Wednesday, July 22, 2020

Frequently Asked questions on BDO Life

I have assumed the reason why you are here is that you have some questions and or / uncertainties with the newly launched offering of BDO life.

To help you with that you may find below the following frequently asked questions:

1.    How does life insurance protect me from life’s ‘what if’s?

Life’s ‘what if’s’ can be summarized as premature death, prolonged illness, and living too long. Premature death will have an impact on your family while prolonged illness and living too long will have an impact on you.

For all of these ‘what if’s,’ you need cash to sustain your family and yourself. At your untimely passing, cash will ensure that your family can pay off your last-minute expenses and maintain their lifestyle for at least a number of years. In the case of prolonged illness or living too long, it will provide for your medical and healthcare expenses, as well as sustain you in old age.

By setting aside at least 8-10% of your income for life insurance, you can provide for these ‘what if’s’. Life insurance creates a fund to provide for your family and cover critical illnesses. It also builds a retirement fund that you can cash in at ages 60 and up.

2.    Why should I purchase a life insurance product instead of an investment product?

A life insurance product and investment product work differently. While an investment product assumes that everything in life will go according to your plans, a life insurance product prepares you for the unexpected curve balls that life may throw at you—which you should be prepared for.

It is best to have both. A significant part of your income should go to savings and investments to help you achieve your plans—whether in the short, medium, or long-term. This is your Plan A. On the other hand, life insurance requires only at least 8-10% of your income. This is your Plan B, if life does not go as planned.  

Plan A needs time to grow. Having P1M or P10M worth of savings doesn’t happen overnight. On the other hand, Plan B builds the fund now. By setting aside a small budget now, a fund is immediately created and paid out by BDO Life, if the insured passes away or gets critically ill.

3.    Besides getting claims if my insured ones or I get sick/die, how else can I benefit from life insurance?

Life insurance is an excellent and disciplined way to build long-term savings. Besides ensuring that your loved ones are taken care of when you pass away, it can build policy values and provide you with a supplemental retirement fund in your old age.

Furthermore, life insurance can unburden your family by covering your “last minute” expenses, such as hospitalization, burial, estate taxes, etc.

4.    What life insurance product do you recommend to your clients?

A life insurance product is a solution to a need. First, you need to identify your needs. What do you want your life insurance to do for you? Protect your family?  Build up savings? Create an educational fund? Cover you in case of critical illness or a challenging health condition? Provide you with investments while protecting your family? Give a supplemental retirement fund?

There is a life insurance product for every need. Needs however, change over time, so people get different life insurance products at different life stages. This is why many people have 6-7 policies in their lifetime.

However, as experts say, the best life insurance product is the one in force at the time it is needed the most. It is the product you can afford to pay throughout its required premium-paying period.

5.    I'm a professional in my late 30s. I'm a senior manager with enough financial flexibility to make investments. I'm married and with a child. What insurance product will I benefit from the most?

You may be interested in a variable life insurance product, if you value life-long protection for your family and the opportunity to invest for long-term needs, such as your child’s education, business, or retirement.

Variable life protects your family with its guaranteed sum assured but also offers the potential to grow your funds through its investment options. 

With variable life insurance, you get to choose how much your coverage is, because coverage is a multiple of your annual premium. Since you are married and with a child, it will be best for you to consider a bigger coverage, with part of your premium invested in your choice of funds based on your investment objectives, your personal preferences, and risk profile.

With a long-term investment horizon, and by keeping your plan active, you may be able to build up a fund value that is potentially bigger than your sum assured. When that happens, your family will receive a higher sum assured at the time of a claim, or you will enjoy a higher fund value, which you can use for emergency, or for financing your long-term goals.

6.    I'm a single, young professional in my early 20s. I graduated only a few years ago, but I want to start preparing for life's 'what ifs'. What insurance product will I benefit from the most?

You may be interested in a life insurance product that will help you save up in a disciplined and methodical way, and realize guaranteed payouts over a period of time. This is a good way to start your life insurance coverage based on your current life stage.

