One of the most interesting - and sometimes controversial - financial instruments happens to be the one thing that most Filipinos do not have. Forget about how much money you have in the bank. Forget about the money you keep under the bed or on your piggy bank. Forget about your mutual funds, the money you invest in the stock market, and other instruments that help you make money work for you.
Sure, these things are such valuable financial assets for you and your family. I mean, they help much in achieving the goals you have and realizing your lifelong dreams. But what if you are just starting out with your job and little has been invested on these assets, and then something happens to you, that you get knocked six feet under with your most treasured people in the world - your family - looking down on you as you go ahead and meet your Creator?
If you have any of those financial instruments stated above (and I'm pretty sure you have, or else!), do you think the money you have right now is enough to give back to your loved ones? Do you think the money you have right now can give them the assurance that everything is going to be fine, financial wise when you are gone?
What am I really talking about here? Here's an example.
Juan works as a manager in a corporate business company that provides him with a quite impressive salary in a month. Still single at that time, he decides to make the most out of the money while saving not as much as you would expect from someone who receives a fancy paycheck.
Then he gets married. He has two kids. They are a happy family living in a nice home. Juan continues his managerial roles until he moves up to the corporate ladder. He helps spend for the family's basic needs, including the children's tuition fees, and still manages to save up a little for future expenses and emergency funds.
Until one day, a car accident left him in a critical situation.
Being part of a job that provides excellent employee benefits can surely come in handy. One of them is healthcare. Apparently, it reached a point that the health insurance provider for Juan's company has been depleted for his admission.
As the last few minutes of Juan's life came to a near end, he brings his wife and school aged children together beside and give them one last hugs and kisses. Then when it was time when Juan and his wife are alone in the room, the dying husband whispered to his worried wife, "I only have PHP 400,000 in life savings. I hope it's enough for you to send the kids to college."
When Juan makes his last gasp for air, the wife bursts out in tears as the love of her life passes away, and the children feel the same way. As the emotions pour out inside the room, the wife becomes concerned about one of her husband's last words.
PHP 400,000.
She thinks "Is that really enough for us? I mean, I have a stable office job, but is that all he can leave to us? My kids are still growing up and there are other financial matters that have to be taken care of."
Yes, the amount is not that bad. The question is whether that amount of money can sustain the surviving family members' daily expenses and future financial obligations. Even with the wife's stable job, it may not even be enough to live a comfortable life for the family without Juan, who somehow died too soon.
If there was just one thing that Juan should have acquired while he was still young, single, and independent, it had to be a plan that would safeguard all financial downfalls for the family in case of an inevitable death. Unless if he has been investing for a long period and millions have accumulated in those accounts, which would render it useless, there is no guarantee that his family will be well off financially even without him.
That one thing is life insurance.
Basically, life insurance is about delivering a promise to your loved ones that they are secured financially in the case of dying too soon without prior notice. By availing it at a reasonable and justifiable amount of money to be invested on a regular basis, the return upon your passing away is an amount of money suitable to keep up and maintain the family's standard of comfortable living. At times life insurance can be useful for you when you somehow live too long; its dividends accumulated or the investment part of the plan can be used to supply your financial needs during the winter of your life - retirement.
Life insurance has its many reasons why it can be so beneficial for you and your family, and why YOU should have a life insurance of your own. A lot of factors will have to be considered in choosing the right life insurance plan for you.
For the meantime, that is what life insurance can basically do for you. Are you familiar with Abraham Maslow's hierarchy of needs? Life insurance definitely goes along with the Safety and Security level of need (in terms of the financial aspect of man). And we'll get to that on the next post.
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