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Give Me Good Reasons Why I Should Get Insurance

AdaAda Administrator PEx Moderator
Naah. I've actually made up my mind to get insurance and I just need a little shove. Part of me thinks I don't need it. :D So, what should I be looking for in an insurance package or an insurance company?


P.S.
I was thinking: one of the signs you're getting old is when the insurance agent comes knocking at your door.
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Comments

  • zimdudezimdude PEx Veteran ⭐⭐
    I don't know the details of the packages - but I think you should seek financial stability in the insurance company, an assurance that your money is safe and sound...
  • KuyaDannyKuyaDanny Moderator PEx Moderator
    When a life insurance agent comes knocking at your door, it does not necessarily mean you are getting old. More likely, it means you have begun earning an income, which deserves to be protected.

    The younger and healthier you are, the cheaper your life insurance will cost. So while a life insurance agent may prefer to sell to an older person (his commissions will be higher), it makes sense to sell to a younger one because it's easier to get coverage approved, and the younger person lives longer, allowing him to keep paying premiums for a longer period.

    Disclosure: I worked for four years with Philamlife, the Philippine subsidiary of AIG.

    Since you seem to be more or less decided, I won't give the basic reasons for getting insurance and instead recommend:

    1) Buy as much insurance as you can afford. It will only get more expensive as you grow older. At this early stage in your career, you should plan on your income growing steadily in the years ahead. Therefore, the time will come when your insurance protection will be inadequate and you'll need more. It's OK to "overbuy" when you're young.

    2) Buy basic life insurance protection only. That's all you need. Compare rates for the same plan sold by different companies. Do not buy endowment products, which are a form of investment. Save the cash and invest the money yourself.

    3) Choose a big insurance company that's been around for a while. There are many operating here, including multinationals (Sunlife, Manulife, AIG) and local (Insular, National, Ayala Life, Grepalife). The government regulators supervising life insurance companies in this country have generally done a good and professional job keeping life insurance companies well-run and stable in this country. That is one thing with our government you can be truly happy about. So if the company has been around for a while, it should be OK.

    4) Do you need help comparing insurance plans? Let me know. I might advise for free. ;)
  • CaRaMBaCaRaMBa Administrator PEx Moderator
    *offtopic*

    Hmmmm parang I know why you posted this. :D Sales talk mo rin ako Ada, I'm interested too, I just don't have time to contact the guy I talked to before. :)
  • brownpaubrownpau PEx Veteran ⭐⭐
    Go for it, Ada, and go for it ASAP. While you're still young, it's an excellent investment, so long as you get your plan from a stable, credible, and well-established insurance company.

    I'm with one of those self-sustaining plans where you stop paying after a certain number of years, and the premium pays for itself from there. The total output at maturity is significantly less, of course, than if I opt to continue payments, but still far more than enough to keep me satisfied in my old age. (Or enough to keep my potential spouse satisfied if I die. :D )
  • Is a "pension plan" from Ayala plans (with minimum life insurance coverage) good enough?

    That way, I don't really need to die first before I can ever take advantage or reap the benefits.

  • KuyaDannyKuyaDanny Moderator PEx Moderator
    Reference brownpau's post above.

    1) Please do not call, or regard, life insurance as an "investment". What kind of investment can it be if the investor has to die first before he gets his money, and his profits?

    Life insurance is purchased for protection, to compensate somebody for losses in the event of misfortune. This is exactly like getting insurance on your car or on your house. You are protecting yourself from losses which might happen if your car is stolen, gets into an accident, or if your house burns down.

    2) The "limited premium payment" plan illustrated by brownpau is designed for people such as pop music performers, film stars, and professional athletes, ie, people who tend to earn plenty of money over a short period of time, and then "slack off" because they retire, fade from the limelight, bomb at the box office, or get injured.

    Limited payment plans function by asking the policyholder to pay a little extra early in the payment period. The extra amount is invested by the insurance company so that when the policyholder stops paying, the money accumulated is used to keep the coverage going.

    Maybe this is appropriate for brownpau. After all, he writes the songs that make the whole world sing. But for the rest of us, it is a little "mispackaged."

    Consider that the typical income flow of the working professional with a long career is one that starts low, but grows steadily until his retirement. Given that the best time to buy insurance is early in the career, when it's cheapest and needed most, the more appropriate payment pattern would, I think, be equal payments until the coverage expires, or premiums which are low in the beginning, but rise as the insured's income rises.
  • kuya dan,

    i kinda have to object to that. true, insurance is not an on-the-spot investment but it will still be considered as a means of saving your money for the future of your beneficiaries (which is actually what most investments are all about...future, savings etc.)

    well, that's just my point of view :)

  • AdaAda Administrator PEx Moderator
    Originally posted by KuyaDanny
    Buy basic life insurance protection only.

    What do you mean by this? The agent who approached me offered this package which has six components [?] and I'm not sure I need all of them.
    Originally posted by CaRaMBa
    Sales talk mo rin ako Ada, I'm interested too, I just don't have time to contact the guy I talked to before. :)

    You know what, I couldn't sales talk you even if I wanted to since the agent I talked to didn't make much sense. Quite persisent bordering on annoying too. :D

    Another question: would it be better if got insurance from someone I personally know than a complete stranger?
  • Originally posted by KuyaDanny
    Reference brownpau's post above.

