Not many Filipinos understand and see the value of a good-fitting life insurance is a household. More, often than not, marami sa ating mga Pinoy ang ayaw sa life insurance kasi they think it’s about death. When in reality, it is not.
As policy owner and insured myself, I see life insurance as an extended gesture of my love and care for my family that even when I am no longer with them and have passed away, they will continue living a life with little to no financial burden at all.
I was a skeptic about life insurance at some point in my life. But with the right information and proper education, I knew that deciding to get the right amount and product of life insurance is one of the best decisions I could make for my family.
Let me share with you the 10 things about life insurance that you as my fellow Filipino should know.
1. If you are the breadwinner or if anyone relies on you financially, you need life insurance.
Life insurance is NOT an investment but instead is your SECURITY and PROTECTION against unforeseen events like sudden passing due to an illness or accident. It helps lessen financial burdens and worries when the surviving family members are dealing with the loss of their loved one.
Life insurance protects and secures the future of those left behind by covering the cost of the final expenses, debts, loans, lost of income up to the extent of ensuring the family’s lifestyle will remain the same and can even enable the children to pursue their education.
With life insurance, you are giving yourself the peace of mind that even when you die your family will still continue to live comfortably and without any financial burden.
2. Life insurance prevents asset and investment loss for your family.
Typically for a Filipino family, when a loved one dies without any life insurance, the family will then come up a sizeable amount of money to cover for the burial expenses and even pay for the debts that the loved one left behind.
Family members then go to great heights in breaking their banks, their savings, touching their investments that were intended for the children’s college education, loaning heaps of debt, and even to the point of selling their possessions like their house. It’s a sad reality in our Filipino culture. Such great sacrifice from our families, but also equally greatly saddening.
But with life insurance, all those sacrifices are no longer necessary. The family left behind no longer need to reduce their savings and they can even keep their investments intact without any deductions. They also no longer have to get buried with debts and loans, and they could keep their house as well.
The death benefit of the loved one’s insurance policy can cover the expenses needed in order to give a proper burial, pay debts and even more than enough to provide future needs for the family.
3. Life insurance is affordable to every Filipino, it is NOT expensive.
Gone are the days that says, “Life insurance is only for the wealthy folks.” That’s a myth! Hindi mo kailangan maglabas ng hundred thousand or millions of pesos just to get your family secured and protected with life insurance.
As an example, if you are a woman aged 24, non-smoker and in good health, you can secure your loved ones of a comprehensive life insurance policy of:
- Php 1,050,000 Total Death Benefit, with
- Php 1,000,000 Critical Illness Benefit, and a
- Php 500 per day Hospital Income Benefit, PLUS a
- Living Benefit (investment) for yourself of a projected Php 1,584,544 at age 55
- All of these for just Php 1,800 per month for 10 years.
Hanggang saan aabot ang Php 1,800 mo kada buwan? 😉 It’s indeed affordable for every Filipino!
Did I mention, this example can be customized to fit your needs? Yes! Just contact me with this link and I’ll create a customized life insurance proposal that FITS YOUR NEEDS.
4. The younger & healthier you are, the better benefits & premiums you’ll get with your life insurance.
I got my first life insurance policy at the healthy age of 27 for a monthly premium of Php 2,800. But if I had gotten my policy earlier, at the age of 23 it would’ve been just Php 2,400 monthly.
Additionally, since my life insurance policy is tied up with an investment component, the investment at age 23 would have been projected at Php 2,772,581 by age 55. Compared to what I have at age 27 which is a projected value of Php 1,905,397 by age 55.
The younger and healthier you are, the better premiums you’ll get, which is usually cheaper than when you are older plus the better benefits (like in my case a higher projected investment value) since there’s a high chance you’ll not get critically ill nor die soon.
Get yourself and your family members insured as early and as healthy as they are NOW. Learn from my mistake.
