10 Life Insurance Benefits & How to Get One in the Philippines

Are you seeking a financial instrument to protect you from life’s uncertainties and help grow your wealth? You should consider getting life insurance. In this article, I’ll discuss life insurance benefits and how to get one in the Philippines. 

If you’ve built up your income and savings and taken care of any outstanding debts, you’re ready to protect your wealth through insurance. Read on to learn why you should get life insurance when to get one, how to get one, and more.

What Is Life Insurance?

Life insurance is a crucial financial tool that provides protection and peace of mind for you and your loved ones. It offers a safety net for breadwinners against the uncertainties of life and ensures that your family is financially secure even in your absence. 

You can also think of life insurance as a contract between you and the insurance company. You pay regular premiums in exchange for a payout to your beneficiaries upon your passing. This payout, known as the death benefit, can take care of your family’s financial needs and well-being after you’re gone.

Life insurance has become more popular over time. In 2017, there were only 7.88 million newly insured Filipinos. But in 2020, that number jumped to 24.9 million. But there are still many people who don’t have life insurance yet. You might be one of them. If you are, don’t worry! It’s not too late.

Nowadays, it’s not enough just to be a wise saver. Even if you save a million pesos today, that amount could be worth way less than ten to fifty years from now. Also, emergencies like sickness, business failure, and other financial catastrophes can easily wipe out savings. That’s why you need life insurance.  

The Top 10 Benefits of Life Insurance Explained

Protecting the financial well-being of your loved ones should be a priority. Would you agree? We should be wise to protect ourselves from surprises like the main earner losing their income. The best way to do that is to cover yourself with life insurance to provide that security. 

Here are the ten key benefits life insurance brings. Read on to understand how this vital financial tool can safeguard your family’s future.

1) Security for Your Loved Ones

Life insurance serves as a safety net, assuring that your family remains financially protected, maintaining their quality of life even in your absence. This is highly recommended especially if you are the breadwinner of the household.

2) Coverage for Immediate Costs

A life insurance policy covers more than just the distant future. It also takes care of immediate expenses like hospitalization, funeral, and burial costs, easing the financial burden on your family during an already challenging time.

3) Debt Settlement 

Outstanding debts like loans and mortgages need not concern your family. The insurance payout can be utilized to settle these financial obligations, providing relief and security. By eliminating the liability early on, your family can focus on rebuilding your lives, making important decisions, and planning for the future without the shadow of debt hanging over them. 

In essence, a well-thought-out life insurance policy can protect the family from potential financial strains and offer them the peace of mind they deserve.

4) Savings and Investments

Some life insurance policies, such as permanent life or VUL, offer a dual advantage. Over time, they build up cash value, serving as protection and an accessible savings resource when needed.

5) Replacing Lost Income

The death benefit from a life insurance policy can serve as a crucial income replacement, ensuring that your family can continue to meet daily expenses without unnecessary stress. Some life insurance also have critical illness coverage that will help with your expenses if you experience debilitating illnesses.

6) Education Fund Assurance

Securing your children’s education is a priority for every parent. As tuition fees and educational expenses rise, ensuring your children can continue their studies without financial stress becomes even more critical. 

Life insurance plays a crucial role in this regard. It acts as a financial safety net, ensuring that your children’s education fund remains untouched, despite unforeseen events that may befall the family. 

7) Safeguarding Businesses

For those who play a pivotal role in a business, their sudden absence can have far-reaching consequences. Life insurance becomes an essential tool in such scenarios. It safeguards the company from potential financial setbacks and disruptions that might arise from the sudden loss of a key person. 

With the right policy in place, businesses can maintain their operations, settle debts, and ensure that employees’ livelihoods are not affected. Entrepreneurs and business leaders can ensure the continued stability and prosperity of the company they’ve worked hard to build.

8) Relief from Financial Burdens

Life can be unpredictable, and financial burdens accumulate over time, from mortgages to loans and other liabilities. A well-structured life insurance policy can be a financial pillar during such challenging times. 

It can act as a lifeline, settling significant debts such as home, car, or even personal loans. Additionally, in many jurisdictions, life insurance can be a tool to address transfer or inheritance taxes, ensuring that beneficiaries receive their due without added financial strain.

9) Tailored Additional Riders

Life insurance isn’t a one-size-fits-all solution. The beauty of modern insurance policies is their adaptability. Policyholders can enhance their coverage with tailor-made riders that cater to specific needs. 

These additional riders can be integrated into the primary policy for protection against accidents, critical illnesses, or disability.

10) Peace of Mind 

Ultimately, life insurance’s most significant benefit is its peace of mind. Knowing that your loved ones are financially safeguarded allows you to enjoy life fully, secure in knowing that your family’s future is protected.

