Aviva SAF Insurance I

Recently, Aviva sent me a letter offering me an "exclusive offer to automatically upgrade your (my) group term life insurance cover to $200,000". The key points of the letter were:

1. Revision of maximum coverage to $600,000 in October 2009
2. Automatic upgrade of insurance coverage to $200,000 costing $0.85 daily (monthly premium $25.60) unless the insured person opts out

Upon reading the letter, I had an issue with (2) straightaway. It reminded me of the "innocent unless proven guilty" versus "guilty unless proven innocent" conundrum. In this case, Aviva was adopting the "Yes you want it unless you say otherwise" approach. I do not think this should be the way. For me, where insurance is concerned, there are two conflicting stands:

1. The level of coverage I would like to have
2. The level of coverage I can afford

Who doesn't want to be covered for a million bucks? But would you be able to pay the premium every month?

Subsequently though, Aviva realised its customer relations folly and sent me another letter. This time, it was "Yes you want it if you say so, otherwise status quo", which is of course much more palatable to the customer. In fact, Aviva was fairly quick to act upon its initial boo-boo. The first letter was dated 30 March and the second one 12 April.

I first signed up for this policy back when I was a blur-like-sotong NSF. It was only when I graduated and entered working life that I started to review all my existing insurance policies and recalled that I have been paying for this all this while. Initially, my monthly premium was $16 for a coverage of $100,000. Then, in a letter dated 28 April 2008, Aviva offered existing customers an automatic upgrade (similar to the one now):


This brings me to my current policy. Upon receiving the recent letter from Aviva, I did a brief comparison:


The third column is the premium per month per '000 coverage and shall serve as the basis of my comparison. To my surprise, the insurance component of my Manulife ILP turned out to be the cheapest in this respect, followed by the CPF DPS, and finally by the Aviva SAF insurance.

However, I will be the first to concede that this is not an entirely fair comparison study.

Firstly, insurers have to make money from somewhere, and for an ILP, the insurer's profits do not come from the insurance component but from the investment portion in the form of fees and the penalties incurred during the first few years.

Secondly, to compare amongst these various insurance policies that I have, is a bit like comparing apples to oranges. For instance, the Aviva SAF insurance has amongst other benefits, accident coverage and hospital cash whereas the CPF DPS is solely for death and total and permanent disability (TPD), which the Aviva SAF insurance also covers. A fairer comparison would entail comparing between policies which have the exact same terms and benefits, such as between term policies. The trouble is, I find that policies nowadays tend to combine benefits across various categories such that it is harder to classify them solely as just one certain type of insurance.

Nevertheless, despite the seemingly unfavourable results of the comparison, I have decided to go for the upgrade due to a few reasons:

1. To increase my overall coverage
2. Aviva SAF insurance allows spouse and children to enjoy the same coverage under one policy
   
3. Every year, I receive a partial cash rebate which helps to lessen the actual cost of the insurance
4. This offer includes free first one month premium

For more details on Aviva SAF Insurance and CPF DPS:
http://www.aviva-singapore.com.sg/life-and-health/for-individuals/saf-insurance-for-nsmen.html
http://ask-us.cpf.gov.sg/explorefaq.asp?category=23023


Disclaimer: The writer is covered under GE DPS, Aviva SAF Insurance and Manulink Flexi ILP mentioned in the post. This is not a solicitation to purchase insurance. Premiums quoted are for males who are non-smokers, aged 35 and under.