Life insurance may be something new to you which you often hear from your office mates or social media posts. But what are its meaning and importance? How does it work? Do you need life insurance? Is it really better to get term and invest the rest? What are the types of life insurance that fits you? This is an detailed guide to Life Insurance.
Life is exposed to a lot of uncertainties that may dramatically impact our financial wellbeing – not just of ours, but of our posterity (descendants). These uncertainties include critical illnesses, permanent disability, accidents, and death.
Have you heard of stories when children stopped schooling and had a tragic life because their parents died when they’re young? Good if there are good-hearted aunts or family members who are charitable and benign enough to shoulder the cost of raising a child.
My mother’s family was like this. Our grandfather died at around 33 years old because of too much alcohol (that’s why I don’t drink alcohol until now at my age due to trauma, sorry) and the care for all the children was left to my grandmother. That was a very hard life and some of my uncles did not finish schooling. My lola Benita had a “traumatic” past but good thing she is a very strong woman.
But having life insurance could have easen the burden of raising dependents especially at their critically-formative years. I believe the most are ages 6 to 12 which would impact highly on their adult life. Preparation is essential. Without intentional preparation and mistakes arrive, you may not recover financially. But if you do your homework, you can avoid huge headaches and financial disasters.
Here in the Philippines, I grew up hearing the stigma from people about the failure of a company during the early 2000’s called CAP or College Assurance Plan. Even my mother was hesitant about life insurance because of this event in the mid 90’s til early 2000’s. Many people bought it and later on had their investments dissolved. But the explanation to that is that CAP was solely a pre-need company, instead of a life insurance company and was only conceptualized in the Philippines. It went bankrupt because when most insured children reached college, CAP wasn’t able to prepare themselves for the rising tuition fees and they were not able to grow the money of the plan holders. Another reason is that CAP also spent on constructing brick buildings. Pre-need companies are not necessarily life insurance companies. No life insurance company became bankrupt yet.
Table of Contents
What is Life Insurance?
Life Insurance is basically a tool designed to protect individuals against financial hardships in the event of uncertainties such as loss of life, accidents and disability of the person insured or commonly called as “breadwinner.”
As you grow older, your life risks are also getting higher. When you begin to have dependents like children, ageing parents, or sick loved ones, you soon realize and ask, “How will they survive from day to day when I am out of the picture?”
Life insurance, just like any insurance, acts as the bearer of risk when the unwanted things of life come knocking at your door.
Life insurance serves as the buffer fund between the gap from the absence of the breadwinner until there is a stable source of provision. It gives certainty to financial uncertainty. It replaces income immediately. If you have dreams, it helps prevents your dreams from dying with you.
Life insurance can also be combined to protect you from both expected and unexpected events in life. A variant called VUL, is combined with investment instruments, to help you accumulate money for certain or expected life milestones such as major purchases, child’s college, travel goals, and retirement.
If you worked hard to build a solid financial footing for you and your family, it needs to be protected. You won’t want life’s surprises take it away by surprise – this is the essence of insurance.
How Does Life Insurance Work?
In my years of experience, I found out that life insurance best works by matching the current needs and life stage of a client. It depends highly on your current priorities, financial capacity, and goals in life.
Once you’re covered by life insurance, it works by covering you under an agreement as long as you comply with the terms such as sustaining the payment. Once you missed the agreed payments, the life insurance agreement may lapse (stop covering you) and when something happens to you, you won’t get the benefit.
For example, you are covered by a traditional term life insurance worth P1,000,000 from January 1 to December 31 by paying P30,000 a year. Once you missed renewing at Jan 1 of next year, your beneficiaries will no longer receive the P1,000,000 once you die after the coverage period.
But if you get a VUL type, your fund value can cover your insurance charges. That’s why it is better to work with an advisor to help find a solution that fits your situation. There are different types of life insurance and you must first know what you need, in order to get the best insurance policy. For sure, you have heard of those that are linked with investments and health, but you must first understand the basic terms.
The insurance advisor should also assist you to assess your needs, hence our designation was officially changed to advisors and not sellers or agents.
