Two instincts about insurance pull people in opposite directions, and both mislead them.
"Pinakamura lang." Just give me the cheapest.
"Sulit ang mahal." Expensive must mean better.
Neither is reliable on its own. Here's why, and what to look at instead.
Why the cheapest can be the most expensive
A low premium is only a bargain if it buys the same thing. Two policies at very different prices may differ in:
- Amount of cover, which is the obvious one.
- Term, meaning how long the protection lasts.
- Exclusions, the list of things that won't be paid.
- Waiting periods, during which certain claims aren't payable.
- Renewability and conversion, what happens when circumstances change.
- The financial strength and claims track record of the insurer.
A premium that's lower because the cover is narrower isn't a saving. It's a smaller product.
Why the most expensive isn't automatically better
Price can go up for good reasons: more cover, a longer term, extra benefits. It can also go up because of features you don't need, such as riders you'll never use, a savings element you didn't ask for, or an amount bigger than your actual risk.
An expensive policy you cancel in year two protects nobody. A well-matched, affordable policy you keep for thirty years protects your family.
The three things to compare
Instead of the price, compare:
1. What it pays and under what conditions. 2. What it excludes and what it makes you wait for. 3. What it asks of you across the years, including how it behaves if your income drops.
Then look at the price relative to your income. A common test: could you keep paying this if your income fell by a quarter?
A useful exercise
Put two quotes side by side and write the same list under each:
- Death benefit
- Critical illness benefit
- Term / years of coverage
- Waiting periods
- Main exclusions
- Premium, mode and whether it's level
- What happens if I stop paying
When you do that, the "cheap" one and the "expensive" one often turn out to be different products wearing the same label.
What I tell people
I'd rather you buy the right amount of the right cover at a price you can sustain than hit either extreme. Cheap that doesn't cover you is a trap. Expensive that you can't keep is a trap. The goal is the middle: enough, honest, and still there in twenty years.
If a salesperson only talks about price in either direction, ask them what you'd be getting for it. The answer tells you a lot.
The free Life Ready Checklist at lifereadywithvenus.com has a page for working through this at your own table, free and with no sign-up.
