There are a lot of life insurance companies in the Philippines. You may have experienced getting approached casually by people selling life insurance policies. They may be your relatives, friends, or colleagues and there’s absolutely nothing wrong with it. It’s always good to know what options you have from people you know and trust.
They’re not out to make money off you. They’re allowing you to secure your family’s future in the event of an unfortunate circumstance. You can never be too prepared for it.Having a clear understanding and a healthy mindset towards life insurance policies will ultimately benefit you and your loved ones.Here are a few things you need to know before getting one.
What is life insurance?
In the world of finance, life insurance is a safeguard against life’s tragedies. An insurance policy is a contract between an insurer and a policyholder that stipulates that regular payments of set amounts will be made by the policyholder for a certain period. As payments are made, the insurer guarantees monetary benefit in the form of lump-sum payments to the beneficiary in the event of the policyholder’s unfortunate injury, illness, or passing, depending on the contract.
What are its benefits?
The glaring benefit is the monetary compensation the beneficiary will receive. The money received brings about certain benefits to your loved ones:
- Retirement fund
- Tax-free payouts (depending on the policy)
- Compounded interests on savings from accumulating premiums
- Protection for the family in case of the policyholder’s death, usually in the form of a lump-sum, to settle financial obligations
What are the different types of life insurance?
- Term Insurance
Term life insurance gives protection for a certain time frame (normally 20 to 30 years). Death benefits are paid out in the event of the policyholder’s passing within the period of the active policy.
- Whole Life Insurance
In contrast to term insurance, whole life insurance plans cover the entirety of your life (or up to 100 years). Other than death benefits, the policyholder is given a savings component in the form of dividends and cash values which he/she can use to fund his/her retirement.
- Variable Universal Life Insurance (VULs)
This type of insurance is a combination of both term and whole life which makes it ideal for insurance needs and long-term investments.
Why do I need to compare life insurance?
Shopping for the right life insurance plan is similar to looking for the right credit card to use. It is best to know your options.Identify your insurance needs, take a look at different providers, compare your choices, and weigh the pros and cons of each policy before coming to a decision.It pays to do your homework. Life insurance is an important investment opportunity. Like any investment, you would want the best possible ROI for your hard-earned money.
How do I choose the best life insurance provider?
Do some background check on the company and its profile. Make sure it is stable enough and will not close down in the foreseeable future. Check if they’re licensed to operate in the country and if they have a strong performance financially (premium income, assets, net worth, etc.)
Before getting a plan and signing the dotted line, be sure to do your homework. Getting life insurance is an investment and as with any other investment, you would want the best possible return for you and your loved ones.