I enjoy chatting with cab drivers whenever I take a taxi and one of the questions that I pose to them is how much insurance they own.

Often, they tell me that they have about $20,000 in life cover. And it is also likely to be an endowment policy. This is a plan that has a fixed maturity period and comes with insurance protection as well as a cash or 'surrender' payout.

When I ask the cab drivers if $20,000 is enough to meet their family needs should something unfortunate happen to them, they take a while before responding by shaking their heads.

Many of them are not aware that if their immediate concern is that of protecting their dependants in the event of an untimely death, they are better off with a term policy that has a higher sum assured.

The trouble is, most people still do not know about term policies or how affordable they are.

Unlike traditional whole life, endowment insurance and investment-linked insurance plans, term insurance offers no-frills 'pure' insurance protection with no investment element.

Of course, with a term policy, there are no annual bonuses or dividends so the policyholder typically gets nothing when the policy expires or is surrendered.

But this has to be weighed against the much cheaper cost. For example, a 20-year term plan with a sum insured of $500,000 costs $1,795 a year for a 35-year-old non- smoking male. This is much lower than the annual premiums of $9,700 for a whole life policy or the whopping $22,495 for a 20-year endowment plan.

My informal survey is certainly not scientific and there could well be some cab drivers out there who do possess a term plan. But I have yet to meet them.

It is no wonder that Mr Low Kwok Mun, the executive director of the Monetary Authority of Singapore's insurance supervision department, recently voiced his concerns about the problem of people buying life insurance plans with far too little coverage.

They do so because they like the idea of getting something back from the premiums they pay for insurance protection. The downside to this is that they usually end up with a plan that offers far less coverage than a term life product.

This is a real problem for the consumer. A study by the Life Insurance Association last year concluded that the average worker would need $480,000 of life cover, but has only a quarter of that at $118,000.

Once upon a time, I was no different from other Singaporeans who pooh-poohed the idea of buying a term cover.

Back then, it did not make sense to me that I would not get anything back from the insurance premiums that I had paid. It was like throwing money down the drain.

Only in the past few years have I become a term life convert. I realised I was putting the cart before the horse. I was mixing investment needs with protection needs and when they were bundled together, my priorities became clouded.

The mental shift came about when I realised that part of the premium for my whole life policy is actually used to pay for the protection, otherwise known as the mortality cost. This is the portion that does not get invested anyway, which means I would not obtain any returns from it.

And the portion that goes into investment gives me a low return of about 3 per cent, which might seem okay for investors who lack the discipline to save or the knowledge to invest elsewhere. But for those who are savvy enough, they can certainly do better over a long time horizon if they invest in other financial instruments such as a globally diversified portfolio of stocks and unit trusts.

This is why some financial advisers feel so strongly about 'buying term and investing the rest'. By unbundling the protection element from the investment or savings element of policies, you can use the savings from the lower premiums for investments.

By separating the two elements, I can also ensure that my protection needs, which are the basic building blocks in any financial plan, are adequately taken care of first before I think of using my surplus funds for investments.

My first policy was a whole life one, bought from a friend. Later, I bought three more traditional life plans comprising whole life and endowment policies, which brought my total life cover to $300,000. I am still holding on to them, but I more than doubled my insurance cover four years ago by buying a 15-year term policy that comes with a death benefit of $400,000.

Together with the life insurance cover provided by my employer, I am currently covered for more than $1 million on my life.

And the term cover I bought did not cost me an arm and a leg. The annual premium for my $400,000 term cover amounted to just $800, or less than $70 a month. If I had bought a whole life cover of $400,000, the premium would have been $9,700.

On a brighter note, many customers are now inquiring about term cover. It has also become even cheaper as people live longer lives and mortality risk decreases.

To meet this demand, insurers are marketing more and more innovative term products. You should check out the full range, because some of them even come with cash-back guarantees.

Changing mindsets is not easy, but I am hopeful that in the not too distant future, an adequately insured driver will greet me when I hop into a cab.