Most people are skeptical when they hear about insurance for a number of reasons. I myself was doubtful at first too.
The first reason is that people don’t know that life insurance exists. Or they know about it but they only know the negative information.
Insurance Agents Tricks
There was this time back in the Philippines when insurance agents are stationing in the malls trying to hard-sell their life insurance products.
In more details, what they will do is ask for the total amount of your grocery shopping and tell you to write your name on a piece of paper as if you won a prize but the truth is they want to preach about their insurance company. It is a dirty move on their part. I found it annoying and it’s very clear that all they want is a commission. Because of these, people stay away and don’t believe in the true benefits of insurance.
Lack of Finances
Another reason is the lack of finances. Usually, we earn a salary which is just enough for us or our family. How much more is setting aside money for insurance?Another expense, another problem to think of?
Honestly, these were also my concerns before I started my life insurance. I was only working for 2 years back then. Being a young employee at that time, I had a lot of plans for my money for shopping and traveling so it didn’t come easily to me to start paying for my life insurance.
What is Life Insurance?
It is a protection given to the insured by the insurance company in case of death. In exchange, the insured will pay its premium payments for a certain time frame such as 5 years, 10 years or more.
Types of Life Insurance
If you are already planning on getting an insurance but doesn’t know what best suits your needs, here are the different kinds of life insurance.
Traditional Life Insurance
- Term Life Insurance
- Whole Life Insurance
Non-Traditional Life Insurance
- Variable Universal Life (VUL)
The difference between traditional and non-traditional is that traditional is the oldest type and the first ever type that exist. Over time, the Variable Universal Life was developed. It is a combination of insurance and investment through a managed fund.
Term Life Insurance
Its coverage is for a specific period of time. In case of death within the term period, the beneficiary will get the benefits. However, if it is after the term period, the beneficiary will get nothing. Therefore, you will need to renew the policy for a new term but with a higher premium level. It will be costly when you get older.
Whole Life Insurance
Its coverage is for the whole life of the insured or until age 100. The insured must pay his premiums equal to his whole life. It also has a savings component that accumulates cash value. It means that the premiums could be more expensive than the term life insurance.
Variable Universal Life (VUL) Insurance
It is a combination of insurance and savings. This is the most popular type of insurance nowadays because a part of the money will be allocated to investments that will later increase in value. After the maturity of the policy which is usually for 10 years, the insured can withdraw the money put into investment and enjoy its benefits.
Why Have Life Insurance?
Protection of loved ones
The definition itself explains the benefit of having an insurance because it protects your loved ones if you die. This is very important for people who have kids or are the breadwinner in the family. It is always better to be prepared when this kind of stuff happens.
We don’t talk about death often because we always think we are young and healthy.But, have you ever thought about what would happen to your family if you die? Maybe, you won’t care because you’re already gone but what about your wife, parents or children? Do you think they will still be financially secured after paying for your funeral expenses, mortgages, bills, debts and be able to continue their usual life?
I asked a colleague who just recently lost a parent. He told me that the funeral service including the casket, flowers, etc. will cost 70,000 – 100,000 PHP. It doesn’t include the food and snacks for the visitors and the lot where the dead family member will be buried. Apparently, you must buy a space in the cemetery.
It simply shows that dying is as costly as living.
Protection of Assets
Death benefits are estate tax-free. When a person dies, all his bank accounts will be immediately frozen and his assets will be subjected to estate tax. The family members will not be able to withdraw money unless the estate taxes are paid. The estate tax can be as high as 20% depending on the value of the estate.
However, if you have life insurance, your family will get your coverage right away, say 1 million pesos. This money can then be used to pay for the estate tax of your assets. What a relief would it be to your family?
Should everyone have a life insurance?
Generally, it should be YES! But again, this is most recommended to breadwinners or those who have dependents. The moment you have a child; you must ensure your life. Insurance is a good thing to have but only if you can afford it, don’t force yourself into getting it and end up failing to pay the next time. (which happened to me =))
You can also add a rider in your life insurance. An example is the Critical Illness Benefit from Sun Life. It will provide another pay out if you will be diagnosed with illnesses such as Cancer, Kidney Failure, Organ Transplant, etc. It’s a very good benefit for those who want to feel safe and secure with matters relating to health. There will test and assessments are done prior to the approval of this rider.
What insurance company to choose from?
Here are the top 10 life Insurance firms in the Philippines in 2016. Study the different firms and make sure the one you’ll choose fits your needs.
- Sun Life of Canada (Ph) Inc.
- Philippine Axa Life Insurance Corp.
- BPI Philam Life Assurance Corp.
- Philippine American Life
- Pru Life Insurance Corp.
- Manufacturers Life
- Insular Life
- BDO Life
- Manulife China Bank
- Sunlife Grepa Financial
The Younger the Better
Be mindful that the younger you are to get a life insurance, the better because the premium will not be so expensive as when you will be older. When I started, I was 24 years old and my annual premium is 24,000 PHP. However, if you start at 30 years old or older, it will also increase to 26,000- 30,000 PHP/ year.
In addition, whatever your age is, it’s never too late to be insured. If you are on your late 30’s or 40’s and there are still people depending on you, having insurance would be a good financial decision.
If you believe that you should have a life insurance but you can’t afford it at the moment, then find extra jobs or additional source of income so you can pay the premium without affecting your monthly budget.
Lastly, getting a life insurance is ultimately your decision. Assess your self and your family. Can you afford and willing to pay the premium for a long time (10 years)?
NOTE: I am not an expert about insurance but this post is only based on my personal experience and research about this subject. You can get more detailed information from agents of different insurance companies.Give them a call and request for an appointment.
Do you have life insurance?
If no, are you planning on getting one?