Life insurance works by providing the following real-life needs:
- Provides for your dependent family members such as babies, wife, or minors
- Cover costs related to death so that your loved ones won’t be buried in debt
- Protect a company’s financial success. In case an employee dies, the company won’t have to release huge money – life insurance will handle it.
- Provide for your sick or ageing parents when you get into an accident or untimely death
- Pay taxes on estate– when you die, your assets won’t be transferred to your heirs unless you pay estate taxes. Life insurance can handle it.
- Cover costs related to disability
- Provide money for living too long. Many life insurance has cash dividends over the long-term.
Uses of Life Insurance Using CreFamEEr
CLEAN UP FUND
Clean-up obligations such as hospital bills, funeral, taxes, estate taxes, loans, mortgages. Life insurance does not let you leave financial burdens to your family.
Cushions the family’s sustenance when the breadwinner dies. It will be used by the surviving spouse to raise up the small ones until he/she is is able to find stability. It can also be used to hire a helper, acquire services, or transfer residence.
FAMILY DEPENDENCY & EDUCATIONAL FUND
Set aside the life insurance on a growing deposit for the college tuition of children. If you are a surviving wife, you need it so you can rear the children in their most delicate years. If you are a surviving husband, you need support to raise the kids while balancing you are working.
Putting your money in the bank brings you nearer to temptation to withdraw it. Putting it in investment fund gives you less temptation because you have to make more steps (like going to the office) to withdraw your fund. Life insurance has a type called VUL which is linked to an investment instrument.
There will come a time that you need money but your body can no longer work. The best way is to invest early so it can grow for your golden years. Choosing an investment-linked life insurance (VUL) lets you target two goals in one action.
Remember that some people make big mistakes in buying insurance – for example, signing up and not able to sustain it. This causes them to lose the opportunity of diminishing charges. Some life insurance are very important, but some insurance are wasteful.
Important Life Insurance Terms
For you to better understand the following sections in this blog, it’s better to take hold of some essential life insurance terms and their definitions.
- Insurer – the company that provides insurance coverage
- Insured – the person or entity covered by the life insurance policy
- Policy-Owner/Applicant – can be different from the insured. The person buying or paying for the life insurance
- Beneficiaries – the person/s chosen to receive the insurance proceeds upon the death of the insured. They’re usually first-degree or second-degree family members. There’s a hierarchy.
- Premium – Sum of money paid by the policy-owner as payment to the insurer to make the policy stay in force
- Face Amount – the promised amount stated in the policy as payable under a life insurance policy if the insured dies while the policy is in force. This could be given 100% or below depending on the stipulations provided in the contract.
- Death Benefit – the amount the beneficiaries will receive upon the death of the insured
- Maturity Benefit – the amount paid to the insured if he outlives the protection period
- Cash Values – The guaranteed amount received in case the plan is terminated prior to the death of the insured or maturity of the policy
- Dividends – The return of excess premiums paid annually to the owner of an insurance policy based on the insurer’s performance over a given period
- Human Economic Value – the monetary worth of the earning capacity of an individual devoted to the support of his family during his working lifetime
Types of Life Insurance and Features
The two main types of life insurance products are individual life and group life. Under the individual life are traditional and VUL. Under the group are customized and packaged life insurance.
Traditional Life Insurance (TRAD)
It’s called traditional life insurance plans because it follows the most basic design of what classic life insurance is about. It ensures you with benefits with corresponding and fixed premiums. It’s also often shortened to as “trad.”
- The most basic elements of trad are pre-determined such as premiums, cash values, and death benefits. The performance of the stock market won’t affect any of these three – they’re fixed.
- No investment options are available to policyholders. This can be both a positive and negative quality. Trad insurance won’t let you enjoy the upward rides of the stock market, but it will also protect you from dramatic reactions incase of down rides or fluctuations.
- You can take a loan against your traditional policy in times of emergencies. (Comparatively, VUL only allows you to withdraw your fund value and when the market is down, it can lead to cessation of your policy if your fund value is not sufficient to cover your policy charges).
