Term insurance is the simplest product in the shop. A fixed period, a fixed amount, a premium that buys protection and nothing else.
Then you read the brochure and meet the adjectives: renewable, convertible, level, decreasing. Here is what they mean in plain words.
Level term
The amount the policy pays stays the same for the whole term. If you buy ₱2,000,000 of cover for 20 years, it's ₱2,000,000 in year one and in year twenty. This is the version most people picture.
Decreasing term
The amount the policy pays goes down over time, usually to match a debt that is shrinking, like a mortgage. It tends to be cheaper because the insurer's exposure falls each year. It fits when you want to cover a specific loan, and it fits poorly when what you need to protect is income.
Renewable term
A renewable policy lets you extend the cover at the end of the term, usually without a new health check. The catch is that the new premium is based on your age at renewal, so it is usually higher.
The value of the feature is certainty: if your health changes during the term, you can still keep cover. Whether it matters depends on how long you expect to need protection.
Convertible term
A convertible policy lets you switch part or all of the cover into a permanent type of policy later, without proving you're still healthy. The right is normally limited by time or age, so check the window.
This is the feature people most often wish they'd paid attention to. A person who buys term at 28 and develops a health condition at 38 is very glad it was convertible.
Which one do you need?
A few questions help:
1. How long will people depend on this income? That sets the term length. 2. Will the need shrink or stay the same? Debt shrinks. Children's needs, for a while, do not. 3. Do I want the option of keeping some cover for life? If yes, look for convertibility. 4. How would a health change affect me? If it would worry you, look for renewability.
What's not in the adjectives
None of these words tell you the price, the insurer's claim record or the exclusions. They tell you the shape of the product. You still need to compare the amount, the term, the premium and the fine print.
I'm not saying one version is best. Term is a tool. A good one is the version that fits the shape of the need you're protecting, and you stay with it long enough for it to matter.
If a salesperson uses these words, ask them to say them back to you in a sentence. If they can't, you're talking to the wrong person.
The free Life Ready Checklist at lifereadywithvenus.com has a page for writing these down, free and with no sign-up.
