Many Filipinos still has wrong belief about life insurance. They believe that the only people who could benefit from life insurance plans are their beneficiaries after their death. This is the reason why many don’t like to get insured because they themselves would not benefit from a life insurance plan. They don’t know that there are life insurance plans that could return part of the premiums/payments they paid. One example is the a peso-dominated, non-participating endowment insurance product maturing at the end of 10 years. This is offered by the insurance company where I am a licensed advisor.
An endowment policy is a life insurance contract designed to pay a lump sum amount after a specific term (on its ‘maturity’) or on death. Typical maturities are ten, fifteen or twenty years up to a certain age limit. The maturity of this endowment plan is 10 years, which means after 10 years 50% of your total payment in 10 years will be given to you in cash. However, after the maturity date, you are no longer insured as the plan terminates. This endowment plan is also a non-participating plan which means, it does not earn dividends or share from the profit of the insurance company.
Sample Proposal: Endowment Plan, Juan Dela Cruz, Male, Married, 1 child, 25 years old, non-smoker, 500,000 Face amount
Annual Basic Premium: 10,610 pesos
Accidental Death Benefit Rider: 885 pesos (Optional)
Total Premium: 11,495 pesos
Face Amount: 500,000 pesos
Modes of Payment: Quarter, Semiannual, Annual
Years To Pay: 10 Years
Riders/Additional Benefits: Accidental Death, Free Living Benefit Rider
Assuming I am Juan Dela Cruz, what benefits will I get from the endowment plan.
I am insured with 500,000 pesos. If I die due to accident, sickness or murder, my beneficiaries will get 500,000 pesos lump sum from the insurance company. This would be of great help to my family who depends on my income. It can pay debt, pay estate tax if I have properties, help my wife start a business, send my child to school, put food in the table, pay funeral expenses, etc. It may not be a big amount but I am sure it will help my love ones a lot. I feel happy that even at my death, I can still help my family move on with their lives.
When I die due to accident, besides the 500,000 pesos lump sum amount that my beneficiaries receive, they will also get additional 500,000 pesos lump sum amount from the accidental death rider. The total amount my family receives when I die due to accident is 1 Million pesos.
What is the free Living Benefit Rider? This rider will pay me in advance 60% of 500,000 (300,000 pesos) if I am diagnosed to be terminally ill with life expectancy of only 12 months or less. Of course medical certificates will be needed to claim this benefit. The other 40% will be given after my death.
Return of Premium
The return of premium is only applicable when I outlive the plan. Meaning, I need to be alive after 10 years (maturity date) to get the return of premium. If I die just before the maturity date, there will be no return of premium and my beneficiaries will get the 500,000 pesos face amount or 1 Million pesos if death is due to accident.
My total payment for the basic premium in 10 years is 106,100 pesos (10,610 x 10). This plan will return 50% of the total basic premium paid which is equivalent to 53,050 pesos. After this money is given to me, the plan will be terminated. If I want to have this plan again, I just need to apply again.
If I doubled the face amount I got, say 1 Million pesos, my annual basic premium would be 21,220 pesos for a total of 212,200 pesos payment in 10 years. The return in premium would be 106,100 pesos.
If you like this plan, ask a proposal & appointment:
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