It has come to my attention that there is some talk regarding the "Family Income Plan", and more specifically, that it is a better substitute for term plan. So I've decided to do my own comparison and to see whether if it is a better deal or not.
The "Family Income Plan" is a type of insurance plan that pays a monthly income to the family following the death of the life assured. So I looked around and a possible fit that I can find is the "Disability Income Plan" offered by one of the insurers. The "Disability Income Plan" pays a monthly income to the family when the breadwinner suffers a continuous "total disability" which renders the insured unable to work. And even so the definition of being unable to work is quite strict as you can see from the policy wordings:
The "Family Income Plan" is a type of insurance plan that pays a monthly income to the family following the death of the life assured. So I looked around and a possible fit that I can find is the "Disability Income Plan" offered by one of the insurers. The "Disability Income Plan" pays a monthly income to the family when the breadwinner suffers a continuous "total disability" which renders the insured unable to work. And even so the definition of being unable to work is quite strict as you can see from the policy wordings:
Disability Benefit
(i) Total Disability Benefit
Total Disability Benefit is payable upon continuous disability beyond the Deferred Period.
Total Disability Benefit is payable upon continuous disability beyond the Deferred Period.
During working periods:
"Total Disability" means a state of incapacity, resulting from illness or accident, which is such that the Life Assured is
"Total Disability" means a state of incapacity, resulting from illness or accident, which is such that the Life Assured is
(a) totally unable to perform the material duties of
i. his own occupation or profession for the first twenty four (24) months of any period of Total Disability; and
ii. any occupation or profession to which he is suited by reason of his training, education or experience after the first twenty four (24) months of any period of Total Disability; and
(b) not performing any work or engaged in any occupation or profession to earn or obtain any remuneration, whether declared or undeclared to the company.
The diagnosis of "Total Disability" must be confirmed by a Registered Medical Practitioner appointed by the insurer.
More interestingly, is the death benefit of this policy. Rather than continuing the monthly payout if the insured dies, the death benefit is only a lump-sum payout of $5,000. (And that is only payable if the insured is already on the monthly payout. If the insured dies outright before the disability kicks in, there will be no death benefit).
On top of this, the premiums for these plans are not cheap. The annual premium for this plan which covers specifically disability (resulting from illness or accident) is $2,419.50 for a $3,000 monthly payout. Meanwhile, with a similar amount of annual premiums ($2,480.00), the insured can get a $500,000 term plan that covers death, total and permanent disability and critical illnesses.
How is the disability income plan better than a term plan?