    1) Please do not call, or regard, life insurance as an "investment". What kind of investment can it be if the investor has to die first before he gets his money, and his profits?

    Life insurance is purchased for protection, to compensate somebody for losses in the event of misfortune. This is exactly like getting insurance on your car or on your house. You are protecting yourself from losses which might happen if your car is stolen, gets into an accident, or if your house burns down.

    some insurance products they sell today provide protection and are investment vehicles as well. for example my company covers me for an extra $100,000 and after five years of continuous payment i accumulate for myself an amount equal to all the premiums i paid which i could withdraw(note: this is not a loan). if i choose not to get this money it will further grow and could be substantial after like 15 or 20 years, with all the benefits of a traditional insurance.
    yeah, get insurance while you are young so you can avail of the low premiums, well a not-so-risky lifestyle would also help.

    KuyaDanny, i was with philam from 95 to 97 and am now back with the AIG group here in Delaware.
  • aticusaticus PEx Influencer ⭐⭐⭐
    Ada, I agree with Kuya Danny, do not get endowments. Get basic life insurance/accident insurance.

    If you're really serious about making your money work for you, go into stocks and bonds, especially US Blue Chips. They offer the most stable returns, and you have the added benefit of being able to pull out your money when you really need it. Endowment policies from insurance companies require you to pay for anywhere from 15 to 20 YEARS... unless you pay for the entire policy up front (in which case, you really don't need the extra money...).

    I'm worried about my financial flexibility, so I don't like tying up my money for very long periods of time. Sure you get the returns, but in exchange you keep putting in money for 10 years in a row before you even get some of your "investment" back? Plus you have to keep paying for 10 years more? Nope, not for me... I don't mind paying for life insurance, because I know I need that... but to use endowment policies as my prime investment option might be too limiting financially...

    Let me illustrate: Suppose, for the sake of the argument, that the country really does go to pieces bec. of impeachment proceedings dragging on too slow... what if your local insurance company folds up? You don't get the money you've been paying out for 9 years? Or what if you need to leave the country, or need to spend for a vital medical emergency BEFORE the endowment matures and starts paying out? What do you do then? You can't pull out, you can't use the money, you can't do squat. (Unless you're willing to give up some, or all, of your returns...) That, for me, is too scary to contemplate.

    One last thought: Be sure you read the fine print. I think you'll find that with most (if not all) insurance companies, THEIR RETURNS ARE NOT GUARANTEED. In fact, when the insurance agent shows you projected tables of "earnings" from your endowment plan, they are just that... "projections." There is no guaranteed rate of return... in fact, the rates are often pegged to external factors, such as company profits... believe me when I tell you that a company that is heavily in debt will decrease, or stop altogether, the endowments you receive. And don't even get me started on what would happen if your company is in receivership...

    So, for my PEx friends who are tired of my long posts and want the "essence" of my post distilled :) :

    Use Life Insurance to protect you from unexpected tragedies. Use the remaining money to invest in more liquid and/or flexible investment options. You should be the master of your own money.

    Have a long and fruitful life.
  • If you are the major bread winner of the family,
    getting insurance would be a smart move.
    It would mean that your family would not be left without
    a provider when something happens to you.

    However, if you want to be a little "selfish" and
    would want yourself to benefit at the same time, a pension plan would be better.

    It gives your family the same protection as insurance
    and at the same time would enable you to have financial
    security when you retire.

    I myself have a paid-up pension plan and i'm planning to
    get another one of bigger plan value. Am also with Philam
    Plans. I can offer you a plan suitable for your needs. Baka pwedeng ma-sulot yung agent mo. :D

  • As far as getting one from someone you personally
    know or from a complete stranger, what is more important
    is the company that person represents. However, there
    are cases of some people reproducing official receipts and forms of insurance companies and pocketing premiums.

    However, if you get one from a friend, he/she can give you
    a discount.
    You can even get one from someone you only know from Pex
    (like me :D) and I would also be able to give you discounts
    on your first year payments. :D
  • kasi ang tatay ko nagtratrabaho sa all-asia?
  • Originally posted by aticus
    So, for my PEx friends who are tired of my long posts and want the "essence" of my post distilled :)...
    i read EVERY word! then again i'm a speed-reader...:D

    a lot of people i know wait till after they are married to get life insurance. is there a downside to putting it off for a few years? what are the advantages of getting one at 25 versus 30?
  • aticusaticus PEx Influencer ⭐⭐⭐
    Biggest diff is you pay a higher premium if you start later in life... plus the older you are, the more likely they'll require you to take a med exam... and if you have a medical history that's a bit dodgy, they'll raise premiums even more.

