Life Insurance 101 page 2

What is the best plan for you and your family?

On the previous page of Life Insurance 101 we talked about  what is life insurance and how much does it cost. You may want to be insured already but you don’t know which plan is best for you.

Understanding different types of life insurance will help you get the right protection plan for you and your family. Let’s check them out!
There are two basic types of life insurance namely: traditional and non-traditional.

Traditional Life Insurance

Term life insurance

Term life insurance provides “pure” protection or coverage for a specified period of time. If in case you die within the time period defined in the policy, the insurance company will pay your beneficiaries the face value of your policy. If nothing happens to you after the term period, your coverage ends, and you get nothing back.

Term insurance is the most basic and the cheapest protection plan you can buy. Why? Because it offers no savings, does not build cash value or pay dividends. The term period can be for 1 year to 10 years or more. You can renew the policy for a new term regardless of health or insurability, but at a higher premium cost, since it will be based on your current age upon application.

A term insurance is right for you if you are looking for a high cover amount at low premium payments, also if you cannot afford to invest in a whole life or endowment plan.

A sample of a term insurance is Sun Life Assure.

Whole life insurance

Whole life or Permanent life insurance provides coverage for your whole life or until age 100. It offers permanent protection (face amount) at affordable premium value and living benefits (cash value and dividends). It requires you, however, to pay or your entire life.

The amount of death benefit is the sum of face amount plus accumulated cash values and dividends. The cash values and dividends are guaranteed and can be used for your financial goals while you are living. Such can be to fund college education of children or retirement. When you get all such benefits, the policy terminates and you are no longer insured.

Endowment life insurance

Endowment Life Insurance provides coverage for a limited period. Since they grow cash values very fast, they can build a future fund for a definite purpose – retirement, college education of a child or other financial goal. It also provides dividends (but not guaranteed). Just like a whole life, the amount of death benefit is the sum of f ace amount plus accumulated cash values and dividends. The policy ceases upon endowment or death of the insured.

This is right plan for you if you are looking for shorter terms to fulfill your financial goals and looking forward to securing the future of dependents.

Non-Traditional Life Insurance

Variable universal life (VUL)

A Variable Life Insurance product is simply an insurance plan with investment in mutual funds. Part of the premium amount paid is invested by professional fund managers into market-linked instruments such as stocks of companies, government securities or bonds, etc.

VUL is one of the most popular in life insurance segment because of the investment component. 

Which plan do you think matches your needs?

Choosing the best plan can be difficult if you do it alone. Talking to a financial advisor is free, and they can help you decide which plan to take for you to achieve your goals.

During the discussion, a financial advisor can provide you a more specific information regarding the plan that interests you the most.

In the next part of Life insurance 101, you will learn about What is VUL, please continue reading..

Do you want to talk to a Financial Advisor instead?
"I am a certified public accountant and a licensed financial advisor of Sun Life financial. I am very eager to connect with you to help you build your financial plan, help you start to save, invest and become protected. If you have any questions, please feel free to text or call me at 09213624324 / 09158864332 or you can get started with a FREE proposal using our form."
Faye Rocero, Licensed Sun Life Philippines Financial Advisor
Faye Rocero
Licensed Financial Advisor

Schedule a meeting with Faye!