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What is Life Insurance: How to Choose and Compare Plans

What is Life Insurance? Read here to compare different types of life insurances and learn their benefits, helping you pick the right one in the evolving market. 

Life insurance products are constantly evolving. With so many options available and complicated policy terms, newcomers to insurance may feel overwhelmed.Do you truly understand what protection you need, the benefits of different types of life insurance, and how to choose life insurance coverage or the right premium Learn more before purchasing ensures peace of mind afterward. Today, let's go through an in-depth lesson on life insurance comparison.<h2>What is life insurance?</h2><p>Life insurance is designed to provide a payout to the policy's beneficiaries when the insured person passes away.The money helps support loved ones cope during such unexpected and challenging times. For those who are the main financial providers in a family —such as individuals with parents, spouses, children, or outstanding debts like mortgages, life insurance serves as both a financial planning tool and a form of protection.</p><h2>Term vs Whole Life Insurance Comparison</h2><h3>Term Life Insurance</h3><p><a href="https://www.fwd.com.hk/online-insurance/term-life/en/" target="_blank">Term life insurance</a> is a life insurance product with a set coverage period (e.g. 5, 10, or 20 years). If the insured person passes away during the policy term, the beneficiary receives a lump sum death benefit. The coverage and payment periods are usually the same. There is no savings component, so when the policy ends, no cash value or dividends are returned. Compared to whole life insurance, the main benefit of term insurance is that with the same coverage amount, the premium is lower. This means buyers can secure equal or greater protection with a more affordable premium by choosing term insurance.</p><h3>Whole Life Insurance</h3><p>Whole life insurance differs from term insurance in terms of premium, payment duration, and coverage period. It features a fixed payment period—once the premium is set at purchase, it remains unchanged regardless of future changes in health and is not affected by inflation. After finishing the payment period, the insured can then enjoy life-long coverage. Another key distinction is the savings component: bonuses not withdrawn are retained within the policy account, accumulating further and offering potential for growth.</p><table><thead><tr><th>&nbsp;</th><th>Term Life Insurance</th><th>Whole Life Insurance</th></tr></thead><tbody><tr><td>Savings Component</td><td>No savings component, belongs to the non-savings type of life insurance.</td><td>Has a savings component ;belongs to the savings type of life insurance.</td></tr><tr><td>Coverage Payment Period</td><td>Typically short coverage periods, such as 5, 10, or 20 years, matching the premium payment period. Often includes renewable terms.</td><td>Premiums paid for a specified term, fixed at the time of purchase, coverage lasts a life time.</td></tr><tr><td>Premium (same coverage amount)</td><td>Lower premium.</td><td>Higher premium.</td></tr><tr><td>Coverage Amount (same premium)</td><td>Higher coverage amount.</td><td>Lower coverage amount.</td></tr></tbody></table>

<p><h2>How to Choose Between Term and Whole Life Insurance?</h2></p><h3>1. Affordability of Premiums and Coverage</h3><p>If you are the main financial provider in your family, responsible for raising children, caring for parents, and repaying loans, and find it difficult to commit to higher insurance premiums, consider using term life insurance for basic protection. Term insurance offers flexibility in choosing the coverage period, ensuring protection without too much financial burden.</p><p>On the other hand, if you are financially secured, and in need of a higher coverage amount and longer protection period, while also wishing to use insurance as a tool for savings and wealth accumulation, whole life insurance would be the better option.</p><h3>2.Needed Coverage Duration</h3><p>Assume you are 30 this year, and buying a term life policy with a 20-year coverage period will be insured from age 30 to 50. Upon policy expiration, renewal will be needed to maintain coverage, and the premiums will be adjusted based on age. Meanwhile, whole life insurance's premiums are set at the time of purchase the amount will not change and coverage remains valid for life, regardless of any future health changes, eliminating the risk of insurance lapse.<span><strong></strong></span></p><h2>Things to Note When Buying Life Insurance</h2><h3>Cooling-off Period<span></span></h3><p>Most life insurance policies offer a 21-day cooling-off period, allowing policy owners to review the policy terms thoroughly. If you decide to cancel the policy during this period, you can notify the insurer in writing and receive a refund of all premiums and levies paid (excluding interest).</p><h3>Exclusions<span></span></h3><p>One common exclusion in life insurance is death caused by suicide within the first 12 or 13 months after the policy becomes effective.</p><p>In conclusion, life insurance mainly serves as a financial protection to lessen the impact of losing a family's economic pillar. Therefore, it is essential to choose a suitable policy based on your financial situation and stage of life. <span></span></p>

