Updated: August 17, 2022
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.
In summary
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.
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Photo credits: alancleaver and dhilowitz
hi sir fitz!
thanks for your valuable insights at the Facebook group Filipino Financial Freedom =) you are indeed a personal finance mentor to follow and learn from =) God bless!
So far, the best from sir fitz! This is like a value meal. All the essentials, yet in very simple words. Thanks.
As always, you were never a fan of variable insurance Fitz and a staunch supporter of term plus mutual fund. I tend to lean over to favoring VUL vs TERM though but your arguments are also sound and facing a situation wherein I am sadly behind my VUL payments, and just managing to pay the minimum so that it doesn’t lapse, I am led to consider rearranging my entire financial plan following the simple concepts you’ve outlined above.
I agree with you however that people should get financial advisers they could trust vs someone who would just disappear from them after the sale. At the end of the day, they would want someone who will be there to answer their concerns long after the sale has been made.
This is why i stick on reading your post. Very true, ideal and no promotion of insurance company intended.
I hope I have read this post before I have gotten my VUL hehe. Not that I am regretting, I just hope that I knew more. With my case right now kasi (it’s been 6 years that I had been depositing), it’s kinda late na to study. Anyway, thanks for sharing this Sir Fitz! You’re really my idol. 🙂
Added to the insight. That most VUL charges it’s fees on the initial years and later fully invested it on the later part. Hopefully advisors explained this to get more transparent. There are studies about VUL VS BTID comparison. Try searching to get more insights.
Question,
how and where can i find a Financial Advisor?
Nice article sir Fitz! 🙂
I like the concept of “Buy Term, Invest the Differenceâ€. Not only we get the maximum potential of our money but also we lessen or even free ourselves from the expensive admin charges incurred when getting other forms of insurance like VULs. I’m not against insurance. Nanghihinayang lng ako sa sobrang mahal na admin fees na binabayad naten na pwede na sana natin iinvest sa stocks or mutual funds at mas malaki pa ang potential returns.
How about single pay VUL?
Single Pay VUL is better for those who needs investment rather than a regular pay investment. A. Financial Advisor should see first what is best to client either Mission to client first or his goal as Financial Advisor.
The thing about VUL and Term is that their are VUL products that has limited paying years that covers your insurance throughout your lifetime. When it comes to Term insurance you have to pay for it yearly even in your older years which then makes the premium more expensive. If you are unable to pay for the premium of the VUL the funds that are invested in the stock market every time you pay your premiums will pay for the insurance. Years after, if something happens to the insured, the beneficiaries will get the guaranteed benefit amount/ face amount plus the funds/ investment. I have nothing against Term insurance, maybe that’s just how I see it considering that I am still young and will be needing to pay longer more years and if by that time I cannot afford it anymore will not be able covered anymore. Maybe I am more into security.
It must be Prulife. This company developed the very first investment vehicle in the insurance industry. Ergo the track record is by far stronger than all the other existing investment products in the country. Whoever pioneers gets the edge. Simple as that.
i am glad i held back on VULs. somebody who was very convincing introduced this product to me and i almost gave in. good thing i was able to research on this subject (online) and talked to other people people before i made my decision. (at that time i wasn’t able to consult this site yet.)
the gist of their advice was — avoid combining insurance with investments as a single product. if want to buy insurance, then by all means get one, but investments should be treated as investments and not tied down to anything else. this post is a nice validation of that timely advice (i decided to stick with UITFs instead). thanks. (now i feel a bit better.)
didn’t answer the question
@ananimus he did. the fact that he didn’t mention a single company should already tell you the answer.
I have been looking for the best Insurance + Investment plan for 2 years until now that I have stumbled on this article of yours..
Very good article and advice sir Fitz..
I will follow it definitely..
Thank you very much!!!
Just what I really needed. Been asking what type of health insurance plus investment should I get. But now I’ll take your advice sir fitz. My question now is what health insurance can you recommend? My concerns are for emergency purposes like if I got dengue or diagnose with a certain illness that needs medication and if I got accident. I would appreciate your advice sir fitz. Thank you
For emergencies, you may search about the PNB Healthy ka Pinoy. You might be interested to get one.
If you want the purest form of investment, UITF/ MF or even retails stocks is a better choice. BUT, do not skip the PROTECTION part which is insurance. A VUL covers not only life but also DISABILITY, ACCIDENT, CRITICAL ILLNESS and even HOSPITALIZATION. If you skip this part and you will need a substantial amount of money for this, then most or all of your hard earned investments will just go down the drain. A VUL when there is a fund value doesnt easily lapse and has no penalty. Unlike term when you miss payments then it is lapsed. And usually when money is desparately needed, insurance is the least of priority in terms of bill payments.
