How to Pick the Best Life Insurance?

Life insurance is a financial tool to manage our risks and loved ones. The assured will pay a consistent premium to trade for coverage limit from a life insurance company in case of death. That coverage limit is called life insurance capital, and the company will pay benefits to the assured under 2 conditions. 

  1. Pay life insurance capital to the beneficiary in death case occurred during the coverage period.

  2. Pay life insurance capital or other benefits as stated in the policy such as installment refund and full-contract refund to the assured in case the assured stay alive towards the end of the contract.

At present, there’re plenty of life insurances and each type offers different coverage and benefits to the assured as follow

1.Term Insurance 

This insurance provides protection with limited time, and the insurance company will pay benefit to the assured for death case in a set period of time like 1, 5, 10, or 20 years. If the coverage period is over and the assured is still alive, the contract will end and the assured won’t receive any compensation.

This insurance contract only covers death cases and no endowment benefit is included. The premium is lower than other insurance so it’s ideal for householders who hold debts, need high insurance capital, and pay low premiums.

However, Term Insurance is not popular in Thailand as it’s considered discarded premium because insurance holders won’t get any refund once the insurance contract ends. However, a con is the protection coverage is quite higher when compared with other insurance.

2. Whole Life Insurance

This insurance requires paying a premium in a period of time like 5, 10, 15, or 20 years but provides a lifetime coverage (at the age 90-99 depending on the type of insurance). If the assured stay alive until the contract ends, they’ll receive insurance capital. If the assured pass away during the coverage period, insurance capital will belong to their beneficiaries.

The premium of this insurance costs higher than Term Insurance because a part of the money is savings which generate cash value according to the policy. We can get a loan from an insurance policy or expropriate policy if we need money before the contract ends. However, if we haven’t paid the premium long enough, there’ll be only little or no cash value (see Insurance Policy Table). Whole life insurance is suitable for householders or those with debt burdens who need long-term coverage, and the insurance can be used as major insurance to buy additional contracts later.

3. Endowment Insurance

It’s the life insurance that the insurance company will pay benefits to the assured who live up until the contract ends (including installment refund and dividends as stated in the policy) or pay insurance capital to beneficiaries once the assured pass away while the insurance period is effective. 

Endowment Insurance is a combination of life protection and savings. Savings are refunds that the assured receive when the contract ends and are considered a highly efficient tool for long-term savings which provides a higher benefit when compared with regular savings bank account. 

This insurance fits those who want to keep the money for the long-term including protection coverage, consistent returns to spend over the retirement period. 

However, with an equal premium fee, Endowment Insurance offers lower insurance capital than Term and Whole life Insurance so it’s not suitable for those who need high capital. 

4. Annuities Insurance

It’s the life insurance that the insurance company will pay an equal and consistent sum of money to the assured every month or every year, effective after the assured retire or reach the age of 55 or 60 and over. The schedule to start paying pension and its payment period will depend on the policy conditions. Therefore, we should select pension aligning with our spending plan in the future.

This insurance fits those who need consistent income like their retirement pension. As this insurance emphasizes savings, it offers less coverage when compared with other insurance.

5. Unit Linked Insurance

This insurance is also known as “Unit Linked”. It’s a new policy and an interesting alternative that offers a chance to the assured to manage risk and to invest at the same time, with the objective of exploring higher returns from an investment in a Mutual Fund operated by experts.

The mechanism of Unit Linked can respond to the needs of wealth accumulation through an investment in Mutual Fund for finding additional returns at acceptable risk level. More, it provides personal life protection under our supervision through compensation received in death cases. It’s also flexible and the assured can adjust the policy such as, increasing or decreasing insurance capital in line with their necessities. 

However, this insurance policy doesn’t offer a guarantee for policy value (no guaranteed returns) as the policy value depends on investment unit value which may be higher or lower due to the Mutual Fund performance. 

This insurance fits those who know an investment well and need wealth accumulation while wanting to arrange capital for a person in charge in the case of simultaneous death.

Above all, each type of insurance has different pros and cons, and each individual holds different status and financial need, so the need for insurance varies. Thus, we should consider buying insurance that matches our necessity, risk, and ability to pay insurance premiums.


Nipaphan Poonsathiensap CFP®, ACC

Freelance Financial Planner, Writer, and Lecturer