Choosing the right life insurance for you (Part 3)

By Randell Tiongson on August 25th, 2012

Question: What are the right criteria for choosing a good life insurance?—Jeremy Jessley Tan (@jeremyjessley) via Twitter


Answer: After discussing how much coverage you should have and talking about the different kinds of life insurance policies in parts 1 & 2 of this column, I will now close this series by discussing how you should choose your plan and provider.

Deciding on a type of plan should be consistent with your objective. If the only purpose of considering life insurance is protection, then a term policy is something you should consider. Further, if you just want to maximize insurance coverage and reduce cost, then a term policy is most prudent. Just make sure that you don’t mind paying premiums that will not be recovered unless a death claim is filed.

If you would like some savings to go with your insurance coverage at the same time, you may opt to get a permanent plan instead of a term policy. Some people would want some recovery of the premiums they are paying when the time comes they feel they don’t need any coverage anymore.

A traditional plan like a whole life insurance will have cash values that will accumulate over the years, typically with a guaranteed cash value and a nonguaranteed portion via dividends. Unfortunately, the returns of traditional insurance policies are very low, comparable to a time deposit rate. Accumulations in traditional plans are also on a long-term basis and will take you many years to break even.

A variable universal plan (or investment link), on the other hand, will provide better accumulation of funds as they are market-driven instruments. The downside of this product is that it does not offer any guarantees beyond death benefits. Still, it is expected to outperform traditional life insurance products over a long period of time, making it more popular nowadays.

Assess your need thoroughly—Would you want to combine your insurance coverage with savings and investment or would you want to do it separately? You can buy term and invest the difference—or you can buy a variable universal life policy that will do that for you.

If you want insurance coverage with guaranteed savings and are willing to accept low returns, then a traditional life policy is for you. If you want better returns but with volatility, then go for a variable universal life. If you just want the plain vanilla insurance, go with a term plan. There is no such thing as a ‘best’ life insurance product—it really depends on your need or affordability.

As to insurance companies, I’d recommend that you consider life insurance companies among the top 10 in the country because they are usually more stable and are highly reputable. I posted a ranking of the top life insurance companies of 2011 here.

The Insurance Commission monitors the operations of all insurance companies and has strict standards, particularly on solvency. Most life insurance companies are well capitalized and it is comforting to know that no life insurance company in the Philippines has ever folded up. It might also be a good idea to ask around about experiences of others with regard to after-sales servicing and claims paying reputation of different insurers.

For me and many others, customer service is a very important criterion—especially since a life insurance coverage is long term in nature.

You may want to get proposals from three life insurance companies of the same product and look at the benefits they offer. I notice premiums of some companies are substantially higher than others so it will be a good idea to be thorough when you are reviewing. Compare benefits and riders, add on those that you need and remove those that you think are unnecessary. When you are considering a variable universal life policy, check out the management fees—some charges are much higher than others.

Finally, I urge you to also be selective in dealing with your insurance advisor. I will go with an advisor who knows his products thoroughly, can answer most of your inquiries, can conduct a good needs analysis and will put your interest first before his sale. Unfortunately, quite a few insurance advisors have issues like misrepresentation or, worse, nonremittance of premiums. It is important that you deal with a professional and it is easy to spot one by observing the way he conducts his business.

Whether you buy from an insurance agent or from a bank (via bancassurance), make sure you get a policy that you need, you can afford, from a company that is reputable and from an advisor that you trust. Tip: If you notice that the advisor is so much in a hurry to close a sale and is more concerned about meeting his sales quota than your welfare, you might want to look for another advisor.

My prayer is that more Filipinos will be like you. More Filipinos have to be covered considering the benefits of life insurance.

This post appeared in the Inquirer.

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16 thoughts on “Choosing the right life insurance for you (Part 3)”

  • that is so true, several times i have encountered unhappy policyholders who felt victimized by advisors who just think of their own pockets. I feel so sorry for policyholders who are burdened with paying high premiums and can’t even identify their benefits.
    Advisors please think of the interest of your clients always remember their capacity to sustain the plan and the continuity of their protection we are suppose to be there to help and secure. It is important that we make people feel the importance of our services so that someday our nation will start to accept and realize that insurance can improve our quality of life.

  • I’m Roland Natividad Jr, Financial Planner/Advisor of Philam Life. To those confuse how to get, what to get fit plan for them, whatever be your intension of getting a life insurance or investment, I can help you to find a plan, fit to your needs.

    my contact details.
    E; [email protected]
    C; 0916-6858103
    T; 710-5286

  • Ranking of Life Insurance Companies according to Networth as of December 31, 2011
    RANKING
    COMPANY
    NETWORTH
    1
    Philam Life & Gen. 25,913,437,928
    2
    Insular Life 21,076,876,926
    3
    Sunlife 9,656,446,747
    4
    United Cocolife 7,267,864,854
    5
    Manulife (Branch) 5,845,338,444
    6
    Manulife (Phils) 5,061,768,867
    7
    SunLifeGrepa Financial 4,793,401,449
    8
    BPI Philam Life 2,608,512,107
    9
    Phil. Axa 2,265,564,458
    10
    Pru Life 1,687,397,680

  • The Philippine American Life and General Insurance Company (also commonly known by its trade name, Philam Life) is an insurance company based in the Philippines. It is currently the largest life insurance company in the Philippines in terms of assets, net worth, investment and paid-up capital.

