Last 2012, I needed to undergo a spine surgery due to scoliosis. We were asked to prepare close to a million pesos for the procedure. A procedure that can result to three things: success, paralysis or death. At the age of 26, I was already thinking about death. And since my parents will spend their hard earned money for this, I thought of giving back in case I die through a life insurance. Because my idea then of insurance is – for the dead.
After seven years, obviously I survived, and since then, my perspective on the need for investments especially life insurance has changed. So here I’ll share the top 3 life-changing lessons I learned from my very first policy.
1. Life Insurance is not just for the dead.
Do you know that Insurance nowadays can serve as Retirement Fund, Educational, Business, Car/House, Wedding and even Travel Fund?
There’s a growing popularity nowadays of the tagline “Insurance plus investment“. And the Investment part is the one that will serve the life goals I mentioned above. This is what we call VUL or Variable Universal Life Insurance. It’s a program where your money is also invested in stocks or mutual funds while giving your loved ones a guaranteed amount of money in case you die. The profits you’ll made from the investment part can be partially withdrawn so you can enjoy your money while you’re still alive.
Currently, I have three different policies addressing three different needs: Retirement, Health and my child’s education. This strategy is connected to lesson #2.
2. Don't put all your eggs in one policy.
Others may disagree with me but I strongly believe that the saying don’t put your eggs in one basket should also be applied in getting insurance policies. What do I mean? There are insurances that can offer you almost everything for additional bucks! We call it riders or add-ons. For example, your retirement plan can come with add-ons such as disability, hospitalization or critical illness benefit. One of the disadvantages of getting an all in one policy is you won’t be able to maximize the value of your money based on your needs and in case of emergency where you really need to withdraw/stop the policy, all the add-ons you also paid for will be gone.
I am not saying that riders or add-ons is a bad idea. If you can actually put as many riders as you can, please do so. My point is, be very clear on your objectives and make sure the program being offered to you addresses it. Be smart and analyze before you sign. A jampacked policy at a lower cost doesn’t always mean you won.
3. Insurance comes first.
While my other investments are also giving me high returns, I’m an advocate of getting life insurance first before risking your money to other investments. Why? Because life insurance is guaranteed and the peace of mind it provides is incomparable. The guaranteed amount your family will receive together with the interests it earned gives you peace of mind because:
- All your debts will be paid especially loans from the bank because there’s instant money to pay it off.
- All the properties you’ve worked hard for will be inherited by your children because there’s ready money to pay for estate taxes. Do you know that if you can’t pay 6% of the total amount of your properties, it can’t be transferred to your children?
- Your child has sufficient funds for his education.
- You don’t need to borrow money or apply for a loan in case you’re diagnosed with critical illness.
- Your retirement fund, savings and other investments will stay in tact because you have a comprehensive health insurance. that will give you cash returns even upto recovery at home.
- You can enjoy your retirement years and travel without any guilt.
- And in case you’ll be gone too soon, your family will be able to sustain and improve the quality of life that they have right now.
Most people nowadays especially if you’re young and healthy ignore the importance of life insurance. But let me remind you that Insurance policies can only be bought when you don’t need it. It can only be granted when you’re still healthy and it’s more affordable when you’re still young.
If you have one already, review and evaluate what else do you need. If you don’t, then it’s never too late to get one. Don’t let yourself reach that point where you’ll say “I wish I have a life insurance”.
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