Four kinds of cover
“Insurance” is not one product. It is four tools for four different failures, and knowing which does what is most of the battle. Below, each one shows what it does. Then pick one and watch what it does to a household’s money.
What each kind of cover does
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Life cover
If you die
Pays the people you name, so nobody has to sell the house to stay afloat.
support + debt + ₱500,000 + schooling
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Critical illness
If you fall seriously ill
Pays on diagnosis, while you are very much alive and not earning.
income × 24 months
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Disability & income
If you cannot work again
You survive; your earning does not. It keeps the income coming.
income × 12 × 5 years
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Savings & education
Whatever happens
A fund that keeps building. Useful, on top of protection, never instead of it.
₱1,500,000 × each child
What happens if
One household brings home ₱40,000 a month and spends ₱32,000 of it. Step through each event and watch two lines: the household with that cover, and without it.
Life cover pays a lump sum to the people you name.
It replaces the money you brought home and settles what you leave behind, so nobody has to sell the house to stay afloat.
Matters most if anyone depends on your income, or you carry debt.
Sized from what you give: support × 12 × years, plus debts, plus ₱500,000 of bills that arrive at once, plus schooling.
Critical illness cover pays on diagnosis.
Cancer, stroke, heart attack, while you are very much alive. It buys treatment, and the time away from work that treatment demands.
Matters most if a year without earning would break your finances.
Sized from what you earn: about two years of income, held between ₱1M and ₱10M. Treatment costs sit on top of it.
Disability cover replaces income over time.
The one people plan for least and fear most. You survive; your earning does not. It pays over months and years rather than in one payment.
Matters most if your income depends on your body or your hands. A tricycle driver, a nurse, a contractor.
Sized from what you earn: about five years of income, up to ₱15M.
A savings or education plan keeps building, whatever happens.
A fund that grows, and completes itself if something goes wrong. Genuinely useful, but it belongs on top of protection, never instead of it.
Matters most if you have already promised a child their schooling.
Ask of any plan you own: how much of what I pay buys protection, and how much goes into a fund? In pesos, in writing.
An illustration, not a quotation. Premiums are left out so the picture shows only what the event does to the household’s money.
Right plan, wrong proportion
The common Philippine outcome is one savings-linked plan bought young, often the first financial product a person ever owns, doing a little of all four jobs and not enough of any.
In a savings-linked plan your premium splits: part buys the insurance charge, part goes into a fund. The fund is why the plan feels like an asset. The split is why the protection is small. Ask what share of what you pay buys protection. The number is in your policy documents.