Etiqa Essential Lifetime Secure

Etiqa Essential Lifetime Secure Elaboration of Features:

Lifelong Coverage: The plan provides lifelong coverage, ensuring financial security for loved ones even after retirement.
Multiplier Benefit: The plan includes a multiplier benefit that increases the basic sum insured by a factor of 2, 3, 4, or 5 times up to a selected multiplier expiry age, providing enhanced protection. After this age, the multiplier benefit reduces by 10% each policy year for five years and then remains constant.
Comprehensive Protection: The plan provides coverage against death, total and permanent disability (TPD), and terminal illness (TI).
Premium Relief Benefit: A premium relief benefit is available to ease financial stress during challenging times such as retrenchment, admission to intensive care, or the death, TPD, or TI of a family member. This benefit waives premiums for the basic policy and its riders for one year.
Guaranteed Insurability: The plan allows the purchase of an additional plan without further health checks when significant life events occur, such as graduation, marriage, or having a child. This option is available up to two times before the life insured reaches 50 years of age.
Retirement Option: The policy offers the option to convert a portion of the surrender value into a stream of payouts for retirement. Policyholders can receive ten equal yearly payments starting from the policy anniversary after the life insured turns 65.
Customizable Riders: The plan allows customization with riders, including early critical illness (CI) benefits, CI benefits, extra secure waivers, and extra payer waivers.
- The Early CI benefit rider provides payouts for covered critical illnesses at any stage, with additional payouts for major conditions like cancer, stroke, or severe heart attack. It also includes premium waivers for early or intermediate diagnoses and covers special and juvenile conditions.
The CI benefit rider offers an advanced payout of up to 100% of the rider’s sum insured if diagnosed with any of 63 severe-stage critical illnesses.
The Extra secure waiver allows for maintaining coverage without paying premiums if diagnosed with one of 37 severe-stage critical illnesses.
The Extra payer waiver stops premium payments for the basic policy if the policyholder dies, becomes permanently disabled, or is diagnosed with any of 37 severe-stage critical illnesses before the life insured turns 25 or the premium term ends.
Flexible Premium Options: The plan offers various premium payment terms, ranging from 5 to 30 years, in 5-year intervals.
Bonus Structure: The plan participates in the performance of the participating fund through reversionary and performance bonuses, which are not guaranteed.
- Reversionary bonuses are determined annually and credited to the policy. The thing about reversionary bonuses is that it is an insurance amount, with a cash value of its own.
- Performance bonuses are a one-off bonus paid upon surrender or claim.

Etiqa Essential Lifetime Secure has the following to take note of:

Cost of Early Termination: Early termination of the policy usually involves high costs, and the surrender value may be zero or less than the total premiums paid.
Non-Guaranteed Bonuses: The bonuses are not guaranteed and may vary based on the performance of the participating fund.
Reduction of Benefits with Retirement Option: When the retirement option is exercised, the basic sum insured and its attaching bonuses will be reduced in proportion to the surrender value used.
Policy Loan Interest: Policy loans are available up to 90% of the total surrender value, but interest is charged on the loan. The current interest rate is 5.75% per annum and is not guaranteed.
Premium Relief Benefit Limitations The premium relief benefit has limitations, including a one-time claim and a 90-day window for submission after a covered event. The definition of “immediate family member” and “hospital” are specified and limit eligibility.
Maximum Benefit Amounts: There are maximum aggregate amounts payable for TPD and TI benefits.
Premium Differences: Premium rates can vary based on entry age, gender, smoker status, premium term, multiplier factor, and multiplier expiry age.
Surrender Value: The cash surrender value may fluctuate, and there may be a clawback of commissions and overrides if the policy is canceled during the free look period.
Nationality/Residency Loadings: Nationality and residency loadings may apply.
Restrictions on Policy Changes: Policy changes such as a reduction in basic sum insured after the free look period can only be made at the next policy anniversary. Increasing the basic sum insured is only allowed within the first 6 months and requires back payment of premiums.

Etiqa Essential Lifetime Secure Use Case Study Example:

Sarah, a 30-year-old non-smoker, who is looking for a comprehensive life insurance plan that offers both protection and flexibility for her future needs. She has a stable job, but is also aware of the financial uncertainties that life can bring. Sarah is interested in a plan that will protect her family, provide a safety net during challenging times and also potentially help with retirement. She is a Singapore citizen.

