line with a loan schedule. It suits a debt that shrinks on a schedule, which is why mortgage cover is often sold this way, and HPS works on the same principle. Decreasing term usually costs less than level term for the same starting sum, because the insurer is on risk for less as time passes. The risk is that the cover falls faster than your real need, for example if you refinance or extend the loan.
You can match a changing need more closely with two level policies of different lengths instead of one long one.
Jun Hao's S$900,000 gap from lesson 2.2 has two parts with different end dates. The support and education part, after subtracting his savings and whole life policy, is 840,000 plus 80,000 minus 60,000 minus 100,000, which is S$760,000, and it ends when Elise is 22. The loan part is Mei's share that HPS would not clear, S$140,000, and it ends with the loan.
So the split is S$760,000 to age 54 and S$140,000 to age 58. Together they add up to the S$900,000 gap. Compared with one policy of S$900,000 to 58, the split stops paying for the large amount four years earlier. Whether it saves money depends on the quotes, because each policy carries its own fixed costs and some insurers price small policies less favourably. Get both quotes before deciding.
Some people go further and ladder three policies, say one ending at 44, one at 54 and one at 58, so the total cover steps down as the need falls. The more pieces, the more paperwork and the more premiums to track. Two is often enough to capture most of the saving.
Group cover doesn't have a term you can plan around, because it ends when the job does. Don't shorten your own cover on the assumption you'll stay in the same job until 54. Plan personal cover for the full need and treat group cover as extra.
The activity asks you to write two years and pick a term. Use the calendar year, not just your age, because it makes the review dates in module 7 easier to set. If you have a partner, agree the "independent" age for your children together, since it drives both the sum and the term.
Write the year your youngest dependant becomes independent and the year your loan ends, and set your cover term.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).