When you need insurance



CHANCES are it will be difficult for you to get one; you will be deemed uninsurable due to some condition/circumstances; it will be too late.

We all have this vision of how we want our lives to be, how we want our money to be spent for things that we want. But when life throws us a curve ball, what is our plan B?  When out of nowhere, a car with faulty breaks hits us, what is our plan B? When all of a sudden we feel pain and we hear the word ‘cancer’ from our trusted doctor, what is our plan B?
The beauty of insurance is that it can be your plan B. It will not take away the physical and emotional pain, but it can lessen the financial burden of a different life.

The thing about insurance though is that you’ll never know if you’ll need it until you actually do. That’s why it is so difficult for many to decide whether to get one or not. There is no certainty, and uncertainty makes us uncomfortable. Some of those who cannot decide about buying insurance might probably buy it for the wrong reason while others will want, first and foremost, certainty that they will get their money back.  Still some others who seek certainty would also want the money they have paid in premiums earn significantly.

Maybe, it is time to change that mindset. When buying insurance, we should not look at it as a moneymaking instrument; we should consider investment component only as a bonus and not the reason for getting insured. We are buying insurance we are buying peace of mind—our plan B.

The real purpose of insurance is to protect from the financial burden rising from an accident, a disaster, illness or death. It helps us sleep better at night knowing that whatever happens the next morning, our family is financially protected. It gives us the peace of mind that despite the breadwinner falling critically ill, becoming permanently disabled or has died, our worst case scenario is that we and our family can continue to meet our needs and, maybe, to a lesser extend afford some of our wants.

The type of insurance one would need depends on personal preference. There is really no one size fits all solution. A term insurance, for example, gives the insured the highest coverage for the lowest price. It is a good option for those wanting to be insured without heavily disrupting current cash flow. But the thought of paying premium without any living benefits is not something many Filipinos would like.

So there’s the ordinary life insurance. Probably a good analogy for this type of insurance is that it is insurance plus a bank savings rolled into one product. The insured is covered with living benefits that accumulate over time. This type of insurance is good for those who want to be insured and save but doesn’t want to endure the volatility of an investment. This is more expensive than a term insurance.

Finally, the last type is the Variable Unit Linked (VUL). For the mindset that many of us have about insurance being an investment, this is the product that could be of interest. It offers coverage for the insured but it also includes an investment component. The investment accumulates over time compared with a traditional ordinary life insurance. However, this option carries the highest premium.

Since being a family man, one of my major fears is not being able to live a quality life when accident or critical illness strikes. I can’t imagine going through the physical suffering and at the same time the mental and psychological suffering of giving my family the financial burden of caring for me. This thought made me realize that the real reason we buy insurance—our love for self and our family.

Jeremy Jessley Tan is Registered Financial Planner of RFP Philippines. To learn more about personal financial planning, attend the 56th RFP Program this Aug. 27 —Oct 15, 2016 To inquire, e-mail info@rfp.ph or text <name><e-mail><RFP>at 0917-9689774.


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