Whether we like it or not, getting Life Insurance should be one of the key pillars of our Financial Foundation. As mentioned in my previous blog about the subject, we buy insurance not for the purpose of getting a huge sum for ourselves in case we live longer, but so that those we leave behind in the event of our untimely death can still have a bright future. It’s a legacy that we leave behind. It is our responsibility to ensure that even after our death, our loved ones will still have a bright future ahead of them.
So why is it that most people do not like getting Life Insurance?
Just a few days back while I was doing my research for this entry, I spoke with a very good friend of mine who’s a fellow Investhusiast, Financial Literacy Advocate- and Authorised Consultant in one of the most established insurance firms here in the UAE- Allan Calumpang; and asked him about the Top Reasons why Filipinos are reluctant to get Life Insurance. Here’s what I got from him.
- Insurance companies will just close down.
Well, after the collapse of the pre-need companies like CAP, Platinum Plans, TPG and many others which resulted to thousands of court cases and loss of investment for the policy owners, and their beneficiaries- who can blame them?Life Insurance however, is NOT pre-need. Also, a lot of the companies offering Life Insurance policies outside of the Philippines have a very good asset base, huge market capitalization- and the premiums are cheaper too compared to those being offered in the Philippines. So before you buy your Life Insurance policy, check first if the company you’re buying from is of good standing. Don’t just buy one from an agent because he or she happens to be your friend, or because the premiums are dirt cheap and offers very high coverage that even well-known companies are not able to provide the same. Keep this in mind, if it’s too good to be true, it most likely is. It pays to do your own due diligence
2. I don’t have a budget/ Insurance is Expensive.
If you think paying insurance premiums are expensive, you should take a look at how much will have to pay for your medical bills after you get hospitalized. Nowadays, folks back home can already avail of cheaper insurance called micro-insurance. Some companies even offer long-term insurance benefits coupled with long term investment for as low as PHP 2500/month which already includes free routine check-ups and consultation, as well as hospitalization cover between 50-100K a year. A good example of this is KAISER. Life insurance though is another thing, but what we need to remember is that when we buy Life Insurance, we do so because we want to make sure that those we leave behind will still be able to carry on with their lives in relative comfort, and not be left penniless or be left in debt. The proceeds from a Life Insurance policy can also be used to pay for the Estate Tax. Keep in mind that if you have assets, unless the required estate tax is paid, all your assets in the event of your death will go to the state.
3. It’s not my priority.
A lot of people don’t realize this fact about insurance- The older you get, the more expensive the premiums become. Why? Because Insurance is all about RISK! The older you are, the higher the risk of you contracting some sort of critical illness like those of the heart or liver and the less time you have to pay for your premiums until it reaches maturity. The insurance premiums of a 20 year old with PHP 1M coverage, is a lot cheaper than that of someone who is already in his mid 30’s. So the older you get, the more difficult it will be for you to get insurance because you’ll be put-off by the higher cost. If you’re a bread-winner, and your family does not rely on any other income, then you need to get insured as soon as possible. It should be one of your priorities as soon as you have a stable financial foundation. For parents, prioritizing Health and Life insurance is our God-given mandate and responsibility to ensure that even in the event of our untimely death, our family and loved ones will be left with enough provision for years.
“Now I am ready to visit you for the third time, and I will not be a burden to you, because what I want is not your possessions but you. After all, children should not have to save up for their parents, but parents for their children.” – 2nd Corinthians 12:14
4. I don’t get sick./ It will not happen to me.
Unless you’re from Krypton, a Super Saiyan or have amazing healing powers like Wolverine; you will DEFINITELY, at some point in time age, get weak, get sick and probably die. How many times have we read about celebrities who died at such a young age? Bruce Lee was the epitome of fitness, yet he died at age 32. Just recently we had a Filipina celebrity who died because of an aneurysm in Qatar. Back in 2009, I lost a dear colleague to Systemic lupus erythematosus (SLE). I don’t know much about the Filipina celebrity, but Bruce Lee and my late colleague both had healthy lifestyles, and yet they both passed away at such a young age. We can never be certain of what illness may befall us, or when our time is up, but we can always prepare for it. In 1994, the late former NBA Player, Manute Bol was left in financial ruin after he got injured in a car accident. Due to the impact of the collision, he was ejected from the car and suffered a broken neck. All his fortunes were donated to Sudan, and he had no health insurance. Insurance is all about preparing for the UNEXPECTED.
“It’s better to have it and not need it, than need it and not have it.”- George Ellis
5. I don’t trust your company.
With all the scams happening left and right, one would be prudent not to immediately trust anyone, especially with their hard earned-money. This is why it is very important for us to do our own due diligence. Just because the Insurance Agent happens to be our friend, brother, sister or neighbor; it doesn’t mean that we should immediately trust them. Not all insurance agents have their client’s or prospect’s best interest in mind. Some are only after the sales commission, and once you’ve bought the policy- POOF! “The number you dialed cannot be reached or is out of coverage area.”. In some cases, they will not even take the time of day to reply to your inquiries anymore. Some insurance companies on the other hand may be selling insurance policies that are dirt cheap but do not really have a good reputation or enough assets to pay for insurance claims. Again, do your own due diligence. Take the time to do the necessary research about the insurance company. If you’re buying insurance from a company in the Philippines, check https://www.insurance.gov.ph to check if they are legit or if there have been cases filed against them. There are also a lot of online resources to check the background of foreign or offshore insurance companies. Legitimate companies will be happy to share this information with you, and a trust-worthy insurance agent or financial advisor will always be within reach, and will tell you exactly what you’re paying for, and check first if you have the capacity to pay for the insurance you are looking for. A good financial advisor will ask you questions about your current situation, job, financial status, goals and reasons for wanting to get insurance and provide you with suitable options and advice to help you make an informed decision.
If you have any questions about Insurance or this post, please feel free to get in touch.