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MANILA, Philippines — More Filipinos are now seeing value in getting traditional insurance, with the number of people getting variable universal life insurance (VUL) policies, which have long been the dominant insurance product in the country, slowly declining.
This stems mostly from fears of sudden and unexpected illnesses—and even death—triggered by the COVID-19 pandemic, prompting BDO Life Assurance Co. Inc. (BDO Life) to intensify its traditional life insurance campaign.
The bancassurance arm of Sy-led banking giant BDO Unibank Inc. explained that while Filipinos “underappreciate” life insurance as an investment product, 79 percent of them confirmed that it was also now “more important to them than ever.”
This market study is supported by the fact that BDO Life’s traditional insurance plans accounted for 75 percent of its total premiums last year, a 15-percent growth from 2022.
READ: The role of life insurance in estate planning in the Philippines
“As fund values of variable life insurance rise and fall with the economic tide, traditional life insurance has proven to be a safer haven over time,” said Renato Vergel de Dios, BDO Life president and CEO.
Need for safety net
“Slowly but surely, Filipinos are realizing the importance of having a safety net, a Plan B in the form of life insurance protection that serves as a solid foundation on which their financial planning model rests,” he added.
Apart from a permanent life insurance, VUL also provides investment opportunities, such as stocks, but there may be higher risks depending on which assets the investments go to.
READ: The misperception of life insurance in the Philippines
Traditional insurance, meanwhile, does not offer this investment component, thus having relatively lower risk, and focuses instead on providing death benefits while allowing loans to fund emergencies while insurees are still alive.
Data from the Insurance Commission show that in the first nine months of 2023, life insurance companies grew their traditional life premiums by 25.88 percent to P78.47 billion. Variable life premiums, meanwhile, declined by 9.35 percent to P151.42 billion.
“Just as the bank safeguards one’s current savings, life insurance serves to protect one’s future savings intended to be funded by future income,” said BDO president and CEO Nestor Tan. INQ