5. Life insurance is a contract called a policy.
As told by this Forbes article, “A policy is a contract between a life insurance company and someone (or occasionally something, like a trust) who has a financial interest in the life and livelihood of someone else. The insurance company pools the premiums of policyholders and pays out claims—called a death benefit—in the event of a death. The difference between the premiums taken in and the claims paid out is the insurance company’s profit.”
Simply put, life insurance policy is a contract between a company and a person wherein the company guarantees the person a death benefit in the event of a death.
As to how insurance companies work and how do they gain profit with their business, that is a whole other topic to be discussed in another article.
6. Keep in mind the 4 players in life insurance are the insurer, owner, insured and beneficiary.
These are the roles and terms that you must understand when getting your policy.
- The Insurer is the insurance company that is responsible for giving out the claims in the event of the death of the insured.
- The Insured is the person whose the policy and value of the life insurance are based/dependent on.
- The Owner of the policy is the one responsible for paying the premiums.
- And the Beneficiary is the person entitled to receive the death benefits of the policy in case of the Insurer’s passing.
As an example, I am the Owner and also the Insured of my policy while as my family members are the Beneficiaries of which my Insurer is Sun Life Financial Philippines.
7. The broad classification of life insurance is Term Insurance and Permanent Insurance.
There are more underlying types under these two broad classifications and I will discuss them on a separate article. For now, let me share to you term and permanent insurance.
- Term Insurance is the simplest and cheaper type of life insurance. Simplest meaning its benefits are purely death benefit and critical illness benefit. Investments are not mixed in. And based on the word “term”, the death benefit coverage last for a limited period of time. It needs to be renewed yearly and often increases it’s premium yearly as well.
- Permanent Insurance, on the other hand, spans its coverage throughout the life of the insured, but in some cases, it can cover up until age 100 on selected insurance company products. More so, this type of insurance can be comprehensive and most often purchased with a mixture of investments.
8. Life insurance’s purpose is to secure and manage risk, and not as an investment.
Although there are life insurances that have investment component in them, we have to understand that the main purpose of it is to give security and manage risks like critical illness and accidents.
If your main goal is to gain and grow your money further, then I would suggest that you seek sound pure investment products and not life insurance.
9. Get the right amount of life insurance that you & your family needs.
The right amount needed for life insurance differs from every Filipino family. There is no one-size-fits-all amount. This is where financial planning comes in handy wherein the Licensed Financial Adviser guides you in calculating the needed life insurance that you need.
I will discuss in detail on how you’ll calculate the life insurance coverage you need, for now, let’s put it simply as:
- First, determine the total amount you need by adding up the expenses that your loved ones would need:
- Liabilities, Income Replacement, Final Expenses, Education
- Second, consider the benefits that you already have. Total up your current assets include:
- Savings, Investments, Current Life Insurance, Surviving Spouse Salary
- Lastly, subtract your expenses from your assets total. A Licensed Financial Adviser can help and guide you more in fine-tuning the right amount you and your family needs.
10. Know your options and get insured by consulting with and being mentored by a Licensed Financial Adviser.
You can learn and gather all the information that you can with regards to life insurance. But by consulting with a Licensed Financial Adviser who is dedicated to providing you with solutions and guidance to your needs, you will save yourself the time, energy and the money by choosing the BEST life insurance product for your particular need.
Plus, more than life insurance, Licensed Financial Advisers can offer you services and mentorship on investments, wealth management, business consultation and even personal finance like budgeting and increase your earnings.
There’s a lot more to be discussed about life insurance and I do hope these 10 facts got you started in understanding and valuing this financial product more.
My vision is to witness a generation of new breed Filipinos who have the confidence in taking on life since they are secured and insured with life insurance policies. No longer will there be a family left behind by their parents and breadwinners who will experience harsh financial difficulties but instead continue on with a brighter life ahead of them with insurance.
Get insured and secure your family’s future and your peace of mind.
Your Stewardship Mentor