- You could expect endowment benefits which can serve as an extra and regular stream of income in the future. But not all types have cash value such as term life insurance which are generally cheaper.
Types of Traditional Insurance
- Term – Term life is the cheapest form of life insurance. It is the most affordable and in the most basic form. It’s the relative equivalence of car insurance. When something happens while your policy is in force, you get the promised benefits. It provides protection only for a specific period. No savings components such as cash value and dividends.
- Also known as temporary protection because once you fail to renew, it ceases right away, however, it is renewable.
- The premiums increase as you grow older and renew, or convert the place. This is called Natural Premium.
- Whole Life – it pays a certain percentage of the face amount in case of death of the insured during the span of his lifetime or up to age 100. For example, when your policy covers until age 100 and the insured dies at 50, then the death benefit is the percentage of the guaranteed face amount.
- Two major types: (1) Regular-Pay Whole Life and (2) Limited-Pay Whole Life.
- Whole life has a savings component in the forms of cash value, dividends, and endowment benefits.
- Endowment – It pays a percentage of the face amount in case of death of the insured during the coverage period or insured gets the Living Benefit in case he or she survives at the end of the coverage period. Just like whole life, endowment life has a savings component. It has non-forfeiture and dividend options too.
Variable Unit-Linked Life Insurance (VUL)
VUL stands for Variable Universal Life but is also defined as Variable Unit-Linked Life Insurance. This is an investment-linked life insurance plan that provides protection and the opportunity to grow your savings through time. VUL is protection plus accumulation.
Fund values are not predetermined and additional premiums may be allowed (called Top-ups). Policyholders can choose which investment vehicles they can put their money in. VUL is also labeled as a Non-Traditional product or Non-Trad.
Also called Death Benefit. Upon death of the insured, VUL will provide money to…
Also called Living Benefit. At a specified time in the future, the VUL policy will provide money to help achieve an important life goal such as…
A VUL policy is designed to protect you against financial disruption caused by unexpected events in life. Its life insurance component gives you a fixed and guaranteed amount when the risk event happens such as:
- Death (major)
- Disability (add-on)
- Hospitalization (add-on)
- Critical illness (add-on)
The main risk event that life insurance addresses is death, such as the main objective of this page. However, life insurance can include riders that can cover a person by the above-mentioned unexpected events.
The distinction of VUL is that it addresses expected life events in the future by ACCUMULATING variable and non-guaranteed amount for a specified time in the future.
- Accumulating – because on top of your premium, your extra money is placed on investments for growth that uses the elements of time, dividends, interest, and professional management.
- Variable – because the amounts can be in varied instruments such as conservative, balanced, aggressive.
- Non-guaranteed – because it all depends on the performance of the fund with factors such as stock market, economy, politics, global markets. These determine the risk that your money is exposed to which could grow or deplete it on a certain period of time.
- Unit Pricing – the process by which the unit price of units is set
- NAVPU – or Net Asset Value Per Unit is the unit price that the insurer uses to allocate units to a policy when premiums are paid of if the policyholder wishes to cash in or claim.
- Fund Value – are the number of units bought multiplied by the unit price (NAVPU)
- Top Ups – single-unit injections which can be used to buy additional units
- Premium Holiday – stopping of premium payments for a period of time, with the idea of continuing it later on
There are three main types of vehicles where you can put your money in: Conservative, balanced, and aggressive. Each has its own quality that can match the profile of the policy owner. It’s best to work out with a trained financial advisor to help you determine your life insurance needs.
Benefits of VUL
- The main benefits of VUL are the opportunity to grow your savings which are historically able to beat inflation. Instead of depositing in the bank, a VUL can both insure you and grow your money.
- You also enjoy access to the skills of professional fund managers. Instead of spending countless hours studying the stock market or fund companies, you can just devote your time to your own profession, business, or family.
- Leave it to the experts. These are fund managers that will invest your money to find the best sources of growing them through time. You won’t bother yourself spending much on learning the nosebleed Stock Market.
- VUL instruments are mostly diversified, which means that your funds are invested across multiple sectors of the economy such as real estate, retail, banks, food, etc. VUL is like hitting two birds in one stone: Protect and invest.
