Types of Life Insurance

You've probably wondering "What's the best Life Insurance for me?  It is important to understand that "life insurance" has various types. Knowing the different types will help you get the right plan. May this article help you find the right one for you. :-)

In the Philippines, we use to have TRADITIONAL LIFE Insurance, but as time goes by, Insurance companies began to evolved and start offering NON-TRADITIONAL Life Insurance.

TRADITIONAL LIFE INSURANCE

• TERM LIFE INSURANCE provides "pure" life insurance coverage for a specific period of time. It is the cheapest form of insurance protection because it has no saving component. There is no cash value or dividend.
• WHOLE LIFE INSURANCE provides coverage for your whole life or until age 100. It also requires you to pay for life. It combines protection and savings. It provides death benefits (face amount) and living benefits (cash values and dividends). Living benefits  can be obtained while you are still living.
• ENDOWING LIFE INSURANCE provides coverage for a specified period. They grow cash values very fast. They can build future funds for a definite purpose. The premium paying period is shorter than the whole life insurance and the insurance amount is paid out within a certain period (5,10, or 20 years) or at a certain age of the insured after which the policy matures.

NON-TRADITIONAL LIFE INSURANCE

• VARIABLE UNIVERSAL LIFE/ VARIABLE LIFE INSURANCE/ VUL is an insurance plan with benefits directly linked to the performance of the unit of investment fund/s you choose (usually equity fund, balanced fund, bond fund, money market funds etc.) It's actually a combination of TERM Life Insurance with Mutual Fund Investment. However, unlike Whole Life Insurance, VUL does not have guaranteed cash value as well as dividends. The face amount and death benefit may vary based on how the investment portion performs. As an investor, you reap all the returns but bear all the risks. But you can minimize these risks through PESO COST AVERAGING. This kind of investment is ideal for long term. 

To give you an overview regarding this product, I will share you the video from Pesos and Sense (Episode 3 on the topic of Insurance).