Types of insurance in the Philippines

Insurance in the Philippines falls into a few groups, by what it protects: a life, your health, your income after an accident, your home, and costs you know are coming, such as a child’s schooling or a funeral. The table maps each group to its guide.

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All of these are regulated by the Insurance Commission (IC). Our guide to the Insurance Commission shows how to check any company, agent or broker before you sign.

Life insurance

Life insurance pays a sum to the people you name, your beneficiaries, when the insured person dies. The amount is the sum assured.

• Term life covers a set number of years, for example 10 or 20. It pays only if the insured person dies in that time, and has no savings part. See term life insurance.
• Whole life covers the person for life, as long as the premiums are paid, and builds a cash value you can borrow against or take if you give up the policy (the cash surrender value). See whole life insurance.
• Endowment plans pay out at the end of a set term if the insured person is alive, or earlier on death.

How much cover a family needs depends on what the income pays for and for how long.

Health cover

Health cover pays for care in different ways:

• HMO plans pay for your care at hospitals and clinics in the HMO’s network, up to a yearly limit. HMOs have been regulated by the IC since Executive Order 192 (2015). See HMOs in the Philippines.
• Health insurance pays back some or all of a hospital bill, or pays a fixed cash amount for each day in hospital. See health insurance in the Philippines. HMO vs health insurance explains the difference.
• Critical illness cover pays a lump sum when you are diagnosed with an illness the policy lists. See critical illness insurance.
• Maternity cover and cover for seniors have their own rules on waiting periods and age. See insurance for seniors.

PhilHealth, the national health insurance programme, sits underneath all of these. Private cover adds to it.

Accident and disability cover

Personal accident cover pays a set amount if an accident causes death, the loss of a limb or sight, or a disability, and some policies pay toward medical bills from the accident. It pays nothing for illness. See accident insurance.

Home and property

Fire insurance pays to repair or rebuild a house damaged by fire, and some policies can add cover for typhoons, floods or earthquakes. See home insurance. Car, compulsory third-party liability (CTPL) and travel insurance are other kinds of non-life cover that this site does not cover.

Pre-need plans

A pre-need plan is paid for now, in instalments or at once, for a service or money you will need later. The Pre-Need Code (RA 9829) covers life, pension, education and interment plans (Sec. 4) and puts pre-need companies under the IC (Sec. 5). The two most common are:

• Memorial plans for funeral and burial costs.
• Education plans for a child’s schooling.

Insurance with an investment part

Variable universal life (VUL) is life insurance where part of each premium goes into investment funds. The fund value goes up and down, and the policyholder carries that investment risk. Selling VUL needs its own IC licence (Insurance Code Sec. 316).

Who regulates insurance

The Insurance Commission regulates insurance companies, agents and brokers, pre-need companies and HMOs (Insurance Code Sec. 437, RA 9829 Sec. 5, EO 192). It publishes lists of licensed companies and sellers, and takes complaints. Nobody may act as an insurance agent or broker without its licence (Sec. 307). See the Insurance Commission.

Words you will see

• Premium: what you pay for the cover.
• Sum assured: the amount a life policy pays.
• Beneficiary: the person who receives the payout.
• Rider: extra cover added to a policy.
• Contestability period: the first two years of a life policy, when the insurer can still question your application (Insurance Code Sec. 48).
• Free look period: the days after you receive a policy when you can cancel it for a refund.
• Cash surrender value: what you get back if you give up a policy that has a cash value.

The full list is in the glossary.