- You can also add more coverage to your VUL such as hospitalization, accidental death, critical illness, and more. Learn about VUL here.
Group Life Insurance
Group life insurance is a policy that covers a certain bracket such as company employees, school staff and students, and family members.
Group life aims to protect the assets of the organization whenever an employee, student, or teacher suffers an unfortunate incident such as death, disability, or accident.
There are packaged group life insurance policies with predetermined rates, risk classifications, and premium payments. You can also get a customized plan specific to the needs of your company.
Saves the Company from Uncertain Expenses
If an unexpected accident or death comes to one of your employees, you as an employer will be required to offer aid and assistance to his or her family. Medical treatment costs money, but prolonged cases are too much. Death will also demand expenses. Coverage cushions them.
Without employee group life insurance, employers will be forced to take money from their own pockets. Business owners can avoid this mistake by securing his business with Group Insurance.
When employees feel that their company is concerned for their welfare, they become more loyal, productive and committed to their employer. As a leader of a company, it is always best to “seek for the good of your subordinates” by providing employee benefits. It is a “plus factor” so your company can be a better workplace.”
Imagine the value and peace that you can give to the families of your workers if they can bring home a Certificate that entitles or insures them throughout the year. It’s an added security for them as well. See sample below:
A Sample Group Life Insurance deck from a Life Insurance company
Benefits and Disadvantages Of Insurance TYpes
The benefits and disadvantages of life insurance all boil down as to how it matches different factors such as your life stage, dependents, income, goals, and personality. Knowing the pros and cons will help you decide either Traditional or VUL is good for you, (or both!) But here are my general high-level overview of the pros and cons of each:
- Traditional Life Insurance
- There are many benefits/pros to trad:
- It is affordable. The premiums are way lower especially if you’re insurable, young, and healthy.
- You won’t be affected when there are economic downturns such as COVID-19 or recession.
- The disadvantages are
- you might have some challenges or hiccups in the future and may be tempted to not renew it, and therefore you lose the benefit of being covered.
- There’s no investment part, so your fund value could have been used in difficult times instead.
- There are many benefits/pros to trad:
- Variable Unit-Linked Life Insurance – lets you enjoy savings’ financial growth through time especially if long-term. You have a fund value that can sustain your policy when things get rough. The disadvantage comes in is that if you think or if you can outperform the fund manager’s performance. For example, if the fund has grown historically by an average of 10% per annum in the last 10 years, and if you think you could have grown it through other investments, then you suffered a disadvantage. You also have to pay admin and fund managers fee which are deducted from your fund value.
Best Life Insurance Companies in the Philippines
The top insurance companies in the Philippines are ranked by the Insurance Commission based on six essential statistics released by the government every year.
The five criteria to determine the top life insurance companies are:
In this contest, let us rank the top 14 companies in each criterion and get the average equivalence. I did not include the Paid Up Capital because it shows the amount received by the insurer from shareholders in exchange of stocks.
Please note I’m a Sun Life financial advisor but I computed this chart without any interference from my biases.
Overview of Top Life Insurance Companies
To get the rankings, we got the rankings of each life insurance company per criteria and placed them on a sheet. Two computations follow: First is to add up all the ranks and divide them by the total number of criteria to get the average. The lower the quotient return means the higher the rank.
Modal computation is somewhat like the Olympics. Those that got the highest number of rank frequencies wins the spot.
A. Ranking By Mean (Average)
- Sun Life Financial (1.4)
- Philam Life (3.4)
- Philippine Axa Life (4)
- PRU Life (4.6); Manulife (4.6)
- Insular Life (5.8)
- BPI-Philam Life (6.2)
- BDO Life (6.6)
- Coco Life (10)
- FWD Life and SunLife Grepa (10.6)
- Manulife Chinabank (12)
B. By Mode (Frequencies of Rank)
- Sun Life Financial (3x Top 1)
- Philam Life (2x Top 1)
- PRU Life (2x Top 2)
- Axa Life (2x Top 3)
- Manulife (3x Top 4)
- BPI-Philam (2x Top 5)
- BDO Life, Insular Life, Coco Life
Sun Life of Canada (Philippines) Inc., has set foot in the country in 1895 and has been servicing Filipinos for more than 125 years now. Its main headquarters is based in Canada and is offering a diverse range of financial products such as insurance, wealth, and asset management.
