The simple truth of it is: you are your most valuable asset. As with anything of great value, you deserve to be cared for and invested in. Education is an investment in your skills so that you can secure yourself a livelihood. Health care is an investment in your well-being so you can enjoy a good quality of life. And life insurance is an investment in your future so that you’re ready to face any eventuality, whether good or bad.
But not many people realize that investing in the distant future should actually be a concern for the present, which is why few are as familiar with life insurance as they should be. As the saying goes, there is no time like the present, and given the rapid economic growth we are currently enjoying, it is high time to reevaluate our financial priorities and determine what is and isn’t worth our hard-earned Pesos.
Which brings us to the question: what exactly is life insurance?
Life Insurance
As the name suggests, life insurance provides commitment. It serves as financial protection for the policyholder, as well as their beneficiaries, for when they can’t provide for themselves, as in the case of a serious illness, crippling accident, unexpected loss of income, or even death.
How life insurance works is relatively simple: you’re really just saving for a rainy day. Every life insurance policy has three essential components — the death benefit, the premium, and the cash value of permanent or universal life insurance.
The death benefit is the amount of money given by the insurance company to the named beneficiaries when the insured dies. The premium is the payment set aside by the insured every given period (e.g., monthly or quarterly), and the amount varies depending on several factors, both as determined by the company and the policyholder.
Finally, the cash value of permanent or universal life insurance essentially acts as a savings account. It’s the money you set aside for later use, which you can either withdraw (in some insurance policies) after a set period, or leave alone to grow in value. The reason it increases in value is the insurance company keeps this money in circulation when you’re not using it, so it doesn’t lose value by simply sitting stagnant in a vault.
Types of Life Insurance
Life insurance is a long-term commitment, and there are certainly a lot of things that could happen to one’s life in the interim. For this reason, there are numerous types of life insurance policies designed to cater to the various needs of a person as they go on in life.
Whole Life Insurance
This is the traditional form of life insurance that lasts for the entirety of a person’s remaining life. The premium you set aside for this form of insurance can go either as a benefit for your dependents to collect in the event of your death or as an accumulated cash value you can withdraw while still alive.
Term Life Insurance
Unlike other life insurance policies, this one is only effective for a fixed period and doesn’t have any cash value. Term Life Insurance generally covers a period of about 20 to 25 years, and if the policyholder dies during the term, their surviving dependents get the entirety of the premium death benefit. There isn’t, however, the option to withdraw the cash one pays for this particular insurance, and it is often the case that this policy also has a no-refund option, which means policyholders can’t get their money back if they outlive their policy. The biggest advantage, however, is that this is also one of the most inexpensive life insurance policies available.
Universal Life
This type of life insurance offers more flexibility than its traditional counterparts; it provides an investment savings option and low premiums. Policyholders can adjust the terms of their contract regularly depending on their changing needs, and the savings component can be a straightforward from the death benefit, which means policyholders can withdraw their cash value without affecting the amount allocated to their death benefit.
Variable Universal Life
The biggest difference that VUL has from the other policies is that it has a built-in savings component totally separate from its other life benefits. The savings component functions more like a traditional investment policy than a simple savings account, and has a maximum cap and minimum floor invested in markets similar to mutual funds. Policyholders can incur losses because of this, but it is more often the case that they will reap even bigger rewards.
An Ever-evolving Game
Of course, as the needs of people continue to change, so, too, do the products they use. Life insurance policies have steadily evolved to become more flexible, now accounting for the various demands a person may have not just in death but even in life.
All of the top insurance companies in the country provide a range of highly-customizable policies designed to keep up with the changing times, replete with sub-policies (known as “riders”) that would cater to just about every aspect of a person’s life, from their medical needs to their educational investments, even to their plans for retirement and beyond.
Top 3 Insurance Companies in the Philippines
Sun Life of Canada (Philippines), Inc.
Sun Life has enjoyed the top spot for eight years in a row for one simple reason: they know the people and their needs. Their best-selling insurance plan is their VUL, which comes in five varieties, each with a rider that covers crucial milestones — from educational funds (Sun Maxilink Prime and Sun Maxilink Bright), to retirement plans (Sun Flexilink), to active investments (Sun Maxilink One and Sun Flexlink1).
AXA Life
One of AXA Life’s most distinct advantages is its collaboration with Metrobank Group. Bank customers have easy access to AXA Philippines’ products, giving them greater financial freedom. AXA’s life insurance policies have strong health coverage and education options, ensuring that you and your loved ones are well cared for in the aspects where it really matters.
Philam Life
The Philippine American Life & Gen. Ins. Co. is perhaps noted as one of the most powerful newcomers of its day, managing to rise to the top of the insurance industry after a mere two years of opening. These days, it continues to live up to its legacy, providing top-quality insurance policies to people from all over the world. In the Philippines, Philam Life’s top life insurance policy covers up to 100 years of age (as opposed to the typical limit of 65 years old), and their policies are focused rather than general, covering specific riders like wealth-building, marriage plans, starting a family, opening a business, and others.
Everyone needs a safety net. As we are our own most valuable asset, it only makes sense that we do our utmost to take care of ourselves. Part of this means securing our future, especially for unfortunate eventualities when we can no longer do this on our own.
For the average working Filipino, in particular, on whom entire families are dependent, it is only prudent for them to insure and protect themselves as soon as possible. Life insurance is not a luxury to consider only when one approaches the retirement age; instead, it is a basic need that should be attended to as soon as possible.
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