Dear Mommy Practicality - Getting A Life Insurance
When I was younger and already working, I used to get quickly irritated by Insurance agents botherin...
When I was younger and already working, I used to get quickly irritated by Insurance agents bothering me (bordering to sobrang kakulitan) to get an insurance from them. I was annoyed because I (thought I) didn't need one, that it's an additional expense and that I don't understand what it's for.
So much for my ignorance back then. I realized its importance when I was already in my 30s (ggetting insured is one of the things that should be accomplished by this time) I immediately got myself insured back in 2012 (after carefully studying each proposals sent.) I kept on saying to myself that I should have started when I was younger. But I believe that it's never late to start, the important thing is, I started and now I feel more secured.
That's exactly what our letter sender this week asked, let's read her short letter:
I'm planning to get a Life Insurance for me and my husband also a Health Insurance and for my son's future for his studies. Please if you can give an advice or ideas for all these matters..Thank You.
Dear Mrs. P,
There are plenty of insurance companies out there and they have plenty of product offers too. Don't rush in picking which one no matter how persuasive or persistent the agent is.
You also have to know the types of life insurances. First is the Traditional Life Insurance, where your beneficiary will get the SUM assured or amount of your insurance 's face value upon your death. Traditional life insurances may have riders or add ons, but it depends on you if you like to add pa, such as accidental death, critical illnesses, death due to murder, to name a few. Each insurance companies have different rider offers, most of them are really beneficial to the insured, but it clearly depends on you. The insured gets both living and death benefits.
Second type of life insurance is Variable Life Insurance, where there's an investment component. I highly recommend this type because you grow your money while you're still living. You also get both living and deat benefits. Your money is invested in equity funds or balanced funds or other types of mutual funds. It really depends on your investment risk appetite. This type also has riders, like health for critical illnesses, personal /accidental, murder, etc.should the insured pass away, the beneficiaries will get both the LIFE investment amount and Death benefits.
"The main difference bet Traditional and VUL Plans is that, the former offers fixed terms and guaranteed returns/benefits whereas the latter, is of the more flexible type and returns are not guaranteed." - Sheryll, from a reputable insurance company with 12 years experience
On life insurance payment duration, there is whole life (you pay as long as you live or up to 60 years) and there is exact X number of years (this type has a higher premium or payment due.) But lets say you got the variable life insurance, by 10th or 15th year of your policy, your investment yield is big enough to pay off your monthly /annual premiums.
Get as many insurance proposals first before finally deciding which one to sign for. This is like marriages, you are tied to it for life, unless you divorce it and lose all your investments, we don't want that right?
Study the numbers. Other considerations in choosing one are: sustainability to pay off your policies and not being delinquent, flexibility in modes of payment and riders, flexibility in add-ons to investment, getting from an established and reliable company, excellent service and of course trust factor in your agent.
When comparing insurance policies, some may offer you the same monthly/annual premium but look at the insurance's face value, the other one is way lower but agent will tell you that that's just for computation purposes and in actual, you will get this much. Please know that the insurance policy is also a contract that if something happens, you will only get what is guaranteed in writing and not what was verbally promised.
Start early, the mere fact your thinking about this is already a good sign of your financial literacy. As to companies, choose from the top companies: PRULife (this is where I got), SUNLife, Manulife, AxaLife, PhilamLife, and Insular life. Good luck!