Life insurance is a means to manage risk ultimately in case of an untimely death. Many life insurance plans available in the Philippine market provide coverage for living benefits including accidents, critical illness, and hospitalization by adding insurance riders.
There is a long list of life insurance plans for you to choose from. But before you proceed in getting one, or as additional information if you already have one, discover the difference between term and whole life under the traditional type (vs variable universal life or insurance with unit-linked investments popularly known as VUL).
Types of Traditional Life Insurance
To simplify the different types of traditional life insurance, let’s use the analogy of renting a house or buying your own.
Here’s how they compare:
Term Insurance is a lot like renting a house. This is best for people who need big coverage on a smaller budget, especially for a specific period. For example, while raising kids or paying off loans, you would better off having term insurance. Below are the key features of a term life insurance:
- Lower cost at the start – Just like rent, the monthly or yearly payment is cheaper.
- Coverage only while you pay – Stop paying, and you lose your “place”; in insurance, you lose protection.
- No build-up of value – Like rent, you don’t gain any asset or ownership.
Meanwhile, whole Life Insurance is just like owning a house. This type of traditional life insurance is designed for people who want lifetime protection and an asset they can pass on or use in emergencies. Pay for a fixed term like 10 or 20 years then stay covered until age 80, 90, or even 100.
- Higher cost at the start – But part of your payment goes into “equity” or cash value.
- Permanent protection – You stay covered for life as long as you keep paying.
- Value that grows – You can use or borrow from the cash value in the future if needed.
In summary, if you want lower cost now, term insurance is practical. If you want long-term protection with savings, whole life insurance is more worth it.
Set a 1-on-1 consultation with the author Dion Greg Reyes to know which products best suit you if you want either term or whole life insurance plans.
Disclaimer: This article/content is AI-assisted for clarity and coherence.
