Thursday, July 14, 2011

Money Mistake: I Hate AXA Honey Saver 5 and AXA Philippines

 Welcome to the first ever Money Mistake Series on The Currency Of Everything.

Everyone has them, no matter how careful you may be with your budgeting or finances. Whether it's a wrong financial decision or a complete mistake, you still lost your hard-earned money. Who in their right minds want that to happen anyway?

Even for savers and investors, it's something that is unavoidable especially when you're also going through with trial and error the first time you try your hand at investing and what products to choose. It's hard enough to find money, plan for a good budget and in the end you will not even get to enjoy the harvests of your hardwork. It's also hard to admit that you made a mistake, but the only way to get over it is to accept and finally find a solution.

The opinion expressed below is solely my own, crafted from my own experiences.

My Money Mistake is Investing in AXA Philippines.

Getting their insurance account, Honey Saver 5, was a very immature mistake in my part. Even now, I know I'm still a novice when it comes to finances, but even now I already know what a bad thing it was to get the AXA insurance. It was almost a year ago when I opened an account with them, and at that time I was so glad that a bank-backed insurance company opened on my Metrobank branch, and it was very near my place of work. I was high with the fact that I was going to open something that could set me at a stable financial footing in the future, and I was very much glad that I could afford the premium, which was set at P1,222.27 a month or P12,886.00 a year.

This is the actual Policy document for AXA Insurance Honey Saver 5. This is my document, my own personal copy, my property.
So that's my Honey Saver 5 policy, a traditional 5-years-to-pay insurance policy that has a Basic Sum Insured of P100,000 until Age 100.
 
Insured for 100k
My understanding of how my policy worked was through the information given to me by my AXA Financial Advisor. Honey Saver 5 will require about P64,430.00 in a monthly installment over a 5-year period. The Sum Insured is immediately in effect upon the first day of enrollment and payment of the first premium.

In my mind, I wouldn't mind paying P64,430.00 if I was going to get insured for 100k until age 100. I was a trainee at that time, so the premium of P1,200 stretched my budget a little. I got the document, but I trusted AXA enough to just give it a once over, but I did my research, learned about personal financial managment in baby steps, and for 2 months now, my AXA insurance left me with an empty feeling.

AXA has Small Returns... Very small cash values
You can see from the picture above the breakdown of my yearly policy, the cash value it has accumulated as well.

In the First Policy Year, which I would have paid P12,886.00 for has a P0.00 value,
and my Second Policy Year I would have paid P25,722 in total for would be valued at P9,800.00.  

for me that's alright since that's always how insurance starts out. I've learned that for about 1-3 years of payment, it would go to covering the total cost of one's policy. But it is in the subsequent years that worry me.

On my Fifth Policy Year, where I would have paid a total of P64,430.00, my last year of paying, my policy has a cash value of P26,000.00, which is barely half of what AXA had hauled from my premium payments.
If one wanted to get back the total P64,000.00 one has invested in 5 years, it is about impossible. Once my policy reaches its 20th year (I would have been 44 years old by then) the cash value would only be P35,300.00.
.
In the end... you don't even get what you paid for....
I've been a good payer until this month. Because after so much deliberation... I decided to surrender my policy.

Yep. Money wasted... because this is my first year, I cannot get back the monthly premium I paid as the value of my policy is a big fat ZERO. It's funny how AXA can't even give back even a fraction of my money. Sometimes I want to lash out at the unfairness of it all.

I truly regret the day I joined AXA.

14 comments:

  1. Hi Kristine, you really should look at proposals
    of traditional whole life and VUL(investment-linked) and you'd find that those figures you have
    there are at most normal.

    I can't say if AXA has the more expensive offering
    though.

    I'm guessing that you already know that
    VUL has no guarantees on the earning/performance
    right?

    Instead of getting say 10%, 8% or 4% as the
    illustration normally shows. You might get
    -xx% and if your cash value is insufficient
    to absorb the charges, you'll be asked to
    put in more money.


    I'm curious though, does those figures you
    posted include dividends

    ReplyDelete
  2. Hi MxHerr5!

    Thank you very much for leaving a comment. I have just learned about VULs, term life and etc.

    I guess my main gripe is that it;'s not like other VULS that steadily grow no matter how little, or at least there is a break even in the amount you've put in before the maturity?

    ReplyDelete
  3. Hi Kristine,

    The thing I see here is that you are looking for an investment vehicle but got a traditional life insurance policy. These are two very different things.

