I was on Facebook the other day, when I saw this question being asked in a group.
“Can you please advice me which is the best insurance company in terms of investments? Manulife? Sunlife or Philam? Thanks.”
The initial responses where agents and advisors who are sharing why they are the best insurance company.
Meanwhile, some gave their opinion and experiences as a client in those companies.
I decided to give a more lengthy response, which I’m reposting below.
I’ve edited it a bit for clarity, and emphasized the most important points. I hope this can help you in your own concerns regarding this issue.
What’s the best insurance company in terms of investments in the Philippines?
Ask yourself first what your needs are. If you need life insurance, then go to a life insurance company. But if you need an investment, then go to an investment company (and not an insurance company).
If you need life insurance, then get the purest form of life insurance, which is term insurance. It’s the cheapest type of life insurance, which makes it easier to pay.
More importantly, know how much coverage you need and do not simply take an agent’s “guesstimate”. It should cover for your family’s needs in the next few years, including the present value of your children’s education.
If you need an investment, then decide on your financial objectives first.
Why are you investing? Where will the money be used? When will the money be used?
It’s wrong to ask what’s the best investment – rather, you should ask what investment can help you achieve your personal goals.
If it’s for your retirement in 20 years time, then go for high-risk investments such as Equity Funds or the stock market.
Do you want to buy a car in 5 years, then a moderate-risk investment such as a Balanced Fund might be your best option.
If it’s to fund your wedding next year, then you don’t have time on your side. You should just put your money in a low-risk investment like a Time Deposit.
Proper financial planning is a 3-step process
The process is: Save >> Protect >> Grow
Have the habit of saving first, make sure that you’re living below your means. Second, ensure proper protection with an emergency fund, health insurance and life insurance. And lastly, grow your wealth with investments that can help you achieve your financial goals.
This is a 3-step process that should be done one step at a time – no shortcuts. Which means getting an insurance with investments is not something I would recommend because you’re getting a 2-in-1 product that’s better availed separately.
Did you know that the minimum holding period of a UITF or mutual fund investment ranges from 30 days to a year only? Which means you can redeem those investments anytime after that period. Plus, there’s no pressure to invest more money in case you’re on a tight budget.
Remember, if you fail to pay your insurance premiums, it will lapse and get cancelled. But if you fail to top up your investments, nothing happens and your investment will just be there and will continue to grow.
That’s why it’s better to get the cheapest type of life insurance (so makes it easy to pay). Then just invest directly in UITFs, mutual funds, and the stock market.
Learn about the concept of BTID – which is “Buy Term, Invest the Difference” – this will help you save a lot of money.
You don’t need life insurance until the age of 100 as a form of protection. It is important for estate planning, but that’s assuming your net estate is worth more than P2.5 million, where BIR deductions start to reach its limits (see here for illustrations).
But still in this case, getting term insurance is the best option. And moreover, there are other tools you can use for effective estate planning apart from life insurance.
Lastly, remember that personal finance is personal and it is only you who knows what’s best for you. Ask yourself what exactly your needs are, and then that’s the time you seek products that can meet those needs.
As for the question on Manulife, Sunlife or Philam – I believe that all of them are great companies and all of them have term insurance and mutual funds that can help you achieve your financial goals.
The more important decision is in choosing the right agent or financial advisor – the person who will put your best interest first before their own. Someone who will recommend to you the most appropriate product for your needs, and not the product that will help them reach their sales quota.