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LIFE INSURANCE: FACT OR FICTION

rubber stamp with inscription INSURANCE

My mother is an agency manager in the biggest and most trusted insurance company in the country.  She’s been working there since she is 21 years old and even up to now that she’s already 68.   My father, on the other hand, is also an insurance agent in the same company for more than 30 years.  With my parents both working in the insurance industry, I grew up hearing lots of things about it.   I can say that life insurance is a normal thing in our life.  It’s been our family’s bread and butter.

Unlike other’s belief, Life Insurance is not bad!  The negative image only comes from people’s fear of death.  Having a life insurance doesn’t mean you will die soon!  But death is inevitable, having life insurance just means you are responsible enough to protect your loved ones even after it happens.  Aside from this, here are some of the statements commonly heard about insurance.  I have reviewed them and tagged them fact if true, and fiction if not.

1.  Life Insurance are only applicable for breadwinners or person with dependents.

FICTION.   This is definitely not true!  Life insurance is for everyone, regardless of your status.  Everyone needs life insurance.  Why?  Because no one is exempted with life’s uncertainties.  Everyone has a risk of dying too soon.  You can get sick anytime.  Or you may even live too long, that you no longer have funds to support your needs at old age.

2.  It is better to avail life insurance while you are younger.

FACT.   Some people think that life insurance are only for old person.  Some, even say that they are too young and far from dying, so they do not need it now.  But did you know that getting life insurance at a younger age has a lower premium?  Yes!  You will pay a lesser amount for a same coverage, rather than getting it when you are older.

Example (values are not based on actual calculation, for illustration purposes only):

life insurance_table

If you notice the given data above, same payment has been made but the coverage of the older person is P300,000 less than of the 27 year old.

3.  Life insurance provided by company is already sufficient.

FICTION:  Life insurance provided by your company is called group insurance.  Commonly, its coverage is only equivalent to your one year salary.   Do you think that will be enough for your loved ones if some uncertainty happens?  For me, it’s not!  My family deserves more.

Another thing to consider is that this life insurance is only effective as long as you are connected to the company.  What if you resign? Or if you already retire?  That’s the main difference when you have your personal life insurance which is effective during your lifetime.

4.  Life Insurance is expensive.

FICTION.  There are multiple products that are being offered now by insurance companies.  Most of it are called VUL (Variable Unit Link)- please also read my article on this subject.  They already have Life insurance and investment in mutual fund, at the same time.  Most of the plans have the flexibility to accommodate your budget.  You can have a plan for as low as P1,700/month or P57/day.  Isn’t it budget friendly?! :)

5.  You will not benefit from life insurance while living.

FICTION.  As mentioned above, new products (VUL) are now being offered by insurance companies that already includes life insurance and investment.  This investment portion can be used as your savings.  Most of the time, this is allotted for a certain goal like educational fund for your children or for retirement fund or simply as your leisure fund.  You don’t need to die to have it!  Good thing is you were able to save, and at the same time, your family is protected thru your insurance coverage.

These are just few of the common perception of people about life insurance.  Don’t immediately believe with hear-say.   It is always best to ask advice from the experts.

For further questions or concerns, Free Financial Planning and to learn more on importance of life insurance please leave a comment here or contact me thru my fb page www.facebook.com/mannypascualpagaduan.

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