Due to some old misconceptions and lack of information, Filipinos traditionally have very little or no regard when it comes to the importance of having life insurance. In recent years, however, there has been a spike in terms of awareness in the Philippines borne out of massive information drives and campaigns initiated by both local and multi-national insurance companies. Insurance agents have also evolved from being salesmen to Financial Advisers and Financial Planners, individuals who are trained to give professional advice on financial matters. Although market penetration rate is still relatively low as compared to other countries, these are all very good indicators that Filipinos are now beginning to accept and understand the concept of life insurance.
Having said all of these, why do you really need to get insured? The following reasons will tell us why:
1.) It is the basic foundation of a sound financial plan
According to Investopedia, a financial plan is a comprehensive evaluation of an investor’s current and future financial state by using currently known variables to predict future cash flows, asset values and withdrawal plans.
Looking at the illustration below, we can see that Wealth Protection is the most basic and primary element of the Financial Planning Pyramid. It is unwise to proceed up the next level (Wealth Accumulation) without first protecting ourselves through Life Insurance coverage. Failure to do so can result to dire consequences. I presume we have heard some unfortunate but true stories involving some families who literally had to sell all their properties then eventually incurring enormous debts when coping with unexpected emergencies, such as putting up a huge amount when the breadwinner of the family, say the father, was diagnosed with a critical illness and needs to be hospitalized. Such scenario can be avoided by getting ourselves insured the moment we get our first paycheck.
2.) It will ensure income continuation for your loved ones
Proceeds from life insurance can help the surviving members of the family to continue to enjoy the same standard of living even when the breadwinner is already gone and unable to provide for them. The children, for example, do not have to stop from going to school due to lack of funds and can continue to pursue their dreams of finishing their studies. It will also give the family some form of cushion that will allow them to recover and move on in life.
3.) To pay off debts and other expenses
Upon death, your family will most likely shoulder the burden of having to pay off your loans from the bank, the amortization of your house and car, etc. Hospital bills and funeral expenses should also be taken into account. Getting a life insurance will help take care of these things because you will be leaving your family an assured sum that they can use in settling these obligations.
4.) To leave an inheritance
It is written in Proverbs 13:22 that a good man leaves an inheritance for his children’s children. The beauty of having life insurance is that it can be used as a tool to provide inheritance not only to your children, but also to your grandchildren. Life insurance can span several lifetimes making it possible for your family’s next generations to still reap the fruits of your hard work.
5.) To bring peace of mind
It should be both an awesome feeling and a great relief to have an assurance that whatever happens to you, your family’s well-being is taken care of. Having life insurance and protecting your family brings a sense of peace in your mind that will help you focus on other important matters.