This protection ensures that the family’s future remains secure even in the face of adversity. With this peace of mind, individuals can embrace life’s adventures, cherish moments, and build lasting memories, knowing that their family’s well-being is always prioritized.

Do You Need More Guidance? 

Insurance is but one part of the whole wealth-building equation. If you’d like to get on track to start your journey toward financial freedom, I’d like to invite you to join our community called “The Yayamanin Life.” 

Here, you will learn all the best strategies and principles to protect your income, grow your wealth, and experience financial prosperity. This community includes all kinds of financial training and programs, including: 

• A monthly coaching session with me, Chinkee Tan, a wealth coach who has helped thousands of people become wealthy and debt-free. 
• A library of courses to teach you how to create, handle, invest, and protect your wealth. 
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• And more!

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How to Choose the Right Insurance For You

Choosing the right life insurance policy is one of your most significant financial decisions. It’s a step toward ensuring the well-being of your loved ones even when you’re not around. This process may seem complex, but breaking it down into manageable steps can help you confidently navigate the options. 

Here’s a comprehensive roadmap to make an informed decision about your life insurance coverage.

1) Determine Your Needs

The first step in choosing the right life insurance policy is understanding your family’s financial needs. Consider your current financial obligations – mortgage, loans, and debts – and consider future expenses like your children’s education costs. 

It is essential to estimate the income your dependents would need to maintain their lifestyle in your absence. This information will be the foundation for selecting an appropriate coverage amount.

2) Assess Your Current Financial Situation

Before you dive into the world of life insurance, evaluate your existing financial portfolio. This includes your assets, savings, investments, and any other insurance policies you might have. Having a clear picture of your financial health will help you understand where life insurance fits into your overall plan.

3) Set Clear Objectives

Consider your long-term objectives. Are you seeking temporary coverage to protect your family during a specific period, or do you want lifelong protection with potential financial benefits? 

Your choice will guide you toward term insurance, which covers you for a set period, or permanent insurance, such as whole life or universal life, which provides coverage for your entire life and may have a cash value component.

4) Understand the Types of Insurance

Before making an informed decision, you need to understand the types of life insurance available. Later in this article, I’ll discuss the different types of insurance and their pros and cons, so keep reading.

5) Calculate the Coverage Amount

Determining how much coverage you need requires careful consideration. Online calculators can help you estimate the right coverage amount based on your financial situation, obligations, and the needs of your beneficiaries. Consulting with a financial professional can provide valuable insights if you’re unsure.

6) Research Insurance Companies

Not all insurance companies are created equal. Research the financial strength of potential insurers. Look into their reputation for customer service and their claim settlement ratios. A strong, reliable insurance company is crucial for ensuring your beneficiaries receive the promised benefits when the time comes.

Check out this list of the most popular insurance companies in the Philippines: 

Company	Description & History	Competitive Edge
Philam Life	Founded in 1947, Philam Life is one of the oldest and most established life insurance companies in the Philippines. Part of the AIA Group.	Long-standing reputation, innovative products, and financial stability.
Sun Life Financial	Since 1895, Sun Life has been in the Philippines, making it the country’s first insurer. A subsidiary of Sun Life Financial Inc. from Canada.	Comprehensive product range, global presence, and financial literacy initiatives.
Manulife	A subsidiary of Canada’s Manulife Financial Corporation, Manulife Philippines started its operations in 1907.	Technological innovations, customer-centric approach, and diverse products.
PRU Life UK	Established in 1996 as a subsidiary of British giant Prudential plc. Pioneer of unit-linked life insurance in the Philippines.	Pioneering unit-linked products, investment strategies, and extensive financial consultant network.
Insular Life	Since 1910, Insular Life, the first and largest Filipino life insurance company, has served Filipinos.	Deep local market understanding, nation-building commitment, and tailor-made products.
AXA Philippines	Part of the AXA Group, a worldwide leader in insurance and asset management. AXA Philippines started operations in 1999 and has since been a major player in the country.	Renowned for its integrated financial services, strong digital initiatives, and comprehensive product range.

7) Compare Premiums

Affordability is key, but remember that the cheapest premium might not offer the best coverage. Balancing costs with benefits is essential. Look for a policy that offers reasonable premiums while providing the coverage your family needs.

8) Consult a Financial Advisor or Insurance Agent

When in doubt, seek guidance from experts in the field. Financial advisors and insurance agents can provide personalized advice tailored to your situation. They can explain complex terms, answer your questions, and ensure you’re making an informed choice.