    Anong plano mo? Usap tayo.
    E; [email protected]
    T; 710-5286
    C; 0916-6858103

  • My personal favorite to get and to sell is the VUL plan because it combines investment and life insurance. Many riders can also be added to a VUL Plan. It gives the client protection as well as an avenue to make his/her money grow for retirement, education, and future expenses. For more info on VUL, contact me at [email protected] or 09179698062. I’m from Sun Life.

  • a Trusted Insurance company must have a big trust fund. Our Educational Plans are now close ended, which later Insurances made a mistake with handling tuition fees. I’m Paolo from PhilPlans

  • There are a lot of good companies offering good policies and services to individuals. One of the best things that you can do find which one is suited for you is to look for options and avoid being convinced upon signing right-away. Good questions that you may ask is:

    1. How long do I have to pay my policy?
    2. When does my policy start to earn?
    3. Does my policy have maturity?
    -In any case you need your investment on your 3rd or 4th yr would you be able get anything.
    4. Is my agent always listening and always understanding?

  • itanong ko lang sn kong ano b klasing insurance tong nkuha ko life insurance b ito or what? nlito ako ksi bali 2 to dti kso yong isa n fortfiet dhil n stop ako ng work pero tong isa nman n ituloy ko at n full paid ko n,,,ang n intindihan ko lang sbi 5 yrs to pay and 5 yrs to wait bali ang nbyran ko total is 73,500 pesos,,,hindi ko n ksi m contact yong nkuhanan ko nito,,,puede b ako humingi ng payo s inyo bli dito me now s hk..thanks

  • Hi Rosella, most Insurance Companies have a website, you may want to check out your policy there.

  • Hi Rosella,

    If you check the policy contract of your life insurance along with that is a service guide book and the customer service telephone numbers and email addresses are listed in that booklet.

    And as suggested by Estrella, you can also visit the website of the life insurance company. You are able to leave a message there and they will contact you. Make sure you mention your unique policy contract number for reference.

    All the known and top life insurance companies in the Philippines are professional and they are happy to assist you.

    Good luck!

    Caloy Abella

  • Fellow Readers,

    AXA Philippines — an affiliate of Metrobank: “We know that your needs are as unique as you are. That is why we in AXA Philippines are redefining the way we do things to better provide you with financial solutions that are perfectly suited for you. And no matter where you are in your life’s journey or whatever your preferences are, we give you what you need.”

    AXA Global: “For the past three consecutive years, AXA has been recognized as the Best Global Insurance Brand by Interbrand (the world’s leading brand consultancy) based on financial performance, the role of the brand and brand strength. The AXA Group’s growing international presence and wide range of quality products and services have established AXA as one of the few successful global brands in the financial services industry.”

    THANK YOU for the opportunity to be of service to you.

    Jeannie May Damoslog
    +639285545123
    [email protected]
    AXA – Baguio City

  • That was true that it is very hard tio find an insurance company that will care and help you. There are lots of insurance company that is not prioritizing their investors but only their own pockets. But then, there are several insurance company that has a good service and they are very helpful. One of them is Prudential Life they can help you, they are accessible to everyone and a trustworthy company.

  • I am a retired faculty member of a state-run university. Prior to retirement I chanced upon my friend whom I lost contact for 20-25 years. She introduced me to world financial alliance,inc (W.F. M. A 812-1188 local 115). It is a financial brokerage that educate people on financial independence. It got me interested because there are provisions in life insurance plans I have with philam life and sunlife but my agents never educated . With WFMA, INC, the session would take 2 hours to 3 hours without selling me any product. It is purely education on financial independence. It was with them that I have heard of rule of 72. It got an investment linked plan. Also, I joined the company. Since it is a new ball game, I attend trainings on marketing and product training as well as conventions. I share what I learned from W. F. M. A with friends. I used it as vehicle to keep the principal of my retirement fund and live on interest or earning. Also, I earned when friends , family and relatives invest through me with products WFMA carries.
    If anyone is interested please email me at [email protected] or call our line and ask for Ces. you may contact me through 099889744339. See you in our bpms

  • Just bumped into this site and as I can there are peeps here looking for clients and they are showing comparative figures and values…

    They market their products that well that proper etiquette is set aside…

    Don’t be fooled by the numbers that gets posted… you can go to the insurance commission to verify it and ask for the ANNUAL REPORT

    what usually gets posted is the total number of sales from the time that the company started… some maybe 100+ years some can be less than 30 yrs… But bottomline is Who performs better Annually and is trusted not only here but in other countries.

    With regard to the concern about choosing the right plan

    1) you need to know what your concern is for yourself… It should not be dependent on what the agent is pushing you to get.

    2) are you open to explanations and to spend time discussing ur concerns with an agent.

    3)lastly, how well would you be taken cared off and would they still be visible after 10 yrs (this is where it hurts coz agents disappear, as far as my clients tell me harharhar)

    those are some pointers in choosing.

    Always Listening, Always Understanding(feel free to txt or call for any questions)
    09238205599

  • Hello randy. I recently acquired a new term life insurance from sunlife. What is your advice with regards to the riders particularly the Accidental Death Benefit? Is it worth adding to the premium I am paying for the term insurance. Is it worth the extra premium? By the way I already have an ADB from my whole life insurance from Prulife but it only covers around Php 300,000. Should I consider adding another ADB on my Sunlife or should I just stick with the ADB I have on my Prulife.

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Choosing the right life insurance for you (Part 3)