• Life Insurance in the Philippines - Basics

    The need to have continuity in income is paramount since most of us are not born with a silver spoon. It is furthermore relevant if you’re leading a family and leaving no stones unturned to keep it going without any interruptions. Monetary security is something we all work hard towards to give a respectable and sustainable life to our loved ones. As long as you’re able and available for work, it's not a big deal.

    We are sure you’ve thought and planned well about exigencies such as disability, old age and death. Mere savings and liquidity may not be sufficient enough to cover the rising costs, inflation and other factors. To hedge against such situations and to provide financial security to your dependents, a Life Insurance comes highly recommended. It is a policy that you buy from insurers to compensate loss of life or disability that has the potential to cut off the financial support. Whether you’ve just started your career or sailing through a stable one, it's important to seek a life insurance cover, regardless of the fact whether you’ve acquired a family or not. It also doubles up as an investment apparatus to secure the financial needs of the future.

    Benefits of Life Insurance

    If you’re someone new to the world of life insurance, you will be surprised to discover its primary benefits. Let's explore them.

    Financial Protection for the Family

    The most visible benefit of having a cover for life is the lump sum amount it offers dependents in case of death of the insured to cover up for the immediate loss of income. It may not be a long term benefit for the family, least it takes care of is the immediate financial obligations of the dependents.

    Acts as Savings & Investment Instrument

    Unless you’re buying a term insurance, the premiums paid over a period of time is payable to the insured upon maturity. Traditional life insurance options such as Whole Life offer pleasing returns with interest earnings. If the insurance bought is Variable Universal Life or a similar product, you can even reap the benefits of receiving attractive charges since the funds are linked to the market performance.

    Serves as Retirement Income in Old Age

    Since most of the life insurance products come with a long term maturity, the lump sum amount received also serves as a corpus for your post retirement life to help you manage expenses when you’re not earning.

    Types of Life Insurance Policies Available in the Philippines

    All the policies offered by insurance companies in the country can be broadly classified into the following types.

    • Endowment
    • Whole Life
    • Term
    • Variable Universal Life

    While all the types above provide death and maturity benefits, the intrinsic features is what makes them different from one another. Let's take a sneak peek into each one them.

    1. Endowment

      This type of cover is obtained by people who are looking for maturity benefits at the end of a specific period. It guarantees the face amount to the insured member if he/she survives the cover period and therefore comes with shorter terms (not full life). In case of death of the insured member during the policy term, a lump sum is offered to the beneficiary.

      Advantages

      For those of you looking for shorter terms to fulfill periodic financial goals and looking forward to securing the future of dependents, Endowment is the right option. They are flexible since you’re free to choose a term either at specific interval years or maturity at specific ages of the insured member. It is also the ideal plan for those who do not like to wait for long term to reap the benefits of life insurance.

    2. Whole Life

      Generally, a Whole Life insurance is purchased for lump sum benefits upon death to the beneficiaries. If offers a lifetime cover at low premium payments. The most outstanding benefit of Whole life is that it offers flexibility in terms of payment at specific intervals throughout the life or for a certain number of years after which the payments cease and the life cover continues.

      Advantages

      Most suitable for people who wish to buy insurance early in life and make premium payments during productive years. Offers permanent protection at affordable premium value and comes with flexible features, amendable on the basis of change in family responsibilities.

    3. Term Insurance

      Perhaps, the most popular of them all, a term insurance offers to pay the face amount only in the case of death of the insured member. It does not offers any maturity benefits to the insured member, although there is a slew of products in the market which offer return of the premium paid after the expiry of the term.

      Advantages

      Suits people who are looking for a high cover amount at low premium payments. If fulfills the insurance needs of people who cannot afford to invest in a whole life or endowment plan.

    4. Variable Universal Life

      A type of life insurance where a part of the premium amount paid is invested by fund managers into market linked instruments such as stocks of companies. It ensure death benefits and also monetary returns to the insured member by way of returns from reinvestments made by the insurance company which are distributed in accordance with the cash value. The investment component is administered as separate account.

      Advantages

      Unlike other products in the life insurance segment, Variable Universal Life comes with no maturity age which works in the favor of the insured. It also offers multiplied benefits since the death component is not limited to the face amount alone. The cash value is also payable along with the sum assured.

    Well, now that you’re aware of the various types of life insurance options in the Philippines, go ahead and compare before purchasing one since the features and benefits varies based on the company you’re opting for.

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