Cash Value of Insurance Policy or Pre-need Plan in the Philippines

Ano ba ang Cash Value? Bakit ganito lang ang cash value ko? Scam! Scam!

Cash value is the amount you get from your insurance policy or pre-need plan
when you discontinue, cancel and surrender your policy or plan. It could range from zero to
a certain percentage of your total plan payments or your insurance face amount.

Cash value is often less than your total payments or your face amount,  since you’re getting it before maturity date or before the insurance is due.

Cash value is a provision that is not applied only in the Philippines; it is a practice around the world. It is not a scam. It may not be fair, but it’s a legal business practice.

Cash value is also the basis of computation if you’re applying for a loan from your insurance or pre-need plan.

The term Cash Value is more often associated with life insurance policies as the term commonly used in pre-need plans is Termination Value.

For many insurance policies, the Cash Value is ZERO for the first two or three years. However, there are now policies that have Cash Value in the second year.
How is cash value calculated for insurance policies?

Among the pages of your insurance policy is a Table of Non-Forfeiture Values, usually with this note: For each 1,000 pesos of Face Amount.

Go to the table of your Age at Issue (your age when your policy was issued — You can check your Issue Age on the front page of your policy.) Look for the columns End of Year and Cash Value, and get the corresponding number.

Divide the Face Amount of your insurance by 1,000. Multiply this result with the number you got from the table of Non-Forfeiture Value. That is your Cash Value.

How is cash value computer for pre-need plans?

Look for the Termination Values section in your contract. The following is an example:

If you have paid less than 20 percent of plan cost, you get ZERO
If you have paid 20 percent to 39.99 percent of plan cost, you get 20 percent of total payments made.
If you have paid 40 percent to 59.99 percent of plan cost, you get 30 percent of total payments made.

Take note that you’re getting a percentage of the total payments you made, and not a percentage of maturity benefits.


  1. jessie corilla cruz July 6, 2017
  2. jessie corilla cruz July 6, 2017

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