Three General Types of Life Insurance

by Gily Tenorio on April 11, 2012

in Insurance

Last time, I made a post about the list of insurance companies in the Philippines. I’ve never thought before that there are many companies in this kind of industry. For this article,  I would like to discuss what are the types of insurance you can applied for.

Do you know what will happen to you next month or next year? All of us don’t know what will happen or the things that might happen to us in the future. I’ll always pray for God’s protection on me and my family members because I believe He controls everything. He’s the one who knows our future.

Last month, I’m thinking of this thing. What if I die early? How will my wife and son go on? There are lots of questions popping up in my mind but of course, I don’t know all the answers. I’m studying lately to get an insurance so I can leave something to my family when I accidentally die. In order to help me  choose which type of insurance best suited for me, I research three different types of insurance that I can get. Here it is.

In general, there are three kinds of life insurance: whole life insurance, variable life insurance, and term insurance. Each type has its own unique features and benefits for the policy owner (you) which I will try to discuss in the succeeding sentences below.

Whole Life Insurance

The whole life insurance is an insurance policy that covers your whole life as opposed to the term life insurance which has a specific period only. The primary benefit of this kind of insurance is the guaranteed payout when you die or even if you don’t when you reach the age 100.

life insurance

However, there’s a downside here, since it is a guaranteed payout, the premium would be higher than the term insurance. The reason behind this is that some portion of your premium will go to taxes and due to the fact that you are paying for longer period, your whole life.

A whole life insurance has a guaranteed payout of the face amount to your beneficiary if you die or to pay you the face amount if you live up to the age of 100.

Term Life Insurance

Term insurance, from the word itself, is a kind of insurance wherein there is a defined or term period where you can only redeem the insurance. Beyond that period, you will not be guaranteed  of any premiums from your insurance policy that you paid in the past.

Either you will stop the coverage or obtain further coverage of the insurance after the period elapses. For most people this will not be a good insurance option because you don’t know how long will you live. Term insurance is the least expensive way to get death benefits among the types of life insurance but may not be a good choice since you’re not guaranteed about the payout.

Variable Universal Life Insurance

Variable Universal Life Insurance or VUL is a type of life insurance that has an investing part. It is an insurance that builds a cash value. The cash value of the insurance is normally invested in several kinds of investments like mutual funds, bonds, and stocks.

The cash value may vary from time to time because the performance of investments also vary. VUL is a permanent life insurance meaning the death benefit will be paid to the beneficiary as long as there is a sufficient amount of money to pay the cost of insurance in the policy.

I’m researching and studying these different types of insurance because I’m planning to get one. However, I’m still thinking which can be the best choice. I’m looking or inclined to get a variable universal life insurance from the suggestions and comments I’m reading from other blogs.

In my mind, I think this is the right time to get an insurance but it’s been hard to apply since I’m out of the Philippines. One requirement in insurance application is that you should go in person at the office of the insurance company that you are applying.

How about you? Do you have an insurance now? Maybe it’s time to think and get an insurance to protect your family. I want to ask a favor, please like my Facebook page or follow me at Twitter. Thanks!

 

Image by David Castillo Dominici

 

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