    Personally, I think the best reasons for young people to start paying for insurance at a younger age are the following:

    a) They are "forced" to "save" their money. They don't spend it for the trappings of youth...

    b) It forces younger people to start planning for the future. It's a big psychological thing.

    c) It prepares them for the kind of long-term financial planning they'll need. It's a good habit to get.

    d) It makes them see that their disposable income is actually a lot smaller than they may have initially thought.

    e) If you wait, keep your money in the bank, and start later... you will lose money. Your money will be worth less, bec. you can rest assured premium prices will grow at a faster rate than bank interest rates. (Do you really think keeping your money in BPI, for instance, with 2 or 3% interest, will help you pay for the premiums later?)

    So if you have the money, it's never really too early to start...
  • KuyaDannyKuyaDanny Moderator PEx Moderator
    Originally posted by Ada

    What do you mean by this? The agent who approached me offered this package which has six components [?] and I'm not sure I need all of them.

    Then let's go through the components and I can give you reasons to buy, or not buy, each one.

    You know what, I couldn't sales talk you even if I wanted to since the agent I talked to didn't make much sense. Quite persisent bordering on annoying too. :D

    Another question: would it be better if got insurance from someone I personally know than a complete stranger?

    Ada, if the guy isn't making any sense to you, then he's not doing his job and doesn't deserve to earn the commissions which he might have earned if you bought from him. Do not buy from this guy. There are many good insurance agents out there who will take the time to explain to you what you're buying.

    As to your next question: my sister sells insurance, yet I have not bought anything from her. All the insurance I've purchased was sold to me by "complete strangers". These strangers, as you call them, have been in business for years and are totally professional. They haven't tried any hard sell tactics on me yet.

    I guess what matters more is the kind of person selling, and how the product is sold to you. If your relative/friend uses lines like "Sige na, pinsan mo naman ako, tulungan mo na ang kamag-anak mo." or something like that, then I'd look for someone else.
  • Hi Ada.:) My mom also sells insurance and from what I've seen from her, mine and other people's experiences, I'd say that there are 2 important things to consider in choosing an agent.

    First it's important to choose someone you trust. I mean you have to be sure that this person knows what he/she is talking about, and can explain it to you pretty well. Para you can make the most of the money you're putting in, and it's clear to you what benefits you'll be getting. Also, that will help you in selecting a plan that suits your needs the most. Iba-iba kasi yun eh. And tama si Kuya Danny. Better to look for someone who's not just out to make a hard sell. :grrr: Kung hindi mahihirapan ka when it comes to asking for advice.

    Second is the level of service the agent will provide you or the alaga. Think long term, cause you'll be making annual installments for at least 10 years, so it'd be better to make sure that agent is still around by then, and also keeping you updated about your policy.

    I'm not sure with other life insurance companies, but in Sunlife kasi the agent is the one who is responsible for collecting the annual premiums(to make sure you make your payments on time - or else baka maglapse:(), and to keep you up-to-date with what's happening within the company. (i.e. demutualization, new policies, news on stocks and dividends blah blah.). So you can see how important it is that all throughout these times, someone is providing you with well-informed.

    I saw the importance of having good service through my friend's bad experience. She told me that her mom's agent (who was their relative) didn't explain to them anything about the recent demutualization, kaya they were not able to take advantage of the benefits as much. They just cashed in the stock they received from Sunlife.. na PhP300 plus nung simula. And now it's reached PhP900.00 na.. so it's like sayang! :(vSabi nga niya if they had only been more well-informed....tsk tsk.

    Anyway, hope this helps. I'm not sure but I think the different components you're talking about may be riders. Optional extra stuff you pay for that may provide you protection while your policy is not yet fully paid. Sort of like a "in case something happens to you while your policy is not yet fully paid, you will receive this much amount of money" clause. I think the other components might be health and female benefits. Am not familiar with Philam policies kasi eh.

    Yaiks ang haba-haba na ng post ko... nuff said na for now. I think I said too much :p
  • brownpaubrownpau PEx Veteran ⭐⭐
    Maybe this is appropriate for brownpau. After all, he writes the songs that make the whole world sing. But for the rest of us, it is a little "mispackaged."

    KuyaDanny :bop:

    But seriously, I will probably change that payment plan in a few years. At the time I applied, my long-term career path and potential inflow of cash was mildly doubtful, so I went with something that would sustain itself after a given period.

    Now that my life is a bit more in order, it's probably more advantageous to me and my beneficiary to continue payments.
  • KuyaDannyKuyaDanny Moderator PEx Moderator
    Originally posted by Ada
    Naah. I've actually made up my mind to get insurance and I just need a little shove.

    Make sure you apply before March 23, 2001. After that date you'll be considered one year older (for insurance purposes), and your coverage will cost more.
  • I have tons of insurance......

    life
    health
    car
    house
    flood
    fire
    earthquake
    liability

    Seriousy, I think if you're single, living alone and don't have any valuable assets, then you don't need to buy life insurance. Pero, if you're married with at least 8 children, then you need to purchase insurance from a reputable co. for your family's protection. You also have to do your homework. Read as much as you can on insurance and don't fall for sales talk. YOu have to know what your needs are and what suits you. You don't want to over/under insure yourself.
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