I bought my life insurance when I was in my mid-twenties. It was pretty late, due to the fact that I finally starting earning enough to cover expenses for my fixed financial obligation, me, and a bit of extra for the insurance premium. Life sucks, I know. I did get myself a hospital plan when I was younger from Prudential and that was the only coverage I had for the longest time.
I met up with a few agents and none really actually vibed much with me. You could smell the desperation or see when they start to calculate their commissions whenever I tell them about my budget.
I decided to do a bunch of research by myself so that I knew what I wanted without their influence. These are the steps that I took into getting my first life insurance.
Step 1: Learn about insurance
I came across this term BTIR (Buy term, invest the rest) and I was really considering going for it. Basically, the two difference between a Whole Life Insurance vs Term Insurance is:
|Whole Life Insurance||Term Insurance|
|Pay $$ for a set amount of time to have coverage for the whole life||Pay $ for the years you want to be covered|
|Have a cash component, so that when you die your kids will get the money||Have no cash component, so if you die on the years you are not covered, your kids won’t get any money|
The idea is that the money you saved in purchasing Term Insurance, like $200, you should invest them to grow your wealth.
Step 2: Find out how much I need
After talking to a bunch of people, I came up with an amount of how much I want to be covered, and at which stage of my life. I even did a Google sheet and wrote down a 50-year coverage plan.
Basically, I asked my friends how much were they being covered, I also wrote down the obligations my family needs and how much for an x amount of time. It also helped that I talked to a bunch of agents and I saw how they did the calculations.
Step 3: Find insurance plans that fit your needs
I used a lot of these insurance comparison sites such as CompareFirst or GoBear to see what are the plans out there. I went on multiple forums and finance blogs to learn what are their thoughts on the plans. I struggled really long before I decided to go for a hybrid of Whole life and Term life, for the reasons being,
(1) There is always something that is going to be better than now and I don’t want to be stuck paying for $x when the newer generation have a better deal.
(2) Paying premium means I would never get my money back1. It is basically for my kids. My kids will have access to my CPF funds when I die. I’m salty, I don’t have kids. I don’t feel the need to provide them with such a cushy life. If they want more money, they can pay for my 99-year term life plan until I die.
(3) In the event I get incapacitated or become dirt poor, and is unable to pay my term insurance, at least I have a fallback with my whole life insurance to protect my family and me. It would really suck if I’m 99 years old, and still have to pay term insurance if I became poor.
(4) I was not thinking about growing wealth at that time because I can’t afford to and I did not know where to start.
I will not talk about the specific plans that I bought because the post will not age well. I however found a plan that resonates with me, talked to my partner’s friend2 to purchase the plan for me.
I would add that if at that time, I had a little bit more budget, I would pay slightly more to go with my Prudential agent I met years ago because I felt that she was genuine at her job. I would pay more for her3.
- Unless I surrender my Whole Life
- Whom I think only works with high value clients. Bless him for taking me on.
- On my Google sheets that there is Prudential term life plan that I plan from her to buy at 40 years old