Life insurance is for beneficiaries. If you don’t have beneficiaries, or won’t have beneficiaries for the whole of your life, you won’t need whole life insurance – or for that matter, permanent insurance for the rest of your life. That’s why term makes sense. Having the investment of a VUL pay for the insurance of your VUL is robbing Peter to pay Paul: it defeats the purpose of your investment. I agree that they should be kept separate. Insurance is all about guarantees; investment is all about risks: they do not sleep well together. And life insurance is not ideal for estate planning: you do not know how much your estate will be in advance (there are like 5 other products for that (ask your estate tax guy). In the US, wrapping investments in insurance has favorable tax consequences that may not be applicable in the PH (?). If so, would be another reason why you would not need to marry them (ask your tax guy). Hi, Fitz! We never had coffee. 🙂
the disadvantage of term insurance is the premium will increase every time you renew it and does not have any cash value. instead of getting a term insurance for your protection, why not get a regular/limited pay life insurance wherein there’s premium that’s fixed. also, it has an increasing cash value which in most cases can be availed thru loan (should you need funds).
for investment, single pay variable policy can also be an option (top up can also be made on the succeeding years); charges are minimal. in choosing a company to invest your money, you must consider the competence and credibility of the fund manager. since all investments will be put into the same market, it all goes down on how well the funds are managed.
For those who are saying that the disadvantage of term insurance is the increasing amount of premium every time you renew, then you don’t get the point of the BTID formula. The goal is to make sure that after 5 to 10 years you are now self-insured with the amount of investment you already have.
[…] Read more: The Best Insurance Company in Terms of Investments […]
Syempre taga IMG ka kaya Term ang gusto mo ipromote.
May mga clients ako BTID kuno pero, wala naman nasasave or naiinvest, pati term nila lapse. Buti mga VUL clients ko, active pa rin mga plans and may fund value and insured pa.
@John
Your clients who weren’t able to follow the BTID strategy doesn’t have the financial discipline, unfortunately.
If it’s a behavioral problem, a person would certainly have their policies lapsed, regardless if it’s term or VUL.
I’m glad that your clients who got VUL were able to remain active.
@Bias
Yes, I am a member of IMG and we do promote Term Insurance. But that’s not an inclusive belief.
David Ramsey, Suze Orman, and Salve Duplito are personal finance advocates who also promote and have a bias towards term insurance, but they are not members of IMG.
It is under the same argument why it is improper for me to say to you:
“Syempre insurance agent ka kaya VUL ang gusto mo ipromote.”
As that is also not an inclusive belief for I know financial planners who also promote VUL.
Hi Term Insurance is great including the BTID approach, this will go well with the people who are already into an active business.
Products of Insurance Company are all good, what sets them apart is the capability to pay (is the company big enough to sustain all its clients?) and the services offered by the servicing financial advisors.
Get parallel with the views of a client, there must be good realisation of what his future plan is, to be able to project what product will best suit him.
I am a Financial Advisor myself, and i am from AXA, i believe being a client oriented FA is better, because we don’t look at what we could benefit but what are clients can.
Well said. Well said indeed! You hit the right spot.
Hello sir, I’m a fan of what you’ve done with your blog. Thank you so much for sharing wonderful information. First time to comment.
From Butuan city.
‘1 of ur follower here and totally agree with most of ur insights but just a bit confused on BTID. If ur going to be granted with long life obviously term is going to be more expensive than VUL and isnt it top ups in VUL is also a v. good type of investment? Thanks.
My best friend growing up had one desire in life, to become a super-salesman. He had a large collection of “success” books and a large number of starter kits from various MLMs. Eventually, he wound up obtaining the proper licenses and sold insurance. He loved to pitch term insurance and invest your savings in mutual funds. This was happening around 40 + years ago. He became uncomfortable around me when I would point out the exceptionally high fees on the “investment” products he sold. I will never blame a person for wanting to earn but we, the consumer, also need to exercise some street smarts when making financial decisions. Simply open up a compounding calculator and see the difference in how much 1% or 2% or 3% higher fees will slow the growth of your money over time. My attitude is, if it moves (volatility) and especially if it has options, I will conciser trading it. On the other hand, if I am looking at something I may hold for years, I insist on low or NO fees.