    I believe, in my own experience with my life insurance policies, is that you are correct in saying that it is near impossible to get the face value of your policy in your lifetime. If calculations are correct, you get the face amount (in your case the P100T) by the time you reach 100 years old. =) And that is really how traditional life insurance works.
    Insurance policies are taken for income protection; the premise here is that if you pass away, the loved ones you are working for get a sum to tide them over. Some people buy huge amounts of protection for this exact purpose.
    In your case, since you are still young and in the build up phase of wealth accumulation, it would be better to go with investment vehicles (think UITF, Mutual Funds so you can get a good start and to start your learning on how to go about investing your hard earned money). Go for fund managers who have good and solid track records; nobody can predict the market of course, but those who made good performances compared to all others in the same time period will most probably handle your money best.
    The best piece of advice you can have is that you need to research, research and research some more. Do not be afraid to ask hard questions concerning your money. Be focused on the details, because the fine print might give you a surprise somewhere down the road.
    I hope that this experience does not discourage you from your path to wealth accumulation. We all stumble sometimes, but we need to pick ourselves up and run the race for wealth again.
    Have a great weekend!

    Ben Vergara
    0917-8083482

    ReplyDelete
  4. Hi Kristine,

    Sad to know how you feel on your first policy. I guess your financial advisor (from AXA) wasn't able to fully disclose the details about traditional policies.

    You see, with traditional plans, the only way you earn is thru dividends, though not guaranteed either.

    At least you learned a bit or 2. Just charge it to experience, :D

    ReplyDelete
  5. Hi there! I applaud you for taking interest in investing. Not a lot of people your age would be thinking hard about the future. You're a different class because you not only thought about it, but took action. Congratulations on that! Unfortunately, there was a mistake in the vehicle that you used to grow your hard-earned money. Investment tools are meant to grow your money, as with engaging in the stock market, mutual funds, and bonds. The younger you are when you start, the more potential there is for your money to grow. Of course, they could grow as fast as they can crash. It would depend on your investment style and risk tolerance on how you would manage your portfolio.

    Insurance, on the other hand, is a different tool, one of which offers mainly protection. Saver 5 pay offers coverage for your loved ones so that when you pass away, your family will not be left empty handed financially. That being said, the cash value of the policy should not be a gauge on how much your money is growing. That kind of thinking would really cause disappointment on your part because the cash values would be essentially less what your total policy is worth.

    "Rita is in dire need of cash to pay for her child's tuition fee. She remembers that her mother left a gold ring before she passed away. Rita hesitated to sell it because it was a family heirloom, so decided to just pawn it for a while until she gets her finances in order. Her child gets to study for the next school year, and after a few weeks, she pays out the loan and interest, and gets her precious family treasure back."

    Just like the gold ring, your policy has a value that you can loan up to a certain percentage in case of a financial crisis. You would not expect a ring worth 100,000 to be pawned at 150,00.00, right?

    The benefit of having this kind of policy is that you would only be paying 64,430.00 for a coverage of 100,000.00. Not only that, even if you just gave the initial premium of 1,222.27 for the first month, in the event that you pass away, your loved ones will still receive the 100,000.00. Wouldn't that be great? That is an advantage that I believe no other financial tool can give to you. And another thing, the protection would still be enforced even if there is a present loan on the policy.

    Hopefully next time, you will do more than a glance over on whatever it is you are putting your money into. Let us learn to maximize our money to lead us towards financial freedom. :)

    ReplyDelete
  6. Hi ayan! Thanks so much for replying!
    I understand the workings now of an insurance, I have realized now that AXA was just too traditional for my liking. I'm glad that as young as I am I could afford to make a few mistakes so I have a bit of knowledge now.

    In a related note, I also now have another insurance policy in effect under PRU Life UK which suits me a lot more. I'm paying a higher premium but with lesser years to pay (10) and with a higher projected value long-term. I am on 80% investment and 20% insurance so I have a bit higher coverage (P200,000) this time.

    Thank you again for imparting knowledge. It is very appreciated!

    ReplyDelete
  7. I hate AXA, I got honey peso 5, 150,000 insurance, with 2500 monthly premiums for 5 years. AXA FE didnt explain the details well that mislead me to believe I will get 150000 after 5 years. its way my second year now that I got the yearly report and do my math, by my fifth year I would get roughly around 85k. which is really bad investment considering that I can get cheaper insurance for the same coverage. If only I have known before I wouldn't have taken this policy. Now I applied for full withdrawal, salvaging whats left of my money before its too late. its been a month now and FE is telling me to wait more since there are delays in processing my request because of numerous client withdrawals. it only took them a week to approve my policy, now a withdrawal is taking forever. I'm really frustrated by it, I hope others dont get the same treatment as I have with AXA FE's on my location, they are very unprofessional and they wont do extra effort to assist you, lots of excuses and where seldom in the office.

