My favourite life insurance plan in Singapore - Aviva SAF Group Insurance for NSmen

4 Nov 2012: A new update for this plan has been written.

My favorite life insurance plan in Singapore for family protection in the event that I can no longer serve as a breadwinner for the family is the SAF Group Insurance for NSmen from Aviva. I am a policy-holder for several years already.

It is the best deal in Singapore that I know of that fits my criteria. It offers the best value for money per dollar for protection. For an annual premium of about SGD920, you are covered up to SGD600k. The coverage extends to high-risk activities like military training which I do not think is covered by other insurance policies.

There is an advance payment of 50% (limited to SGD100k) if the insured is diagnosed with a terminal illness. There is even a daily hospital cash benefit which pays up to SGD10 for every SGD50k assured. One thing I like about this policy is the partial cash rebate of the annual premium during good years. I know of no other policies that have a similar feature.

For parents with sons who are going for National Service soon, it is a policy worth considering. To my knowledge, it is the only policy that covers mishaps during National Service.

For more details, please visit http://www.aviva.com.sg/pdf/57660_SAF_Brochure.pdf and read the footnotes and the clauses yourselves. My brief summary cannot cover all the restrictive clauses that all buyers should be aware before buying.

If you know of a better deal, please tell me. I am confident none exists.

Please note that there is no savings or investment component in this insurance plan. In other words, you do not get back any money at the end of the day. This is why it is so much cheaper than the endowment, whole-life or investment-linked policies that insurance agents like to sell. It is a pure protection plan which is almost never recommended by insurance agents because it pays very little commission. So, if you want to buy this policy, do the agents a favor. Don't expect them to visit your home for this policy. If they do, it is reasonable that you will have to put up with sales talk for the higher commission products like the endowment, whole-life or investment-linked policies. Submit the application form yourself.

As a general rule, I never liked insurance products that mix investment or income. If I want income, I will go for fixed-income products like government bonds or fixed deposits. Insurance plans that offer income come with projected returns which cannot be relied upon. Ignorant customers can be easily taken in by the aggressive projected returns to lure them into buying. It is easier to analyze fixed-income products with guaranteed returns than insurance plans with projected returns. The insurer actually has an incentive to use unrealistic projected returns to boost sales. Consumers should be aware of this risk when assessing these kinds of insurance products.