Name the situations where cover that lasts your whole life is a sensible choice.
Write down the age at which your need for life cover ends. For most people this is a known date, such as when the youngest child finishes studying. Jun Hao's cover can end when Elise is 22, and his need for cover ends at 58. If you can name a date like that, the comparison in lesson 3.4 applies to you.
That comparison was buy term and invest the rest: you buy term cover and invest the premium difference instead of buying whole life. It works when the need for cover ends at a known date and you actually invest the difference. Lesson 3.4 does not mean whole life is always the wrong choice. The comparison changes when the need never ends, or when you know you will not invest the difference. There are three situations where permanent cover, a policy that pays out whenever you die at any age, can be justified.
Wei Jie is Mei's cousin. He and his wife have a six-year-old son, Ethan, who has an intellectual disability and is likely to need support for life, including after both parents are gone. Unlike Jun Hao's, Wei Jie's need for cover has no end date, and cover that lasts for life is designed for this case. Term cover to 65 does not fit. If Wei Jie died at 70, his term cover would already have ended and Ethan would still need support. Renewing term at 65 may not be possible at all, and where it is possible it would be very expensive.
You size the amount with the needs-based arithmetic from lesson 2.1, "Needs-based cover beats a multiple of salary". Estimate the monthly support needed beyond what government schemes and family would provide. Multiply it by 12, then by the number of years it is needed after both parents die. Wei Jie puts Ethan's gap at S$1,500 a month, as an example, for perhaps 25 years: S$1,500 x 12 x 25 = S$450,000. That is the gross need. Next, subtract what the parents expect to leave. Wei Jie and his wife expect to leave a paid-up flat and S$200,000 of savings set aside for Ethan, so the permanent cover the need justifies is closer to S$250,000.
Families with a lifelong dependant usually also look at a trust and a will so the money is used for the child. The Retirement & Estate course covers this. Most families do not have a real lifelong need.
Some people want cash to arrive on their death, whenever that happens. A business owner may want it so the family is not forced to sell the business quickly. A parent who plans to leave the flat to one child may want to leave an equal sum to the other. A policy that pays at any age can provide this cash.
Singapore has no estate duty, which is a tax on an estate at death. So the tax reason for permanent cover that is common in some other countries does not apply here. In Singapore the case rests on getting cash into the right hands quickly and on fairness between heirs. Even then, check whether savings and investments, or CPF savings passing by nomination, would do the same job.
Some people know they will not invest the difference, for example because they started a regular savings plan and then stopped it. For them, a premium that must be paid each year, or the policy suffers, may be the only saving that sticks. This is forced saving. Lesson 3.4 showed that if Jun Hao invested only half the difference, whole life's guaranteed value came out ahead.
Forced saving is a legitimate reason, but it has a price: distribution costs, no access to the money in the early years, and lower guaranteed returns. You can build the same discipline with a standing instruction that invests on payday. Lesson 2.3 of the course "The Singapore personal finance system, end to end", titled "Automate payday so saving happens first", shows how to set one up. Try automated investing for a year before you pay for discipline through a policy.
None of the common sales lines is false. Each describes something the policy really does. What you need to settle is whether you need that thing, and whether this policy is the cheapest way to get it.
"You'll be covered for life." Ask who would need the money if you died at 80, and why. "It's a savings plan with protection." Compare it as a savings plan, using the surrender table from lesson 3.2. "Lock in while you're young." Locking in a premium only helps if you need the cover later. Lesson 1.3 covered the real case for buying young. "You can leave it to your children." Ask whether they would need it, or whether this is a wish you would fund some other way. "It pays for your retirement." Compare the surrender value at retirement, meaning what the policy pays if cashed in, with what the same money would build elsewhere.
Jun Hao worked through the situations and the sales lines. His need for cover ends at 58. He has no dependant who will need lifelong support and no business, and the flat will pass to Mei. He has kept a regular investment going for four years, through one bad year, so forced saving is not a reason for him. He already holds S$100,000 of whole life cover bought at age 26, which pays out whenever he dies. That is more permanent cover than any need he can name. He decided the new S$200,000 whole life plan he was offered did not meet a need, declined it, and chose term cover for the gap found in module 2. He kept his old whole life policy, and lesson 7.2 explains why replacing it would have cost him.
When you run these checks yourself, count any permanent cover you already hold against the need you name. Your answer may differ from Jun Hao's, as Wei Jie's did. Base it on a need you can name and size, not on the policy's features.
Write down whether any of your needs last for life. If one does, write how much permanent cover it would justify.
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