Choosing Etiqa Essential Lifetime Secure Plan:

After reviewing different options, Sarah decides to purchase the Etiqa Essential Lifetime Secure plan because of its comprehensive features and the ability to customize it to her specific needs.

Coverage Amount: Sarah opts for a basic sum insured of S$150,000, understanding that this amount can be multiplied for enhanced protection. She also appreciates that her coverage is for her entire life.
Multiplier Benefit: She selects a 3x multiplier which increases her coverage to S$450,000 until the age of 71. This multiplier provides a significant level of protection for her loved ones during her working years. After age 71, the multiplier benefit will reduce by 10% each policy year for five years and then remain constant.
Premium Term: Sarah chooses a 20-year premium payment term to align with her financial planning and cash flow. This allows her to pay off her premiums by the time she is 50.
Riders: Sarah decides to enhance her coverage by adding the following riders:
- Early CI benefit rider: This rider provides her with a payout if she is diagnosed with a critical illness at any stage, along with premium waivers for early or intermediate diagnoses. It also includes an extra 20% payout for major cancers, stroke, or severe heart attack, and additional monthly payouts for severe-stage critical illnesses. She chooses a sum insured of S$50,000 for this rider.
CI benefit rider: This rider will give her an advanced payout of up to 100% of the rider’s sum insured if diagnosed with any of the 63 covered severe-stage critical illnesses. She chooses a sum insured of S$50,000 for this rider.
Premium Payment: Sarah pays S$5,066.50 annually for the policy with all of the riders.

Benefits During Sarah’s Life:

Guaranteed Insurability: When Sarah gets married at age 35, she uses the guaranteed insurability benefit to purchase another policy without undergoing additional health checks. This ensures that her coverage keeps pace with her life changes.
Premium Relief: At age 42, Sarah is unexpectedly retrenched from her job. The premium relief benefit kicks in and waives her premiums for one year, easing her financial burden during a difficult time. This provides her with a financial safety net when she needs it most.
Retirement Planning: When Sarah reaches 65, she exercises the retirement option to receive 10 equal yearly payments, using up to 80% of her surrender value, to supplement her retirement income. She can use up to 80% of the surrender value. Her basic sum insured and bonuses are reduced in proportion to the surrender value she uses, but her multiplier remains the same.

Potential Payouts:

Death Benefit: If Sarah were to pass away before the multiplier expiry age of 71, her beneficiaries would receive the higher of the multiplied benefit (up to S$450,000) or the basic sum insured plus any accumulated bonuses. If she were to pass away after age 71, her beneficiaries would receive a reduced multiplier benefit or the basic sum insured plus any accumulated bonuses.
Critical Illness: If Sarah is diagnosed with a critical illness covered by the Early CI benefit rider, she would receive a payout. She would also receive an additional 20% of the rider’s sum insured if it were a major cancer, stroke, or heart attack, and monthly payouts for other severe-stage illnesses. The CI benefit rider would provide another advanced payout if she were diagnosed with a severe stage critical illness. If she were diagnosed with one of 37 severe stage critical illnesses, the extra secure waiver would kick in, allowing her to maintain her coverage without paying premiums.

Downsides and Considerations for Sarah:

Surrender Value: If Sarah decides to surrender her policy early, she may receive a surrender value that is less than the total premiums paid, or even zero due to the costs associated with early termination.
Exclusions: Sarah is aware that the policy has exclusions for certain events, such as death due to self-inflicted injuries within the first 12 months and TPD caused by dangerous activities. She understands that the premium relief benefit will not cover events related to pre-existing conditions or retrenchment from self-employment.
Non-Guaranteed Bonuses: Sarah recognizes that the bonuses are not guaranteed and can fluctuate based on the performance of the participating fund.

Some things to note. This review post will get dated. And the product might not be available for new subscriptions at some point. Hopefully this serves as reference for future policyholders who have forgotten what they have taken up.

There can be shifts in planning narratives over time. For example, limited premium tenures like this plan gain popularity over the years because people are less confident of their future earning capacity or sustainability of income levels. Regular payout features gained popularity when more and more people are in tune with the FIRE (Financial independence retire early) movement. An extended period of low interest rates brought down insurance products’ returns yield for policy holders, but now in a higher interest rates environment, things have changed.

Etiqa Essential Lifetime Secure may or may not fit into your financial plans. Understand that there is no best plan for all time, but there is a method to objectively facilitate your decisions. Read more about it here.

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