Statistically, Sun Life is officially the first and longest-standing life-insurer in the Philippines. It went through World Wars and even went underground during the Imperial Japanese occupation.
Based the latest statistics of the government’s Insurance Commission, Sun Life is top 1 in the following criteria:
- NBAPE – Top 1
- Premium Income – Top 1
- NET Income – Top 1
Philippine American Life and General Insurance Company (commonly known by its trade name, Philam Life) started its operations in the Philippines in 1947. It is part of the AIA, a publicly-listed pan-Asian life insurance group. Philam Life offers products ranging from life insurance, medical insurance, credit/company insurance, to wealth management.
Based the latest statistics of the government’s Insurance Commission, Philam Life is top 1 in the following criteria:
- NET Worth – Top 1
- Assets – Top 1
Axa Life is part of the global company, Axa Group, which was founded in 1985 and is headquartered in Paris, France. The group traces its roots back to 1816 under different names.
AXA conducts its business in five segments: Life & Savings, Property & Casualty, International Insurance, Asset Management and Banking.
The Life & Savings segment offers products including individual and group savings products, life and health products for both individual and commercial clients.
In the 2019 rankings, Axa Philippines garnered 3rd ranks in New Business Income and Premium Income, 4th ranks in Net Income and Assets, and 6th rank in Net worth. Both by mean and mode computation, Axa gained the 4th spot as best life insurance in the Philippines.
- NBAPE – Top 3
- Premium Income – Top 3
- Networth – Top 6
- Net Income – Top 4
- Assets – Top 4
Established in 1996, Pru Life UK is the pioneer of insuravest, or investment-linked life insurance products, in the Philippines and is one of the first life insurance companies approved to distribute US dollar-denominated investment-linked life insurance policies in the country. Since its establishment, Pru Life UK has expanded its reach to over 190 branches in the Philippines, with the biggest life agency force of more than 32,000 licensed agents.
The company is also ranked second (2nd) among life insurers based on the Insurance Commission’s 2019 rankings in terms of new business annual premium equivalent and total premium income. Pru Life UK is headquartered in Uptown Bonifacio, Taguig City.
Pru Life UK and Prudential plc are not affiliated with Prudential Financial, Inc. of the United States, Prudential Assurance Company (a subsidiary of M&G plc, a company incorporated in the United Kingdom), Philippine Prudential Life Insurance Company, Prudentialife Plans, Inc. or Prudential Guarantee and Assurance, Inc. (all Philippine-registered companies). Pru Life UK is a life insurance company and is not engaged in the business of selling pre-need plans.
Pru Life UK is a life insurance company and is not engaged in the business of selling pre-need plans. It is registered with the Insurance Commission under Certificate of Authority No. 2019/69-R. Its primary Philippine office is located at 9/F Uptown Place Tower 1, 1 East 11th Drive, Uptown Bonifacio, 1634 Taguig City, Metro Manila, Philippines.
- NBAPE – Top 2
- Premium Income – Top 2
- Net Income – Top 3
Manulife Philippines is an insurance company dedicated to helping you find solutions to help you achieve your dreams and goals. We are a subsidiary of Manulife Financial based in Canada, one of the largest insurance companies in the world. As a leading insurance provider in the country, we’re proud to offer flexible and innovative solutions for your financial needs.
Manulife Financial Corporation
With headquarters in Canada, we’re proud to take care of the financial and protection needs of more than 28 million customers worldwide, providing a wide range of insurance, investment, wealth management and financial planning services. At the end of 2019, we had more than 35,000 employees, over 98,000 agents, and thousands of distribution partners, serving almost 30 million customers. As of December 31, 2019, we had $1.2 trillion (US$0.9 trillion) in assets under management and administration, and in the previous 12 months we made $29.7 billion in payments to our customers. Our principal operations are in Asia, Canada and the United States where we have served customers for more than 100 years. We trade as ‘MFC’ on the Toronto, New York, and the Philippine stock exchanges and under ‘945’ in Hong Kong.
