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Pre need plans are educational funds and pension plans and they are under the control of SEC. Life insurance is about of course….. life insurance plan and it is controlled by The Insurance Commission.
Pre-need plan is from the word itself, means a plan that you get because you want to be prepared for the CERTAIN events of life such as education of your kids and your retirement.
Life Insurance plan on the other hand is a plan that you should get more of being prepared for the UNCERTAIN events of life. You’re not certain when these would happen: Critical Illness (i.e. heart attack, stroke, cancer, etc.), Accident, Disability, and even Death-though we are certain we would die, we’re not certain WHEN it will be. Now, you don’t want either you or your family to suffer financial disaster just in case , hence you get a Life Insurance for your Peace Of Mind.
And the biggest difference between the two is the assurance that what was promised can be delivered. We’ve seen Pre-need plans fail on that aspect (remember CAP?). But Life Insurance plans are sure to deliver. Not only because Life Insurers are strictly monitored and regulated by Insurance Commision(i.e, they can only invest the plan holder’s money in the Philippines, they should meet the required capital reserves or IC will not allow them to continue to operate), but also of what is termed as “Code of receivership”. Which means, worst comes to worst that a Life Insurer was no longer able to continue operations, then IC will have other Life Insurer to take over and service the other company’s plan holders. Hence, you still get the same benefit that was promised.