Insurance Vs. Pre-need

Most people I know are confused with the difference between pre-need plans and insurance policies. As someone who worked in the insurance industry for several years I think I am in the authority to shed light on any misconception or wrong notion one might have about the two.

1. Pre-need plans tend to be cheaper than most insurance policies.
2.Pre-need plans do not give you protection while insurance policies do.
If one buys a college educational plan, and he dies after a year, his child will not
yet get the benefits of the plan. Instead, the child will have to wait for years, until
the plan matures, usually when he is already ready for college. Meanwhile, the surviving parent is left with the problem of earning a living enough to send the child to grade school and high school.

3.If one buys an insurance policy with savings that can be used any which way, like for college and he dies after a year, the child will be able to get the fund right away and use it for his everyday necessities or yearly tuition so that someday he will finish grade school, high school and possibly go to college.

4.Both pre-need plans and insurance policies can give pension after some time but if a holder of a pre-need pension plan suddenly dies after a week, the beneficiaries will just get whatever payment he has already paid.

If a person with an insurance policy dies after a week of getting the policy, his
beneficiaries will still receive the whole coverage amount. For instance, he has only paid one quarterly premium of Ps. 4,000.00 for a one million peso coverage, his beneficiaries will still be able to get the whole Ps. 1,000,000.00, assuming he did not lie in the medical questionnaire part of his application.

5.Pre-need companies are under SEC while Insurance companies are regulated by
the Philippine Insurance Commission. If an insurance company is in financial
trouble, another insurance company is obliged to take over, and absorb all the
financial liabilities of that company. This way, policyholders are always secured
that they will get the benefits they are paying for.