- NBAPE – Top 4
- Premium Income – Top 4
- Network – Top 4
Life Insurance Quotes
What factors should you consider when choosing an insurance agent?
- Substantial assessment of your financial needs before generating any product proposal.
- Risk-tolerance. The agent should identify your risk-tolerance if you opt for investment-linked. Needs-based selling is important.
- Listed. Make sure the company he or she is in is listed in Insurance Commission website
- Disclosure. The agent should provide full disclosure of the risks, volatility and non-guaranteed components in the products, and makes sure that the client understands them before they avail.
- Payment periods and penalties. Agent must discuss payment periods, details of riders, cost of insurance, and applicable charges.
- Remit collections immediately. The agent encourages safe ways to pay such as check, credit card, debit, or cash directly to payment centers. He must provide a provisional receipt.
- Delivers your policy contract within a reasonable amount of time and communicates proactively about its status.
What Questions to Ask Yourself Before meeting a Life Insurance Agent?
It’s important to choose your life insurer and life insurer agent carefully. There are multiple factors with varying weights so make sure that you consider them well. It’s best to first determine the monetary value of your insurance needs independently using some free forms or guides.
- 1. What stage of life you are in?
- 2. How much is your desired coverage?
- 3. What are your financial goals?
- 4. How much can you afford per month?
- Death benefit – the amount that my beneficiaries will need in case I or the insured dies unwanted. With the amount, how long can they survive with that until they find stable support again?
- How much are my debts?
- Set aside an emergency fund first
- Do I have the capacity to outperform the average investment performance of the insurer? Do I have the time and skills to make a better investment?
- If I need investment-linked insurance, what are my future financial goals and how much monetary value do I assign? Should I entrust all money-growing endeavors to my VUL? Examples:
- Child’s Education- how many years from now will they be in college?
- Retirement – when will I retire? How many years do I have and how much do I need when I reach that age?
- House – how much do I need as a downpayment for a future house?
- Other future milestones: Wedding, Car, Vacation, House repair
- Make sure that your insurance advisor will ask to perform a needs-based analysis for you first. If he or she will just sell you directly an insurance product, the danger is that it won’t fit your needs and you will end up not able to sustain it and losing money and coverage. A good advisor is not a seller-first, but an educator.
- Ask for proposals from as much advisors you can contact and compare the premiums for the same coverage. However, you must also consider the status of the company. It is possible that high-ranking companies will charge higher because of the quality and stability of the company. So you choose if you want to belong in a stable company with higher premium and charges, or in a less stable company with cheaper premiums.
Life Stage Financial Planning for Insurance
What is life stage financial planning? It’s determining your insurance (and maybe investment) needs-based on your marital status, familial, and financial condition in life. Age is not the primary basis, but your dreams, mindset, and surrounding circumstances.
Lifestage financial planning highlights the varying goals of an individual on a certain period of time.
Your main goal here is to build independence and confidence in your career path or work. You are trying to establish financial freedom from your parents or even envisioning your family already in the future.
You are idealistic, mobile, and connected. You value independence and the ability to think for yourself after analyzing valuable information.
Your Game Plan: CREATE BUDGET | BUILD EMERGENCY FUND | ENSURE INCOME IN CASE OF ILLNESS OR INJURY | SAVE FOR LIFE’S MAJOR MILESTONES
You are either in a young marriage relationship or a couple with young children. You prioritize family as one of your top priorities. Your aim is to provide for their needs as they start their life in the world while thinking ahead for their future.
You look ahead and want to start preparing for their education, save for your home as a couple and start setting aside money for your family vacation.
Your Game Plan: BUILD EDUCATION FUND FOR CHILDREN | ENSURE INCOME FOR YOUNG ONES INCASE OF UNTIMELY DEATH | START RETIREMENT PLAN | BOOST EMERGENCY FUND
You are beginning to feel the relief as you see your dependents moving away and starting their independence in the world with their own family.
