a) premature death
b) serious illness and disability
c) unemploymentd) insufficient income during retirement
The chance of (a) and (b) occurring during the working life is quite low, perhaps less than 1%.
By getting bad advice from insurance agents, they spend too much of their savings to insure against these risk.
Most people (i.e. 99%) are likely to face the risk of (c) and (d). This risk can be best managed through personal savings.
The savings should be invested to earn a good rate of return and can be withdrawn without penalty, e.g. through a low cost investment fund. The personal savings can be used to cover cash flow needs during a temporary period of unemployment, without the need to depend on borrowings which incur a high interest burden. If the savings are invested prudently, they will provide an adequate amount for retirement.
As an alternative, they can also buy a personal accident insurance for $100,000 at a premium of about $175 a year. Most of the risk of premature death is caused by accident, right?
The key priority is to have adequate savings (say 15% to 20% of your earnings, in addition to EPF) and keep it for an adequate rate of return (low risk fund). Spend not more than 5% of your savings on term or personal accident insurance.