We’ve covered life insurance in the Philippines quite extensively. We discussed the purpose of getting insured, test for insurability, adding a rider, the general types of insurance products in the market, list of insurance companies you can buy them from, and common questions. In this article, we’re going to talk about term insurance.
What is term insurance?
In our country, term insurance is a type of insurance that gives you cover for a specific period of time. Usually, you purchase it at a relatively affordable amount and agree to a short validity. That’s why it’s called by its name, term being the length of time that you can enjoy the coverage. When it’s up, you may choose to renew it again.
Term insurance is always compared with whole life insurance. The former insures you for a period, usually for a year. Whole life insurance on the other hand gives you cover for an entire lifespan, somewhere between 88 years to 100 years.
If you look at these two products from this basis alone, you might say that it’s better to get insured for as long as possible and therefore whole life insurance beats term insurance. But comparing the two is not as easy as that because there are other factors that you should consider before buying either one.
Common factors in term insurance
Below are common things in a term insurance product.
- Term refers to the length of time that your policy is paid up for and valid. After the term ends, your policy may be up for a renewal or end up getting terminated.
- Cover is the value of the insurance. It is the amount of money that beneficiaries can expect to get when the insured person passes away suddenly.
- Premium is the money paid to the insurer. It is what makes the policy coverage to start and become enforceable.
- Once the term is up, it can be renewed up to a certain age.
What are the advantages of buying term insurance?
There are many benefits in purchasing a term insurance policy.
- It is affordable because you’re paying only for one term at a time.
- There are many flexible terms you can choose from, ranging from one year or longer.
- Flexible payment schemes exist.
- You can get the most coverage at a reasonable price. That means you can get insured for millions of pesos without breaking the bank.
- It can be customized. For instance, you can add riders such as critical illness, hospitalization benefit, or accident coverage.
- Automatic renewal is an option, so there’s less hassle in terms of managing the policy.
- Renewal is done without need for medical underwriting.
- The policy is convertible to whole life insurance.
- It may be used with other financial strategies, such as buying term and investing the difference.
What are the disadvantages of getting a term insurance policy?
Term insurance’s biggest advantage is its cost. It’s relatively less expensive compared to a whole life insurance. And that’s because you’re paying only for one term or one renewal, while whole life covers an entire lifespan to be paid on your first few years.
However, there are also disadvantages.
- Limit. It stops at a certain age. In the market today, most products stop when you reach the age 65 to 70 years old. This means that it can’t be renewed anymore at a time in your life when you need insurance the most.
- No cash value. There is no savings or investments. Unlike other products, it has no cash value that increases over time.
- Increasing premium. Premium increases in each renewal without a corresponding increase in coverage. Meaning, you’re paying more to get the same benefits as you get older.
- Relative premiums. Premium is more expensive for people in their 50’s or 60’s than those who are in their 20’s or early 30’s. It can be an issue too upon renewing existing plans.
- Elderly people. There are available products in the market for people who are too old, like those in their late 60’s or 70’s.
- New policy. You might develop health issues that might prohibit you from getting new insurance policy.
- Renewal. Your ability to renew is only limited to the company you get the insurance from.
Top term insurance policies in the Philippines
Here are the top term insurance products available in the Philippines today.
- FlexiProtect from AXA Philippines
- Philam Guardian
- Manulife Yearly Renewable Term
- Sun Safer Life
- FWD Set for Tomorrow: Short Term Cover
- PRUlife your term
- Sun Grepa ProTerm
FlexiProtect is a low-cost term insurance offered by AXA Philippines. It’s a 5-year renewable and convertible policy that brings value to your money. With a substantial cover, it can help your family financially should something untoward happen to you.
With AXA FlexiProtect, you may enjoy at least P3 million in benefits for a reasonable premium of P35 a day. You’re also given the flexibility on how you’d want to pay, either one-time or in 5 years.
Should you want to get the most out of your policy, you may add the following riders:
- Critical conditions rider covers 57 major illnesses.
- Secure rider, which gives protection when you meet accident, suffer major burns, or dismemberment.
- Care rider provides benefits each day that you spend in the hospital.
- Waiver of premium allows the insurer for your policy if you lost the ability to earn an income.
The Philam Guardian provides a cover for a specific period. It is available for people until the age 84 years. You can choose to purchase 1 year, 5 year, 10 year or until age 65 years old.
Moreover, clients can attach other supplements. For instance, you may add accident, disability, and hospitalization benefits to customize the plan according to your specific insurance needs. In terms of payment, you can choose to pay one-time, in five years, in ten years, or in regular intervals to suit your budget.
Lastly, at the end of the term, you can renew for as long as allowable and you may also opt to convert to endowment plan without being required to present proof of insurability.
Manulife Yearly Renewable Term (YRT)
The Manulife Yearly Renewable Term (YRT) is a 1-year term insurance that gives clients the opportunity to get insured for a year. Another variant called the ReACT is available. Its term is good for five years.
Just like the other products in this category, Manulife’s offers are renewable. After the term ends, you can choose to reinstate the policy again. Moreover, it can also be converted to a whole life insurance policy, which is ideal for those looking to have peace of mind for long term.
Sun Safer Life
The Sun Safer Life is an affordable 5-year term insurance plan offered by Sun Life Philippines. It is a simple plan for those who are just new to insurance plans in general and for families who are on a shoestring budget. It can be renewed until age 75.
Additionally, supplementary contracts can be added to add more customization to the plan. It can also be converted to a product that is investment-linked for as long as the insured’s age is 65 years old and below. Flexible payment arrangements are available, including the ability to automatically renew and deduct from a bank account.
FWD Set for Tomorrow: Short term cover
The FWD Set for Tomorrow: Short Term Cover is one of the three variants of traditional insurance products that FWD Philippines offers. It’s a term insurance for 5 years or 10 years. Payment term is also flexible, with premiums to be paid in 5 years, 10 years, or one-time.
In addition, 100% of the proceeds may be given on the diagnosis a terminal illness. A 10% of the insurance can also be released within 48 hours in advance. Should you and your spouse meet sudden demise due to accident, an additional 100% is given if there is one dependent who’s younger than 18 years old.
BPI-Philam Life Protector
BPI Philam Life Protect is a term insurance that comes in three options: 1 year, 5 yhears, and 10 years. Issue age is from 18 years old to 79 years old, which would depend on the option was chosen.
The product allows you to increase up to 10% of the original insurance amount wihtout going through any medical underwriting. Riders can also be attached to the policy if you see fit. For instance, you can add an accident benefit that would cover any untoward incidents and a Waiver of Premium which would let the insurer waive your payments and still consider your plan valid until the age of 60 on diagnosis of being disabled.
PRUlife your term
PRUlife your term is a simple insurance cover for one year that is renewable until the age of 89 years old. Premiums start at P8,000 per year for people aged 0 – 39 years old. People who are 79 years and younger can avail of the policy.
There are riders that can be added to customize the plan. You can add protection against accidental death and disability, hospitalization, critical illness, and a variable life rider for wealth accumulation.
Sun Grepa ProTerm
The Sun Grepa ProTerm is a 5-year renewable and convertible policy. It automatically renews at the end of each term without the need to present any proof that you are insurable. The limit to the renewal is at age 74 years old.
Moreover, the policy can also be converted to other eligible life insurance plans, and even you may not be asked to go through the application of a new plan. In addition, additional protection such as total disability benefit and accidental death benefit can be added onto the plan.