<h2>FWD Term Life Insurance</h2><p>FWD's MyTerm Plus Term Life Insurance Plan (MyTerm Plus)<sup>1 </sup>is a pure term life insurance.  It offers coverage of up to HK$8 million<sup>2</sup>, with a total compensation amount of up to HK$24 million <sup>3</sup>. It provides flexible renewal options of yearly ;or 10-year, allowing you to make decisions based on your mortgage repayment period or other protection needs. During the 10-year renewal term, the premium rate remains level and guaranteed not to change<sup>4</sup>.</p>

<ol><li>MyTerm&nbsp;Plus is underwritten by FWD Life Insurance Company (Bermuda) Limited (incorporated in Bermuda with limited liability) ("FWD&nbsp;Life"). &nbsp;</li><li>If the age of the insured is 52 – 66 (age next birthday), the&nbsp;maximum&nbsp;sum insured (per&nbsp;MyTerm&nbsp;series per insured) is HK$3,500,000.&nbsp;</li><li>Assuming that the sum insured of the Insured is HK$8 million, if the Insured dies unexpectedly due to a specified accident, FWD will pay: a) a death benefit of 100% of the total sum insured; plus b) Additional accidental death benefit of 100% of the total sum insured; plus c) Double indemnity benefit of 100% of the total sum insured. The total amount payable is up to 300% of the total sum insured, which is HK$24 million. The relevant payout must meet the specified requirement(s) and is only applicable to&nbsp;MyTerm&nbsp;Plus Term Life Insurance Plan – Superior. Please refer to the policy terms for details.&nbsp;</li><li>The premium rates upon renewal are not guaranteed and will be determined at our sole discretion based on factors including but not limited to the age of the insured on his or her next birthday at the time of renewal, claims experience and policy persistency from all policies under this product. However, within each of the renewable period, the premium rate is guaranteed.&nbsp;</li></ol><p>The product information on this website does not contain full terms and conditions, key&nbsp;product&nbsp;risks&nbsp;and&nbsp;full list of exclusions of the policy. For the details of benefits and key product risks, please refer to the product brochure; and for exact terms and conditions and the full list of exclusions, please refer to the policy provisions of the plan. You should not purchase the plan solely based on the information on this webpage. &nbsp;</p><p>The above information is provided&nbsp;by FWD&nbsp;Financial&nbsp;Limited ("FWD Financial") (License Number: FA2568) for reference only.&nbsp;It&nbsp;does&nbsp;not constitute an offer to buy or sell any insurance products outside of Hong Kong.&nbsp;Before&nbsp;purchasing&nbsp;any&nbsp;insurance product, you should understand your needs and affordability, read the policy carefully, and select suitable product. &nbsp;FWD Financial is an appointed insurance agency&nbsp;of FWD&nbsp;Life. &nbsp;FWD Financial,&nbsp;FWD Life, their subsiding companies or their respective directors or employees make no express or implied&nbsp;representations,&nbsp;statements&nbsp;or&nbsp;warranties as to the&nbsp;accuracy,&nbsp;completeness&nbsp;or&nbsp;suitability for any particular purpose of the information provided. In no event shall FWD Financial,&nbsp;FWD Life, their subsiding companies or their respective directors or employees liable in any way for any consequences resulting from the use or reliance upon&nbsp;this&nbsp;article,&nbsp;and&nbsp;shall&nbsp;not incur any legal liability (including third-party liability). Users should evaluate all the information contained in this article and seek independent professional advice. &nbsp;</p>

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