We often heard people saying negative things about life insurance. I myself as a Filipino grew up with the mindset that insurance is not important and always skeptic about the benefits it could give to an individual. Most Filipinos perhaps have the same mentality that’s why many do not invest time and money in life insurance rather would prefer saving their hard earned money in banks to earn interest which by the way only 0.5% at most. For many, saving in the banks is one of the most secure and effective way hoping that when the time comes their saved money would have grown to give security and protection for themselves and to the people whom they treasure.
Skepticism or having a skeptical attitude is good in some way or scenario since it gives you the ability to doubt and start to question which leads to answer. But being skeptic forever without seeking for probable answer especially about life insurance will cost more that will hurt financial needs in the long run. The lack of answer to educate and gain financial literacy limits the individual from knowing on what is the right approach which probably the reason why many Filipino neglect the idea of being insured or having the insurance they need to secure their future. Some common doubts about life insurance that keeps Filipinos away from getting insurance protection are:
It is just a waste of money
Many believe that insurance is just a monthly expense that doesn’t give anything. Insurance only becomes a waste of money ONLY IF no proper orientation about the different types of plans is selected. Choosing the right insurance based on the individual’s needs is the key to avoid inappropriate payment of premiums that is not required. Determining the need before engaging is important since you can identify which is suited to the person being insured. You don’t need a plan that will cover you with millions of protection if you only have limited budget to pay for the premium. The end result could be terminating the plan prematurely due to lack of budget to supplement the premium thus incurring insurance at loss. It is like taking too many foods that is hard to swallow thus ending up into waste.
Nowadays, insurance companies uses a different approach that is need-based driven to offer life protection plus the addition of investment known as Variable Life Insurance. Its flexibility is so attractive which can be adjusted according to the individuals future needs and capacity thus making it more convenient to almost everyone.
Insurance companies is not secure and safe
There are a number of insurance companies in the Philippines and based on the 2013 Life Insurance Companies ranking, there are a total of 30 listed but of course others are not accounted on the list. It’s true that in some instance insurance companies closed due to mismanagement and lack of financial capability to sustain the drastic changes in economy. I myself was a victim of such situations where the insurance company – Permanent Plans closed after it filed for a corporate rehabilitation or should we say bankruptcy.
Nevertheless, not all insurance companies are the same. Some of them already had gone through tough times and proved that they can stand the test of time on whatever the situation may be. Some companies for example already survived World War 2, People Power Revolution in 1986, endured several economic crisis globally and locally. Yet, they still exist to serve the needs of every Filipino.
To clear doubts and have the feeling of confidence with insurance companies, one must do some research. The quickest way to determine if the company is stable, reliable and trustworthy is by simply checking the insurance commission website at www.insurance.gov.ph. As recommended, it is best to look for the top five (5) best performing company and narrow it down by choosing which one is more appropriate based on the needs.
I have sufficient income or my business is doing well
Having regular income from salary or a business that provide a constant inflow stream of money is sometimes also the reason why Filipinos are not investing in insurance. This negate the other reason where the lack of budget is what pushing them out to get one. The reason behind is having the constant stream of money gives them the comfort and confidence that they don’t need any insurance for future needs considering that they have the source which for them is more than enough.
Being comfortable at something especially for work or business is dangerous. Remember that nothing last forever. Your work may be giving you all the perks and benefits including high salaries today but you can never tell tomorrow. Same with businesses. Even how stable the business you have, don’t’ expect that it would last. There is no exception. There will come a time where business couldn’t keep up with the change and worst case could end up collapsing.
The best approach while you have other sources of income or you still have a stable job, is to use your excess money to diversify. Learn the different investment opportunity and make room to understand life insurance which is the foundation for future protection.
There are still many reason which others can share aside from the mentioned list and some might be able to argue about it. Nevertheless, the main idea can simply be answered with right education to gain financial literacy and better yet consult a qualified financial planner or adviser to ask for guidance.
Photo Credit: cfmins.com
About the Author:
Harold Candelaria is a technology consultant working in a corporate IT service provider company. At the same time a financial advisor and the founder of Klikdito.ph. He’s a tech-savvy and at has interest in different financial investments and instruments.