Life insurance is a contract between an insurer and a policyholder. A life insurance policy guarantees the insurer will pay a set amount of money to designated beneficiaries following the insured’s death in return for the premiums paid during the policyholder’s lifetime. Additionally, for the life insurance application to be enforced, the insured’s history and current health condition, as well as high-risk behaviors, must be appropriately described. While you can still invest your hard-earned money in more tangible assets such as a condominium or a car during these difficult times, you may want to consider purchasing life insurance to help protect your income, secure your future, and provide support for your dependents in the event of your death.
In the Philippines, there are two kinds of life insurance: term life insurance and permanent life insurance. Term life insurance is the more affordable of the two. Whole life insurance and endowment life insurance are both types of permanent life insurance. The third kind of insurance may be introduced in variable unit-linked life insurance (VUL), which some experts consider being a sort of whole life insurance in some instances. Thus, life insurance PH varies based on the needs of their clients.
The Different Types of Term Life Insurance
There are numerous types of term life insurance; the best life insurance selection will depend on your specific circumstances.
Level Term, or Level-Premium, Policies
These policies cover a specific period, typically between 10 and 30 years. The death benefit, as well as the premium, are both fixed. Since actuaries must account for the increasing costs of insurance over the policy’s useful life, the premium is significantly greater than annual renewable term life insurance.
Yearly Renewable Term (YRT) Policies
Yearly renewable term (YRT) policies do not have an expiration date and can be renewed annually without giving evidence of insurability. Rates vary yearly; premiums increase as the covered person matures. Although no specific period is specified, premiums might become prohibitively expensive as individuals age, rendering the coverage undesirable to many.
Decreasing Term Policies
This insurance features a death benefit that decreases at a predefined pace each year. For the length of the insurance, the policyholder pays a constant, level price. Decreasing term policies are routinely used in conjunction with mortgages to align coverage with the diminishing principal balance of the mortgage.
Term Life Insurance Benefits
Term life insurance is particularly appealing to young parents. Parents can acquire substantial coverage at a reasonable cost. When a parent dies, the significant payout might compensate for lost income. Additionally, these policies are well-suited for individuals who temporarily require a specified quantity of life insurance.
To know more about the things to consider when buying a life insurance policy, below is an infographic from ICHOOSE PH:
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