What Is The Best Insurance?

Looking back before 2011 year end, I decided to buy term insurance.  Being a member of the TrulyRichClub for almost a year at the time, I got the regular wealth strategies from the club which happens to be discussing about insurance.
best-insurance-tooThis article pushed me in getting term insurance as it suggests while investing in the stock market or equity funds, it is mandatory that one should get protection.  I was surprised how cheap the annual payment for a pure life/term insurance.

So I called up a friend who referred me to this insurance company and asked him how much he’s paying for his insurance “bundled” with investment.  To my surprise, he’s paying double compared to my annual fee while my insurance coverage is five times than his.

I think this friend of mine doesn’t like to invest directly in stock market so he allowed the insurance company to take care of his investments.  The cons for me is, I will not be expecting anything from the insurance company after completing the term but at least I have protection which suits my goal.

Knowing this, I’d like to share with you this article I got from the TrulyRichClub discussing the importance of insurance.  This will help you think and decide which insurance is best for you specially if you are already investing in the stock market like I do.

Feel free to share.

What Is the Best Insurance?

The purpose of insurance is simple: If God calls you home today, your kids won’t go hungry.

Many people misunderstand this simple logic. I know some people who buy insurance for their kids. I heard one person bought insurance for his baby.
Huh? I don’t get it. Who’s the kid supporting? Her Barbie doll? Her kitten?
Or some single people buy huge amounts of insurance—even if they have no kids or no aging parents to support. Sure, they can buy a little insurance to take care of their funeral expenses, so they don’t become a burden to their siblings. But they don’t reallyneed big insurance.
I repeat: Buy insurance if you’ve got people depending on your income. So that if your income suddenly disappears because you disappear, the insurance money will support them.
But some insurance agents will try to sell you stuff you don’t need, just to earn their commission.

What’s the Goal?

 But our goal in the TrulyRichClub is very simple: To build your wealth over time so that you don’t need insurance anymore.
In other words, the goal is to be self-insured.
But that doesn’t happen overnight. Building millions in your investments will take many years. So while your millions aren’t there yet, buy insurance.
What kind of insurance?

Buy Term Insurance

For TrulyRichClub members who are learning how to invest, you should buy pure and term insurance. It’s the cheapest insurance.
Any other insurance product is a bundled product combining insurance and investment. It sounds nice.
They even come by nice names: Whole Life insurance, Universal Life insurance, etc.
Compared to pure and term insurance, these are very expensive insurance products—precisely because they have an investment component.

These bundled products are Okay if you don’t know how to invest.
And the truth is that many people really don’t know how to invest. And many people are so undisciplined, they need an insurance agent following them up every month to give their monthly payments, with the threat of “forfeiting” or losing their entire insurance if they don’t pay.

But if you’re a TrulyRichClub member, you shouldn’t buy these bundled insurance products.
Why? First of all, you already know how to invest (in equity funds and in the stock market). Second, you’ve got the discipline to do it each month. No need for “threats” hanging over your head.
Here’s the shocking truth: Most of these bundled insurance products with investments only earn between four percent to seven percent each year.
Yes, that’s better than the bank. But that’s much lower than what you’ll earn if you invested your money yourself in equity funds and the stock market, where you can earn between 12 percent to 20 percent each year—if you invest long-term, over 20 years or more.
That difference is huge over time.
So buy term insurance.

“Buy Term, Invest the Difference!”

 

So instead of buying bundled investment product which is expensive, buy term insurance—which is cheap—and invest the difference yourself.
That’s where the wise statement come from, “Buy term, invest the difference!”
Warning: Some insurance agents will not like you to buy term insurance. Because their commission is tiny if they sell this product. They will always push for bundled insurance products.
So ask for it. Tell him, “I like to buy term insurance only.”

Happy learning!

May your dreams come true,

Bo Sanchez

P.S. As you can see, TrulyRichClub members have an incredible edge over 99 percent of the population: You don’t end up buying the wrong products and waste your money.

14 thoughts on “What Is The Best Insurance?”

  1. hi. thank you for sharing this. may i know where did you invest? i once attended a seminar of Kaiser International Health Group. They are offering health insurance with term insurance too. but i am also keen on either Philam or Cocolife.

  2. I invested in Kaiser. It’s a bit pricey since I considered paying on a annual basis (there’s a discount of around 5 – 10%). But I know that in the long run, I will reap its benefits.

  3. i believe yes because its the very basic insurance. Just ask them what you really want because most likely, they will offer you bundled insurance like VUL to get higher commission. The agent won’t offer you the basic insurance you need that’s why you have to ask =)

  4. how about manulife? Meron clang program na Freedon at 65. The price is low compared sa Kaiser.. I think, kaiser is health insurance.. manlike offers life.. meron na din clang investment thing for that..

  5. hi! we really cannot say BTID is cheaper than VUL. the best thing to do here is COMPUTE before deciding, and by computing I mean computing for the long term. True, term insurance charges are small and VUL charges are quite big for the first year. However, VUL charges get smaller each year while term insurance charges get more expensive each year.

    if you intend to get insured by at least 15 years, chances are you will pay far more on term inusrance than VUL charges. in additionit is also likely that in VUL, the money you have paid has already been earned. while for term, it’s bye bye.

    term insurance cannot to be always the cheapest. again COMPUTE before deciding. more importantly, compute before giving suggestions 🙂

  6. I think you should discuss estate tax since the topic is all about insurance..no matter how big the investments are, it will get hit with estate tax once a person dies and the ppl left behind will have a hard time paying those taxes. While remaining vested is always good but i think having a third party pay for my hospital and funeral bills and taxes after i pass on is better..i do agree that there are some agents who put in a lot of riders that would cost more to get commissions.. but you can actually ask them to reveal the charges and thay way you can actually decide on which benefit you would need and not need..like an 20 yr old might not need hospital coverage compared to a 60yo..and term insurance also increases on the next yrs..bottom line, if your plannig to get insurance..ask the agent all the questions and review and rereview the proposals..i would advise getting bundled insurance with investment for diversification and protection purposes

  7. Hi,

    I would like to know the name of the insurance company the offers term insurance that you would highly recommended. I am also a member of TRC and since I know a few about investing in stocks it would be nice if you can share me what term insurance should I get. I hope you can help me on this one. Thanks. More Power!

    1. For your term insurance requirement, you might consider Philam. I heard if you are also a member of IMG, you have the option to buy term insurance at Philam for as low as 4,000php per annum (might be lower than this) for 1M. Hope this also helps 🙂

    1. Hi Menggay,
      According to insurance.gov.ph, cocolife sits on 5th in terms of net worth. So I think it would be good. You may also check and compare the same insurance policy with others like Philam and from there you can decide what’s best and economical for you.
      Blessings!

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