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 expires, you may choose to renew it again.
It is useful to compare it with whole life insurance. The former insures you for a period, usually for a year, and it is usually cheaper between the two. Whole life insurance on the other hand gives you cover for an entire lifespan, somewhere between 88 years to 100 years. Because you are pre-paying
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. Some of the important features that they have in common are organized them into a table so you can better compare them. And don’t worry if you want to know more information about them, each one of them will be discussed in details in succeeding sections.
|Name||Company||Term||Issue age||Covered Age|
|FlexiProtect||AXA Philippines||5 years||18 – 65||70|
|Philam Guardian||Philam||1, 5, 10 or until age 65||0 – 84||85|
|Manulife Yearly Renewable Term||Manulife||1 year|
|Sun Safer Life||Sun Life||5 years||75|
|FWD Set for Tomorrow: Short Term Cover||FWD||5 or 10 years|
|BPI-Philam Life Protector||BPI-Philam||1, 5, 10 years||18 – 79|
|PRUlife your term||PRUlife||1 year||0 – 79||89|
|Sun Grepa ProTerm||Sun Life Grepa||5 years||74|
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. Other variants include the Income Protector and Estate Protector.
In Short Term Cover, 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 without 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.
PRU Life also has other term insurance variants, the PRUShield and the PRU Personal Accident. On top of being renewable for a year for a life term insurance cover, the PRUShield has an added benefit of income protection where one is given a specific amount for each day being confined in a hospital due to illness or accident. Issue age is between 18 and 64 years old and it terminates at age 65.
The PRU Personal Accident on the other hand is a yearly renewable policy that gives out cash benefit for total and permanent disability, as well as for burial expenses when death is due to natural causes. Half of the benefit described in the schedule of losses is also paid when death is caused by murder and assault.
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.
Qualities of a good term insurance
How can you look for the best term insurance product? It’s quite hard to answer this question, but what one can do is to actually look at the qualities of the product.
It isn’t too expensive that you can’t afford. The cost is reasonable with the benefits that you’re getting in return.
Optimum insurance coverage
The sum insured matches your current insurance needs. It does not under- or over-insure you. It is just right. In this way, you are paying the exact amount and getting the appropriate level of insurance that you need.
The life insurance plan gives you the ability to attach insurance riders. extends to situations that might impact your ability to earn an income, not just loss of life. See if you can attach contracts for critical conditions, accidental death, hospitalization, or waiver of premium.
You trust the company and the rep that you’re dealing with. That means that they are regulated by the government, is recognized as one of the top insurance companies in the country, and has a long, established history.
Are you able to get in touch with somebody through phone, email, online, or physical location? How well are you taken care of? How quick is the response time should you have questions about your policy?
It should be easy to manage, track, and get updates with. Is there an online access where you can do simple transactions like paying and checking account status?
You can also check the ease in which you can renew once the term is up. This can be done through an auto-debit arrangement.
Tips on how to buy term insurance
If you’re decided to get a term insurance product, it might be tempting to go with a company where you know someone. That’s very typical of us Filipinos. Familiarity is comforting. However, you might be depriving yourself of better deals elsewhere. Here are some tips in buying your term insurance.
Check what other providers have in store. Make comparisons between similar products, rates, terms, and payment methods.
Go with a reputable insurer
Only go with duly-licensed life insurance insurers.
Talk with an advisor
An advisor is someone who has registered with the Insurance Commission to sell insurance products. They can help better choose the product that suits you.
Ask for required files
There will be a couple of required first premium and files. Prepare them ahead so that you’ll have a hassle-free application.
Pick your beneficiaries
The policy will require you to declare your beneficiaries. Your beneficiaries are the people who would receive the benefits. From the start, come up with a list of people who depend on you financially.
Open an account
Once you’ve chosen the right product and company, start the account. Wait for the issuance of the policy.
Check the status
It’s important that you know when to pay your policy on time and when to renew it. From time to time, check the status to make sure that you are still insured.
Continue to shop around
You may have missed a more affordable and better product when you were first looking around. Don’t stop getting to know other similar plans in the market.
Taking advantage of term insurance
By the time that you have a plan, make the most out of it. Take advantage of what it can offer. In this way, you don’t get to miss any opportunity to get the most bang for your buck.
- Financial checkup. As you grow older, your insurance needs increase. The plan you purchased five years ago may no longer be suitable for you. Make sure that you undergo periodic financial check so your coverage remain adequate.
- Buy just what you need. There is no use being under- or over-insured. Purchase the right policy that’s just right for you.
- Add riders. Riders can expand the purpose and cover of your policy. Check what riders you need and add them on to your plan.
- Pay on time. Your plan stops when it’s not paid on time, so be right on top of things and ensure that the plan is paid.
- Renew on time. When the term lapses, your plan renews. Aside from making sure that it’s paid, you need to be mindful for its renewal. Get to know ahead of time the new rates, any changes of the policy’s rules, and other items.
- Convert. Talk to your advisor about convertibility of the policy. Having a whole life plan might be something that’s more appropriate for you.