On Avoiding Insurance Plans

At an event where we were offering insurance products, we noticed how people were quicker to get in line at a bank that offers a credit card than to drop by ours. I don’t blame them. I would have done the same back when I wasn’t very aware about the consequences of owning a credit card. Yes, it’s very useful for booking flights or doing cashless transactions. However, I’ve learned that spending what you haven’t earned is not a very wise way to manage your finances.

In the same event, my fellow insurance advisor pointed out how people are quick to buy an insurance for their car, but not for their own life. True enough, it’s a wonder how people can value material things enough to protect them but are hesitant to invest in protecting their own.

But, why are some people adamant to get a life insurance? I guess one of the most common reasons is because of the Filipinos’ perception towards death. We dread death, and some may feel that mentioning it before it happens does not result to any good. However, one inevitable event in life is death, and not talking about it doesn’t really stop it from happening, right?

Another is because of failed insurance plans back in the 90s. People are too scared of not reaping what they sow when the company goes bankrupt. However, it is unlikely to happen for huge insurance companies nowadays as they regulated by the insurance commission, making sure that they can fulfill their promises to the policy holders.

Now, I can’t help but think about the missed opportunities of getting insurance policies just because of these fears or misconceptions. I can’t help but think of how we struggled to produce cash when we buried my grandfather. I can’t help but remember how difficult it was for my friend to produce cash to pay for the piling medical expenses due to the hospitalization of his father. I can’t help but regret all the years I should have invested in money-generating vehicles instead of on clothes that I’m not even able to use now that I’m not allowed to go outside.

I guess it’s really hard to spend money on something intangible. It’s hard to put your trust on a concept or an assurance. It’s hard to use your hard-earned money to buy products you may not even use in the near future. If you’re having these thoughts, then let me help you think about why owning a life insurance is always a good idea.

1. There are various providers to choose from. This is a good thing because you know that the industry is thriving and won’t fail you when the time comes that you actually need the benefit.
2. You’re guaranteed a return of investment. You’ll get your money back one way or another. It’s either you get it through investments and benefits or your designated beneficiary will get the funds should the inevitable happens to you.
3. Your family won’t have difficulty accessing your benefits in case of your early demise. There’s no need for a last will and testament or a estate planner as the benefits will go to your designated beneficiary without question. Any other investment vehicles (savings account, mutual funds, stocks) won’t make it this easy for your beneficiary, and they may sometimes even need to fight over who’s the rightful recipient.
4. You have an opportunity to invest in the stock market. Through variable funds, you have an opportunity for capital appreciation without the needed stock market trading skills. The fund managers of life insurance products work hard to grow your money as this also means a growth in the company’s profit. Of course, if you also want to control how aggressive you want your investment to be, there’s an option for you to choose from the bucket funds based on your investment appetite.
5. It’s sooo easy to open one. Due to the pandemic, most insurance companies have taken the business process online, so you’re just one zoom call away from getting the right product for your needs.
6. It’s cheaper when you’re young and healthy. Insurance costs increase by age and are increased even further by existing health conditions. This is why it is best to get a plan during your prime years. You get to start early and pay less for the same benefits.
7. You can use the funds for various purposes. Do you want an additional medical benefit? Get a life insurance with a health rider. Do you want funds for your children’s education. Get an education builder type of life insurance. Do you want to accumulate funds for future big expenses? Get an investment-focused life insurance. It’s available for all life stages, and you can get as many as you can while you’re qualified.
8. There’s flexibility and access to your money. Do you need funds to purchase a car? You can make a withdrawal from you policy. Do you want to increase your investment? You can make top-ups to increase your portfolio value. Do you want to end your policy prematurely? You can definitely do this. However, it is always recommended to keep your policy in force for 3-5 years, so the withdrawal charges will no longer apply.
9. You don’t have to guess how much you’ll be paying. Insurance advisers can give you free quotes or estimates, and you don’t have to buy if your not ready. You can also request to adjust the benefits/ costs until you find the right product that’s within your budget. Pro tip: Get quotes from various providers with similar benefits and compare the pricing. You’ll definitely feel better about your choice.
10. They are low-maintenance investment vehicles. You don’t need to check on your policy daily. You also don’t have to worry about changing your investments according to the market conditions. There are funds available that automatically switches from the aggressive model to the conservative model based on market volatility, and you can opt for this fund type if you prefer this strategy. You can also consult your insurance advisers anytime for help.

Yes, I sell life insurance products. I sell them because I believe that every Filipino should have them. If every Filipino is insured, no family’s finances will crash because of a sudden disability of the head of the family. Children won’t have to postpone their education due to financial challenges because their parents have prepared for it. Orphaned children can be supported even after a parent’s passing. Families won’t have to break the bank to pay for medical expenses should sickness come.

I guess the one reason why some turn their backs on life insurance policies is because they don’t think it’s a good use the money they have worked hard to earn. However, we have to realize that life is unpredictable, and the only thing that’s certain is death. So, it’s good to invest in life, as well as the uncertainties of life. We don’t escape the inevitable just because we don’t think about it. But, we can be future ready if we think about it NOW.