Real-life cases on closing gaps

Here are two real-life cases on how policyholders closed their insurance protection gaps by buying suitable plans.


Mr Michael Chng (not his real name), 50, is the sole breadwinner of his family of four, including two young children aged 10 and 13. He approached to review his coverage.

In the event of his untimely death, he would like to provide a monthly income of $4,000 for his dependants to support their daily living expenses for the next 16 years.

Mr Chng would like to fund his children's university education, which will amount to approximately $176,000. He would also like to cover his home mortgage of $250,000, which has a remaining loan tenure of 16 years.

His total death needs amounted to $1,194,800, while his existing insurance coverage and assets amount to $690,000 - a shortfall of $504,800. advised that if he had opted for a whole life plan to cover the shortfall, the annual premiums would be $7,113.75 for 15 years.

Mr Dennis Hoe, insurance planner at, says: "The option is expensive and may not be necessary as his needs are temporary and last for only the next 16 years."

So Mr Chng was advised to buy a term insurance plan with $500,000 death and total permanent and disability coverage for the next 16 years at an annual premium of $1,667.01.

"This option will be more cost effective and suits his needs better," says Mr Hoe.

A term plan can provide a large sum of life protection at a reasonable cost because a basic policy is limited to pure protection with no saving or investment element. On the other hand, the premium for a whole life plan, which offers a cash value, is typically much higher.


In 1995, Ms Phoebe Han (not her real name) bought a Prudential investment-linked whole life plan - PRUlink assurance account - with an added benefit that offers critical illness coverage.

Prudential said the key advantage of this plan lies in its flexibility to change the sum assured and premium to suit a person's needs at each stage of life, with options to add on complementary coverage for critical illnesses.

With a better understanding of the value of insurance and the protection it provides, Ms Han, now 51, increased the amount of her sum assured for critical illness cover from $60,000 to $110,000 in 2014. This translates to an annual premium of $2,580.

It turned out to be a timely decision. A year after raising her critical illness coverage, Ms Han was diagnosed with stage three ovarian cancer.

She required surgery to remove the tumour and underwent several rounds of chemotherapy. The treatment drained her both physically and financially.

Ms Han filed her claim under her Prudential plan and received a lump sum payout of $110,000, which helped to meet her medical and living expenses during her recovery.

Coupled with coverage from her PRUshield hospitalisation plan, Ms Han was able to fully cover her medical treatments without any out-of-pocket costs, which provided financial peace of mind to her and her family.

Lorna Tan

A version of this article appeared in the print edition of The Sunday Times on September 10, 2017, with the headline 'Real-life cases on closing gaps'. Subscribe