A contract between an insurer and a policyholder is referred to as life insurance. In exchange for the premiums paid by the policyholder throughout their lifetime, a life insurance policy promises the insurer will pay a specified quantity of money to named beneficiaries upon the insured’s death. Moreover, to be enforceable, the life insurance application must accurately describe the insured’s history and present health status, as well as high-risk activities. While you can still invest your hard-earned money in more tangible items such as a condominium or a car during these times, you may want to consider purchasing something that will help you protect your income, secure your future, and provide support for your dependents in the event of your death, such as life insurance.

What types of life insurance are available?

There are two basic types of life insurance in the PH, the traditional life and variable life. The primary objective of conventional life insurance is to provide assured death and or living benefits. On the other hand, variable life insurance is investment-linked, allowing the policyholder to earn a better rate of return on their living benefit while still receiving a death benefit. However, the amounts obtained through variable life insurance are not guaranteed due to market performance.

There are three further classifications of life insurance:

Insurance on a Term Basis

Term life insurance provides coverage for a specified or limited number of years, referred to as the “term.” The beneficiary will get the death benefit when the insured individual dies while the policy is still active. Term life insurance is more affordable than other types of insurance. There is no income potential because there is no capital accumulation component.

When the policy’s term expires, the money required to maintain the policy’s status expires as well. The good news is that term life insurance products are now available to be automatically renewed or changed to a permanent plan that covers you for life.

Insurance for the Entire Life

Whole life insurance protects the policyholder until they die. It will pay the policy’s coverage amount in the event of the insured’s death for the duration of the policy’s validity. Whole life insurance payment structures are usually straightforward because premiums are constant, but they are frequently more expensive than term life insurance.

Endowment

On top of safety, endowment life insurance plans provide assured living benefits. These guaranteed living benefits may be paid out monthly or as a lump payment at the policy’s maturity. After the term, the beneficiaries of endowment life insurance plans get the death benefits.

When it comes to prices, endowment life insurance policies typically have higher monthly or annual premiums. Premium payments are higher because endowment programs provide assured living benefits while financially covering you and your dependents in the event of death or illness.

To know more about the things to consider when buying a life insurance policy, below is an infographic from ICHOOSE PH: