Step 3 of 7
Life insurance
What life insurance really is
- Safety net: a lump-sum cash benefit paid to the people you choose, your beneficiaries (usually family), when you pass away.
- Tax-free: proceeds are generally not subject to Philippine income tax.
- Flexible use: the money can pay tuition, a home loan, daily expenses or final medical and funeral bills, whatever your loved ones need.
Do you need life insurance?
Does anyone rely on your income? (parents, spouse, children, or a sibling's tuition)
Do you have loans that someone else might have to pay?
Would your family struggle to pay bills or finish school without your income?
Do you own a small business that depends heavily on you?
How much coverage is enough?
The quick rule is 10 × your yearly income: ₱400,000 of yearly income means ₱4,000,000 of coverage. The detailed DIME method adds up Debt payoff, Income replacement (years your family needs × yearly income), Mortgage balance and Education fund, then subtracts your existing savings, investments and coverage. The result is a good estimate of the coverage, or "face amount," you need.
DIME calculator
Suggested coverage (face amount)
₱0
Quick rule: 10 × yearly income
₱0
Juan's example: ₱6,500 a month of family support for 5 years is ₱390,000. He rounds up for his loan and final expenses, to about ₱500,000 of term coverage.
Types of life insurance
Term life
- What it is
- Pure protection for a set time, like 5, 10 or 20 years
- Cost
- Lowest
- Good to know
- Most coverage per peso; no cash value. Good for tight budgets.
Whole life
- What it is
- Lifetime protection with a savings component
- Cost
- Medium
- Good to know
- Fixed premiums and cash value, but slower growth than most investments.
VUL (variable universal life)
- What it is
- Life insurance bundled with an investment fund
- Cost
- Medium to high
- Good to know
- Fund value can go down; charges are higher, especially in early years. Only for people who fully understand how it works.
| Type | What it is | Cost | Good to know |
|---|---|---|---|
| Term life | Pure protection for a set time, like 5, 10 or 20 years | Lowest | Most coverage per peso; no cash value. Good for tight budgets. |
| Whole life | Lifetime protection with a savings component | Medium | Fixed premiums and cash value, but slower growth than most investments. |
| VUL (variable universal life) | Life insurance bundled with an investment fund | Medium to high | Fund value can go down; charges are higher, especially in early years. Only for people who fully understand how it works. |
Smart buying tips
- Choose an insurer licensed by the Insurance Commission, with a good track record for paying claims and serving clients.
- Work with licensed advisors who put your needs before the sale, and who can explain every charge.
- Compare at least three quotes for price and benefits.
- Start with term if money is tight; you can add more later.
- Pay annually when you can. It's usually cheaper than monthly.
- Review your coverage after major life events: marriage, a new baby or a new home loan.
- Most policies give you a free-look period after you receive the policy. Use it to read everything and cancel if it's not right.
Free Insurance Needs Calculator
Work out your coverage gap on planwealth.ph, or use the Google Sheet version.