The Different Kinds of Life Insurance

Before you decide to get life insurance, you must know that several types of life insurance policies are available in the Philippines, each designed to cater to specific needs. Understanding these options will help you decide the type of coverage that suits you best.

1) Term Life Insurance

Term life insurance is similar to car insurance and provides annual coverage, typically you renew this on an annual basis. If you pass away during the policy term, your beneficiaries receive the death benefit. 

Pros

• Affordability: Term life insurance is generally more affordable than permanent life insurance options, making it an attractive choice for individuals on a budget.
• Simplicity: The straightforward structure of term life insurance makes it easy to understand. You pay a fixed premium for a specific term; if you pass away during that term, your beneficiaries receive the death benefit.
• Flexible Coverage: You can choose the policy term that aligns with your specific needs. This is particularly useful when you have short-term financial responsibilities such as paying off a mortgage or funding your children’s education.

Cons

• Limited Duration: Term life insurance only covers a specified period. If you outlive the policy term, you won’t receive any benefits, and the coverage ends.
• No Cash Value: Unlike permanent life insurance policies, term life insurance does not accumulate a cash value over time. This means you can’t borrow or withdraw funds from the policy. 

2) Traditional or Permanent Life Insurance

Traditional or Permanent life insurance offers coverage for your entire life as long as you continue to pay the premiums. 

Pros

• Lifelong Coverage: This provides peace of mind knowing that your beneficiaries will receive the death benefit regardless of when you pass away.
• Cash Value Accumulation: One of the most significant advantages of permanent life insurance is accumulating cash value over time. This cash value can be used for various purposes, such as supplementing retirement income, paying off loans, or covering emergencies.
• Tax Benefits: The cash value growth in a permanent life insurance policy is tax-deferred, meaning you don’t pay taxes on the growth until you withdraw the funds.

Cons

• Higher Premiums: Permanent life insurance policies typically have higher premiums than term life insurance. This can be a drawback for individuals looking for more affordable coverage.
• Complexity: Due to the cash value component, Permanent life insurance policies can be more complex than term policies. Understanding the policy’s features and potential returns requires careful consideration.

3) Variable Universal Life (VUL) Insurance

Variable Universal Life (VUL) insurance is a type of permanent life insurance that combines elements of traditional life insurance with investment options.  

Pros

• Investment Opportunities: VUL policies allow policyholders to invest a portion of their premiums in various investment funds, potentially leading to higher returns over time.
• Flexibility: VUL offers flexibility in terms of premium payments and death benefits. You can adjust the amount of coverage and investment allocations as your financial situation changes.
• Cash Value Growth: Similar to other permanent life insurance, VUL policies accumulate cash value over time, which can be used for various financial needs.

Cons

• Market Risk: The investment component of VUL policies is not guaranteed and exposes the policyholder to market fluctuations and risks. Poor investment performance could negatively impact the policy’s cash value and death benefit.
• Higher Costs: VUL policies often come with higher fees and charges compared to traditional or permanent insurance due to the investment component. These costs can eat into potential returns and affect the overall policy value.
• Complexity: Just like other permanent policies, VUL can be complex to understand due to the dual nature of insurance and investment. This complexity requires careful consideration and potentially the help of financial professionals.

Before deciding, it’s important to weigh the pros and cons of each type of insurance and consider your individual financial goals and circumstances. Consulting with a financial advisor or insurance professional can provide valuable insights to help you make an informed choice that aligns with your needs and objectives.

Frequently Asked Questions (FAQs)

What are the best life insurance companies in the Philippines? 

Research and customer reviews are valuable resources for identifying reputable insurance providers in the Philippines. You should check and decide for yourself. But I highly recommend that you go with any of the companies above.

What is variable universal life insurance? 

Variable Universal Life (VUL) insurance is a versatile option that combines life insurance coverage with investment opportunities. Policyholders can allocate their premiums to various investment funds.

What is permanent life insurance? 

Permanent life insurance offers coverage for your entire life, often including a cash value component that grows over time.

Can you cash out life insurance before death? 

Depending on your policy type, you might be able to surrender or withdraw funds from your life insurance while you’re alive. Keep in mind that this action could affect your coverage and cash value.

Final Words

Choosing the right life insurance policy is a decision that involves thoughtful consideration. It’s about securing your family’s financial well-being and protecting them, even if the unexpected occurs. By carefully following these steps, understanding the different types of insurance, and seeking expert advice when needed, you’re taking a significant step toward creating a stable future for your loved ones. 

The benefits of any life insurance extend beyond your lifetime, providing enduring financial security and peace of mind. Your choice today becomes a legacy of protection and support your family can rely on for generations.