By setting aside at least 8-10% of your income, you may prefer a product with guaranteed benefits. To start with, you will enjoy a guaranteed coverage for 20 years, with the original sum assured doubling on the 3rd policy year. Premium-payment period is guaranteed for eight years. Plus, you will receive guaranteed payouts equivalent to 8% of your original sum assured, starting at the end of the second policy year, and every two years thereafter until the 20th policy year. At maturity, on the 20th year, you will receive a lump sum benefit equivalent to double your original sum assured.

While giving yourself life insurance protection, this product helps you enjoy the benefits of your forced savings while you are young and active.

7.    I'm an executive in my early 40s. I'm married and with kids. I'm comfortable financially, but would still like to provide protection for myself and my family members. What insurance product will I benefit from the most?

While you are at the peak of your career, it will be good to ensure that you have a life insurance coverage that doubles up as a health cover in case of critical illness. The death benefit or critical illness coverage is 100% of your sum assured.

Premature death will set back your family financially—so will a critical illness, should you contract it. Thus, saving up for a health coverage is one of the foundations of a sound financial plan.

By setting aside a portion of your income for critical illness coverage, you will be able to draw the necessary cash from a health fund upon diagnosis, for your medical treatments, hospitalization bills, laboratory tests, therapy, medication, and check-ups.

This health product also covers you in case of an early or intermediate condition, or if you need angioplasty. You will be covered up to 50% of your sum assured. This additional coverage will be in force only during your premium-paying period—either 10 or 20years, or up to age 65. So, the longer your premium-paying period, the longer you will enjoy this additional benefit.

Another benefit of this health product is if you stay healthy until age 65, you will receive a wellness fund equivalent to 5% of your sum assured from ages 66 to age 85.

In effect, this health product actually offers you 3-in-1 benefits: a guaranteed insurance coverage for your family; a critical illness coverage; and a wellness/retirement fund.

8.    I'm an overseas Filipino in my mid-20s, who provides for the needs of my family back in the Philippines. I plan to retire from working abroad in my 60s and stay at home, perhaps even start a business. What insurance product will I benefit from the most?

As a young, family breadwinner, it will be good for you to protect yourself with life insurance, and at the same time, build up a guaranteed savings program for yourself. There is a plan specifically designed for someone like you, who needs to make sure his family is protected.

The first benefit of this plan is a guaranteed life insurance coverage for 20 years.  The original sum assured will double on the 3rd policy year, which your family is guaranteed to receive in the event of your untimely passing. There are guaranteed premium-paying period options of 5 or 10 years.

While protecting your family, this product will also generate savings for you. This will be in the form of guaranteed payouts, equivalent to 10% of your original sum assured, which you will start receiving at the end of the 10th year, and every year thereafter until the 20th year.

Moreover, on the 20th year, you will receive a lump sum equivalent to 200% of your original sum assured. The lump sum benefit is what you can use to build up your capital for your business when you retire.

In case of premature death from the 2nd to the 9th policy year, your family will receive advance annual cash payouts of 10% of your original sum assured, plus all the scheduled payouts and lump sum originally intended for the insured. All these benefits will be given over and above the death benefit. This additional feature will provide your family the much-needed income protection for 20 years.

Alternatively, you can choose a life insurance product where you can enjoy guaranteed life insurance protection, and at the same time, get into investments.

If you’d like to go into investments but don’t know how, you many consider getting a variable life insurance product which will give you both protection and investments.

BDO Life’s investment funds are managed by BDO Trust, also a subsidiary of BDO Unibank. You can choose to make your insurance active for the long-term by paying your premiums, as well as making top-ups to increase your coverage, while potentially increasing your fund value. This is another way to aggressively grow your retirement fund with irregular but potentially higher market returns.  With this life insurance product, you can protect your family in case anything happens to you, and at the same time, protect your savings.

9.    Who is BDO Life?  How do I benefit from its affiliation with BDO Unibank?

BDO Life Assurance Company, Inc. is a subsidiary of BDO Unibank, Inc., the country's largest bank to date. BDO Life complements BDO Unibank. BDO Life and BDO Unibank are Partners in Protection.

BDO Unibank protects your Plan A, while BDO Life protects your Plan B. When your Plan A gets disrupted, your Plan B takes over.

BDO Unibank is committed to support BDO Life for the long-term. BDO Life seals BDO Unibank’s commitment to you because BDO Life takes care of you and your family when life’s “what ifs” happen.

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