Updated: September 20, 2013
Yesterday, I went to the IMG Wealth Academy office in Makati to attend the official announcement of IMG’s newest product, the Philam Life Annual Term Life Insurance.
One of IMG’s top mentors, Mr. Noel Arandilla, together with Philam Life’s top marketing executives discussed to us the features and highlights of this special term life insurance available only through IMG
As a strong supporter of term life insurance (as opposed to whole life and VUL’s), I am really excited to be able to access this annual renewable term insurance from the country’s largest life insurance company, Philam Life.
What is Term Life Insurance?
It is the most affordable type of life insurance, which only gives pure death benefit for a fixed number of years.
For example, if you get term life insurance with a coverage of P500,000 for a term of 10 years, then your beneficiary will get P500,000 if you die within the next 10 years. If you don’t, then the “term expires” and you get nothing.
While that may seem disadvantageous, it’s actually better because term life insurance is so much cheaper than getting whole life insurance. And in the end, if you do the BTID strategy, you’ll potentially have more money in the end.
What is BTID?
BTID stands for “Buy Term, Invest the Difference” – and why is it better? Let’s say for example that you are a 30-year old male who wants P500,000 coverage.
Whole Life Insurance
- Will pay P57,650 every year for 20 years
- This is based on the Philam Life Save Plus product (a whole life insurance)
- Total amount you will pay: P1,153,000
- Guaranteed life insurance coverage until age 100
- At age 65, you can receive a cash benefit worth P2,022,073 (assuming 4% dividend plus other bonuses and no benefits are previously claimed)
Term Life Insurance
- Will pay P6,990 every year for 10 years
- This is based on the Philam Life Guardian 65 product (a term life insurance)
- Total amount you will pay: P69,900
- Guaranteed life insurance coverage until age 65
- At age 65, term expires and you receive nothing.
Why is getting term life insurance better?
If you take the difference of the annual premiums above between whole life (P57,650) and term life (P6,990), you’ll get P50,660. Now, if instead of getting whole life insurance, you bought term life insurance and invested the difference in a mutual fund, here’s what will happen:
P50,660 invested every year for just 10 years with 4% compounded annual rate of return, will have a potential value of P1,753,750 by the time you reach 65 years old.
Whole Life: P2,022,073 (cash benefit at 65) less P1,153,000 (total insurance payments) equals P869,073 (your net income)
Term Life: P1,753,750 (mutual fund investment value at 65) less P69,900 (total insurance payments) less P506,600 (total money invested) equals P1,177,250 (your net income)
Two products from the same company, with the same coverage and “same 4% growth” delivers two totally difference results. Now you see why getting term life insurance is better?
Special Note: Local equity mutual funds in the Philippines delivered an average compounded annual return of about 18% in the past 10 years. (Source) If applied above, your net income would have been P103 million at age 65!
Philam Life’s Special Term Life Insurance
If you’ll notice, I said at the start of this article that Philam Life is offering a special term life insurance exclusively for IMG. Indeed they are because the product they offered to us is term insurance with more than just death benefits.
Philam Life is giving IMG access to a term life insurance that’s:
- Annual term and renewable every year, until the age of 70
- With terminal illness benefit (TIB) and;
- With accidental death, dismemberment and disability benefits (ADDD)
A typical term life insurance will only “pay out” if you die; but this one will also “pay out” in the unfortunate event that you become medically diagnosed as terminally ill, or even if you get into an accident and become disabled (conditions apply).
The annual premiums are very low, around 15% cheaper than current market rates. For example:
A 30-year old male for a coverage of P1,000,000 – the premium is just P3,230 and only increases by less than P100 every year for the next 10 years or so. Now that’s affordable protection for you and your family!
Again, this product is being offered by Philam Life exclusively to IMG. So if you’re a breadwinner and would like to get term life insurance, then you have two options:
- Get term life insurance from any reputable insurance company.
- Sign up to be a member of the IMG Wealth Academy, and get access to this special term life insurance by Philam Life.
Yes, I would like you to become a member of IMG – but if you don’t want to, it’s totally okay. Getting a traditional term life insurance from any reputable insurance company in the Philippines is still a smart financial decision.
So I guess that’s it! I hope you learned something today.
If you want to learn more about the IMG Wealth Academy, then visit the link below: