The Sun Term 90 is a term insurance. Term insurance is protection for a limited amount of time. One can think of it like temporary insurance, as one covered with term insurance is only protected up to a certain time period. In the case of the Sun Term 90, protection only lasts for one year.
Figure 1 shows the heading for a Sun Term 90 life insurance proposal.
Figure 1. Heading of a Sun Term 90 life insurance proposal.
From Figure 1, we note that the Sun Term 90 is a yearly renewable and convertible term insurance. It is yearly because as a term insurance, the protection is only valid for a single year. It is renewable because every end of the year, one has the option of renewing the term insurance for the next year. When one renews the insurance, he does not have to undergo medical tests again to qualify him for insurability.
The Sun Term 90 is also convertible because one can opt to convert his policy from a term insurance into a whole-life insurance. When converting to a whole-life insurance, he would be insured for the rest of his life as long as he pays the necessary premiums.
There are differences between term insurances and whole-life insurances. One notable difference is that for term insurance, one only has protection, no savings. For whole-life insurances, most of the time, one has both protection and savings.
For term insurance, once a policy holder surrenders his policy, he will get nothing. His beneficiaries only get money if the policy holder dies. Otherwise, all money is sucked in by the insurance company. This is why there is no savings in term insurance.
Figure 2 lists the payment schedule for a 30-year old male for a coverage of one million Pesos.
Figure 2. Premium schedule of Sun Term 90 for 30-year old male, non-smoker, 1 million Pesos face amount.
As the Sun Term 90 policy has no savings part, it is the cheapest. For example, to be covered for 1 million Pesos, one only needs to pay 4,800 Pesos for the first year. But as one gets older, his premium increases as well. For example, 50 years after, that is if the 30-year old client is 80 years already, then he would have to pay 100,040 Pesos instead of 4,800.
The Sun Term 90 product is then cheap at the beginning, probably cheaper than all other products, but eventually, as one becomes older, the product becomes more expensive. As one renews year after year, his premium increases as the risk of him dying becomes higher as well.
At age 90 years old, his premium is about 200,000 Pesos. That’s 20% of the face amount meaning that the insurance company thinks that at that age, one has a 20% chance of dying in any given day!
As the Sun Term 90 policy has no savings part, it is the cheapest. For example, to be covered for 1 million Pesos, one only needs to pay 4,800 Pesos for the first year. But as one gets older, his premium increases as well. For example, 50 years after, that is if the 30-year old client is 80 years already, then he would have to pay 100,040 Pesos instead of 4,800.
The Sun Term 90 product is then cheap at the beginning, probably cheaper than all other products, but eventually, as one becomes older, the product becomes more expensive. As one renews year after year, his premium increases as the risk of him dying becomes higher as well.
At age 90 years old, his premium is about 200,000 Pesos. That’s 20% of the face amount meaning that the insurance company thinks that at that age, one has a 20% chance of dying in any given day!
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