    ReplyDelete
  8. I hate AXA, I got honey peso 5, 150,000 insurance, with 2500 monthly premiums for 5 years. AXA FE didnt explain the details well that mislead me to believe I will get 150000 after 5 years. its way my second year now that I got the yearly report and do my math, by my fifth year I would get roughly around 85k. which is really bad investment considering that I can get cheaper insurance for the same coverage. If only I have known before I wouldn't have taken this policy. Now I applied for full withdrawal, salvaging whats left of my money before its too late. its been a month now and FE is telling me to wait more since there are delays in processing my request because of numerous client withdrawals. it only took them a week to approve my policy, now a withdrawal is taking forever. I'm really frustrated by it, I hope others dont get the same treatment as I have with AXA FE's on my location, they are very unprofessional and they wont do extra effort to assist you, lots of excuses and where seldom in the office.

    ReplyDelete
  9. Hi guys, its great that someone wrote a blog about AXA. I hope you wont mind me sharing my experience too, which is a bad one, I have honey peso 5, with 150k insurance coverage. 5 years @ 2500 monthly premium. I'm on my 2 1/2 year now and begin to realize from a mail, investment report. And doing a simple math if everything is the same my policy value will be just around 85k value after 5 years, Also I notice some fee's that made me skeptical on how AXA invest my money. It was really a bad investment for me considering that I have payed 60k AXA and get a costly mediocre insurance. I may have been mislead by the FE who recruited me into thinking I will get 150k value after 5 years but not anymore so I decided to full withdraw my policy, trying to salvage some value from it, and just get me a cheaper insurance with the same coverage and just invest 2500 every month to something more productive and really pays off. Now my problem is with FE making excuses not to see me and get my application, always not in the office, sick, on vacation. until a month of trying to reach an FE, finally someone is available and got my requirements and application for full withdrawal. so now my problem is, another month passed and my application is still processing, I'm really beginning to lose my patience of the excuses and lying. AXA could you just credit my current policy value and lets get on with our lives.

    ReplyDelete
  10. Hi, This Blog is good and the comments are educational most especially Ayan's reply. I have a saver 5 PAY as well and dont know what to do with it. But now I know. Thanks!

    ReplyDelete
  11. Hi Kristine<
    If you are into investments and wanting to have a substantial growth of your money you should not have gotten a traditional product. You should have applied for an Investment linked product or a VARIABLE LIFE INS. A traditional life insurance is just merely LIFE insurance and have small earnings coming from dividends. So next time you applied at any company please ask questions.....it's better that putting all your grumps on the net when it's too late already.

    ReplyDelete
  12. For me Insurance is just a legal ponzi scheme. Your premium is used for the payment of current claims and the company's overhead cost. Agents don't really care if its really the product that you want, they are just after their commission.

    In me opinion, insurance is only good for people who doesn't know how to save and invest for their future, so they let insurance companies do the saving and the investing for them. But with restrictions on when and how you can get your money back in times that you really need the money.

    But doing your own invest is often more rewarding and you would be more free to pull-out your money anytime. Of course self investing is not for everybody, that is why there are UITF and mutual funds that gives you the advantage of having a fund manager, but allows you more freedom to transfer to other investment over a short amount of time. This would allow you more freedom unlike in investment link insurance product that they control your money for 1 - 3 years minimum before you can have any say. Also, you can have the flexibility on making additional or subtraction on your investment when the need arise.

    ReplyDelete
  13. Honey Peso 5 is NOT variable-linked life insurance...it's a traditional life insurance....like PAY-NOW-DIE-LATER. meaning,
    You don't get cash values/returns...you just get dividends. ALWAYS INVEST IN VARIABLE-LINKED LIFE INSURANCE. Signed up with AXA's variable insurance, Checkd my cash values and IM SO HAPPY :)

    ReplyDelete
  14. Hi..I am an axa insurance holder with honey peso 5 plan. my agent did not explained me very well about the insurance, now I realize i cant invest them because of my daily expenses it getting higher now. I pay my insurance 2500 monthly and now i am almost 3 years paying it.But I am planning to withdraw my money. I was just being forced by this insurance because at first they deducted me through my savings account and i did not yet read the policy. the policy was given me for almost a month. I have no choice but to continue it and wait until 2 years. And now i am almost 3 years. My question is can i withdraw all my money i paid to my insurance?..and how much the percent they would return it..

    Thank you and more power!

    ReplyDelete

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