Updated: August 6, 2020
I was on Facebook the other day when I saw this question being asked in a group.
“Can you please advise 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 with your 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 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, 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 third, grow your wealth with investments that can help you achieve your financial goals.
This is a 3-step process that is best done in sequence – no shortcuts. This means you should first work on learning the habit of saving first, then getting financial protection next, before considering investments.
Moreover, I don’t recommend getting life insurance with investments in most cases, because I believe these two are better availed separately rather than together.
Did you know that the minimum holding period of a UITF or mutual fund investment ranges from 30 days to a year only?
This means you can redeem your investments any time after that period. Plus, there’s no pressure to invest more money if you’re on a tight budget, unlike if you’re paying for an insurance policy.
Remember, if you fail to pay your insurance premiums, it will lapse and get canceled. But if you fail to top up your investments, nothing negative 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 and affordable to pay). Then just invest directly in UITFs, mutual funds, and/or 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 estate or assets are worth more than the given exemptions by the BIR.
To illustrate, the current TRAIN law states that family homes that are worth up to P10 million will be exempted from estate tax. So no need to worry about your home’s title not being transferred to your spouse or kids.
However, 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.