So, you’ve decided to get a life insurance. As a breadwinner, being insured means sparing your loved ones from financial burden when something unexpected happens. Even if you’ve accumulated wealth, it’ll be quickly wiped out by an accident, permanent disability, or death. And so, you start looking for an insurance plan. How will you find out which one is right for you? Before you sign up for a policy, it’s best to compare insurance options, much like comparing credit cards and other financial products.
Why You Need to Compare Life Insurance
In the Philippines, you’re typically approached by an insurance agent who happens to be your relative, friend, or colleague. Nothing wrong with that—it’s good to know your options from someone you know and trust.
However, it also pays to be proactive. Identify your life insurance needs, actively shop around, compare your choices, and assess the results before you pick a policy.
Your ultimate goal is to find a policy that meets your needs and budget, specifically one with the most coverage at the least possible cost. You can narrow down your choices by comparing insurance companies, insurance types, and insurance policies.
How to Compare Life Insurance Companies
Make sure that the insurance company you’ll choose won’t likely to fold in 5 to 10 years. Look for these essential qualities when comparing life insurance providers:
Licensed to do business in the Philippines
Check the Insurance Commission’s list of licensed insurance firms to see if the companies you’re considering are legitimate.
Solid company background
If an insurance firm has been operating steadily for a long time with a good reputation in the industry, then you know it’s worth trusting.
Strong financial performance
The best life insurance providers are those with a high net worth and a high premium income.
Net worth is the value of all a company’s assets minus all its liabilities. So an insurance firm with a higher net worth can better withstand financial crises, as it has enough assets to enable its business to operate amid losses.
Premium income is the total amount a company receives from its clients’ premiums. It’s also a good indicator of an insurance firm’s financial strength, as a higher premium income means it serves a lot of policyholders.
Here are the top life insurance companies in the Philippines based on net worth and premium income (in alphabetical order) as of the end of 2016, according to the Insurance Commission:
- AXA Philippines
- BDO Life (Generali Pilipinas Life)
- Insular Life
- Philam Life
- Pru Life UK
- Sun Life Financial Philippines
- Sun Life Grepa
How to Compare Insurance Types
What insurance type should you buy? This is a major decision you have to make before you get an insurance. So it’s important to compare the different types of insurance in the Philippines.
A term insurance provides protection over a specific time frame, ranging from 1 to over 10 years. Death benefits are paid to survivors if the insured’s death occurs within the policy period. If you outlive the term period, your coverage ends and you’ll get nothing back.
Being a pure form of insurance, term insurance has no savings component, making it the least expensive insurance type. Term life insurance is ideal for low-income earners who cannot afford a whole life insurance and want maximized protection at a minimal cost.
Whole life insurance
Unlike term insurance, whole life insurance provides protection for your entire life or until you’re 100. Besides death benefits, it also has a savings component in the form of cash values and dividends, which you can get while you’re still alive to fund your retirement or your child’s college education.
Variable universal life insurance (VUL)
This insurance type combines whole life insurance and investment. Death benefits are paid to survivors anytime the insured dies. Its accumulated cash value is invested in balanced, bond, money market, or equity funds. Thus, VULs are ideal for long-term investment and insurance needs.
To choose the right insurance type for you, know exactly what you want in an insurance:
- How much insurance coverage you need
- How long you want to be insured
- How much you’re willing and can afford to pay in premiums
- Whether you just want protection or you’d like to add savings to your insurance coverage
Prepaid Health Cards
Unlike the other health insurance types, this one is a little bit more special. Similar to an e-voucher, you get a one-time visit to selected medical facilities and can avail of certain treatments depending on the card you pick. In general, there are three types of prepaid cards covering the following:
- Emergency care
- Preventive care
It is the more affordable and flexible option compared to the regular health insurance but it covers fewer services and normally expires after one year. Curious to know more? Visit the link below to see a comprehensive list of prepaid health cards available, compare and choose the best option for you!
How to Compare Life Insurance Policies
After you’ve chosen your top insurance companies and the right insurance type, it’s time to compare insurance policies. Here are several tips to help you pick the best insurance policy:
- Ask for life insurance rates, quotes, or proposals for your preferred insurance coverage from two or three providers of your choice. For the same coverage, benefits and premiums may vary among insurance companies.
- Compare benefits and riders. Evaluate which primary and supplementary benefits are suitable for your insurance needs and which ones you can do without.
- Compare premiums. For the same coverage, some policies are more expensive than others. For example, a policy may have a higher premium because it’s designed for a higher retirement fund. Ask the insurance advisor about the reasons for the price differences.
- Thoroughly review the fine print. Check the life insurance charges and fees—such as taxes, policy fees, and rider charges—that will be deducted monthly from your total funds.
- Ask a lot of questions. Discuss each policy feature with your insurance advisor. If you don’t understand anything, ask questions. It’s better that way rather than regret your decision in the end.
Before you apply for a life insurance, make sure you compare insurance companies, insurance types, and insurance policies first. Go with the insurance policy that’s consistent with your life goals and offers the best overall value for your money.