Your financial obligations may begin to decrease as you are beginning to receive support from children. Your concern over your health and retirement is now becoming more real, and you now have aging parents whom you look after.
Your Game Plan: BOOST RETIREMENT PLAN | PROTECTION AGAINST ILLNESS OR INJURY | PROTECTION AGAINST UNTIMELY DEATH
Bequeathing Your Heritage
You want to ensure that you want an impacting legacy during your golden years. You are in the retirement phase and are relying on passive income to sustain your daily needs and lifestyle.
You are beginning to think on transferring your wealth / legacy and resources to your loved ones.
Your Game Plan: ESTATE PLANNING | WEALTH PRESERVATION
Life Insurance Calculator for Filipinos
The best life insurance calculator is when it addresses your customized needs. When your needs and capacity are identified, then you are on the road to having the best life insurance.
Important Life Insurance Calculator Elements
- Financial Goals or Needs – what are your target dreams? How much amount would you want to leave to your loved ones? How much final expenses would you need to address?
- Are you considering purely life insurance or a hybrid with other riders/add-ons? (Such as health, hospital). Would you want to merge it with investments?
- If you opt for VUL, what is your risk-tolerance? A fund mismatch may lead to unnecessary withdrawal out of anxiety towards fund performance.
- Financial Capacity – a client must have sufficient financial means to pay for his or her premiums regularly to keep the life insurance policies in force.
People often come to me and say, “Can you give me a life insurance quote?” But the best practice is not to easily quote right away. There needs to be a prompt assessment of your financial goals and needs first.
This form can help you assess what type of life insurance product best fits you. I believe that the more specific we identify our capacity and target goals, the more we will enjoy sustaining our life insurance plan.
This assessment involves personally-identifiable questions such as email, name, and birthday and will be handled with data privacy in mind.
I will then send you a PDF containing recommended targets so you can prepare ahead for your goals/ uncertainties like your child’s education, hospitalization, retirement, life’s milestones and uncertainties.
Please note that I used SunLife’s FNA as reference in this form but I used rearrangements, own words and different system.
Life Insurance Self-Assessment Form
Risk Profile Chart
If you want to know your risk-appetite, and the best fund allocation for you, you can answer the form below by selecting your answers and total the corresponding score.
Number of years you plan to put the money to investment instrument
|POINTS||RISK & RETURN|
Your attitude towards investing, and the level of risk or volatility (the ups and downs of investment instruments) you can take
Consider your regular expenses, your ability to pay your loans and emergency funds
|More than 15 years||4||Seeks growth of money. Fully accepts volatility and is very okay with ups and downs just to ensure higher returns over the long term||4||Can meet emergency expenses without withdrawing these funds||4|
|Between 11-15 years||3||Comfortable with up and down fluctuations of the market and prepared to do so even it goes down more than 50%||3||If an emergency situation will arise, I may withdraw these funds||3|
|Between 5-10 years||2||Comfortable with volatile happenings but prepared for my money even it goes down not more than 50%||2||I won’t need this money for now. I’ll put it in an investment but this may change||2|
|5 years and below*||1||Just want to preserve the money and prefer to gain stable returns rather than seeing fluctuations*||1||Need to supplement my income with this investment*||1|
|*may not be suitable for VUL|
|SCORE||RISK PROFILE||RECOMMENDED % IN EQUITIES||APPROPRIATE FUNDS|
|10 – 12||Aggressive or Growth-Oriented||70% or more||✔︎ Equity / Growth Fund
✔︎ Index Fund
✔︎ Growth Plus Fund
✔︎ Others: _____________ (contact Bryan)
|7 – 9||Moderate||30% – 70%||✔︎ Balanced / Opportunity Fund
✔︎ My Future Fund
✔︎ Others: _____________ (contact Bryan)
|3-6||Conservative||Less than 30%||✔︎ Bond
✔︎ Money Market Fund
✔︎ Others: _____________ (contact Bryan)