Which Insurance Proposal to choose? (Litong lito ka na ba?)

7:58 PM

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I've received several messages asking for help on what insurance plan to get. Most of the time, what they did was ask several financial advisors for insurance proposals. Having a lot of choices was supposed to help them choose the best plan suited for them. But to their disappointment, they ended up more confused than certain.

I attended a program about Applied Business Economics for Decision Makers and one of the topics discussed was about the principle of economics when it comes to decision making.

Basically, with the same benefits, rational people will choose the one with the cheaper price. This is easy when choosing between insurance proposals that only offer death benefit. With the same amount of coverage, you will definitely choose the one that has a lower premium. But insurance companies have a clever way of conducting their business. They started offering different benefits in a single plan that makes it almost impossible to compare it with a product of another company.

What makes it more confusing is that with the same premium, one proposal can give higher death benefit, but the other one can offer higher critical illness benefit, the other one has hospitalization, disability, fund value, an so on and so forth.

Now, which one do I choose!? Ang daming benefits! pareho lang naman ng premium! ang problema yung isa talo sa isang benefit pero panalo naman sa fund value!?

The Rationality Test. Doing this will help you have a systematic and purposeful decision. Rationality test brings you back to the main purpose why you wanted to have an insurance and with the process of elimination, you will be able to choose the one that best suits your needs and goals.

Write down all your insurance needs and goals and place them in order of priority/importance.


1. Disability Benefit
2. Critical illness Benefit
3. Hospital Income Benefit
4. Death Benefit
5. Fund value

Now lay down all the proposals you got from different advisors. Ditch the ones that are way above your budget. Di mo kaya ang premium diba? So out of the picture na yan!

Then what comes next kung lahat ng proposals ay swak na sa budget?

Now go back to your goals. Start with your priority. With my example, DISABILITY benefit is the priority. Since ito ang most important, pipiliin ko yung proposal na may pinaka mataas na disability benefit or yung proposals that will cover my income protection when it comes to disability.

TAPON mo na yung iba that will not meet your first priority. Then do this again considering your second priority.

You just continue with the elimination process until you come up with the proposal suited for your needs.

Just a reminder, we all face trade-offs in making decisions. Let us accept the fact that one choice will lead you to letting go of the other. With budget restrictions, we can't have all the benefits that we want in an insurance policy. We sacrifice one opportunity to obtain the more important one. Ipon ipon nalang ulit para sa iba.

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  1. Thank you, Sir Ron, for being so generous with tips and knowledge!

    1. You're welcome Anna. thank you for your appreciation. :)

  2. Such a great idea Ron! Plus, you can use The Rationality Test in most of your decision-making in life. Thanks for sharing.

    1. Thank you Michelle! :) Will continue improving this site.

  3. Hi Ron, Nice article! Was wondering if I can post a link to this and share it on my blog http://achievingmyfirstmillion.blogspot.com/ ? :)