Money Matters

Three Timelines to Reflect on Before Getting a Life Insurance Policy

Financial literacy plays a major role in outlying life stages planning.  It is always applicable to different phases of life may you be a single professional, getting married, already has a child, or is planning for retirement.

As a licensed Financial Advisor, my advocacy is to disseminate my learnings in terms of finances to people who don’t know where to stack their money and help them realize the importance of planning for their future.

Just to give you a brief background, prior to joining PRU LIFE UK, I have worked in the Credit and Collections Industry both for end consumers and business to business clients. I have seen the ugly side of indebtedness. I have negotiated with consumers who are crying because the interest rates have reached its threshold and don’t know how on earth they are to finalize their delinquent account.  I can definitely say that I have flipped both sides of the coin and negotiated for debt consolidation and at present negotiating for savings in the future.

Why are people reluctant with life insurance policies?

Risk…it is an inevitable factor. I noticed that most Filipinos have stigmas when it comes to risks and is very much risk averse. I am not sure if this has been contributed by bad experiences from Insurance Agents or Pre-Need Insurance companies that became insolvent. As most businesses believed, risks are okay, as long as these are not impulsive risks but rather a calculated one which requires planning or contingency. Risks can be reflected on for us to be able to come up with the most suited solution and carry on for a life stage planning.

So why is it important to secure an insurance policy?  What’s in it for me?  We know that life is packed with a series of unfortunate events and we just simply have to be ready for that.  Our solution lies on three timelines we need to reflect at…

1. PAST  –  Ask yourself, have I learned from the past mistakes I committed in terms of handling my finances?

If I have fallen into debt or my parents had, what takeaway lesson can I get from that? Or, if I have seen in the past people who became successful in being stewards of their money by prudently saving and thereafter leaving a chunk of inheritance to their loved ones.

2. PRESENT –  Assess your current financial situation.  Am I trying to make both ends meet at the moment and how long will I have to endure this same situation?  Will my present situation be the same situation I’ll be in the years to come?  Maybe you’re saying to yourself, “Nah, I cannot spare some money to obtain life insurance”, but the decision lies at hand in the present circumstance.  If I do not decide today, I’d wake up with the same situation. As Einstein has put it, doing the same thing over and over again is insanity.  You know you dream of being stable financially, in your heart, you want to also have your own savings, a money where you can get any time when you want to secure a house or a car or something that can be utilized for you when emergencies arise.  The decision is NOW.

I think the usual problem is we want shortcuts.  We loan the things we want to obtain and the consequence is it adds up to our burden because we have another financial obligation.  What if, you decide now, to discipline your spending and delay some our your material gratifications. Also, saving a huge chunk and realizing it’s something you cannot maintain, is other pitfalls.  There are low premium insurances available that offers cash value in 5, 7, 10 or 15 years to pay.  The most essential thing to look at is the amount you are committed to set aside and know in your heart that it will not lapse or be a burden to you.  I am a firm believer that any number multiplied by zero is zero, therefore, it doesn’t matter how much you set aside, as long as you have a definite number as your multiplier, then you can save and grow your money.  Just only keep in mind, the higher the risk, the higher is the return, and the lower the risk, the lower is the return.  Anyways, what matters is the multiplier.  You can start from small and gradual steps that’ll lead you to financial wellness.

3. FUTURE –  Most people I believe are too caught up in the present situation that they fail to envision their future.  I know it may sound a little dramatic if I ask you to just relax a little, take a deep breath, close your eyes, and think of the things or situation that you see yourself in the future.  Sure nothing is definite in life, but seeing your future is like having a compass on the difficult circumstances you’d like to someday leave behind and to be able to enjoy life worry free.

I’d say, think of the things you’d like to possess for yourself or for your family.  Make it specific.  I know the SMART goal setting is a cliche and I am not going to dwell much on that.  I’d like to put it as simple as just writing a specific thing or situation you see yourself for the years to come and the timeline as to when you’d like to obtain it.

Write if on a whiteboard or a small piece of paper to remind you that it’s something you desire to happen. It could be as simple as this example…

Future Plan:  In 5 years, I would like to have some money available for me to be able to buy my own car.

But, plans go hand in hand with your specific commitment.  I may need you to write that down too.

Commitment:  I will obtain a Variable Life Insurance plan for 5 years and set aside 3,000 monthly.

Note that these are just examples and your future plan and commitment should not be templated at the same amount as this one.  Always bear in mind that it should be depending on your financial capacity and a real Financial Advisor will also be happy to make this assessment for you and help you with the right financial planning.

So, you can give it a try and as another piece of advice, it is best to first go to the insurance commission website and research on the most stable insurance companies, that way you know that your money is being taken care of properly.  Or you may download this PDF file for reference.

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Three Timelines to Reflect on Before Getting a Life Insurance Policy

JK is a Licensed Financial Advisor with Pru Life UK. In the past she worked in the Debt Recoveries industry (Credit Collections and Credit Investigation) for both end consumers and business to business for two years. Her advocacy is to help people in financial management in terms of saving for the future, lifestyle assessment, debt consolidation, and budget friendly travel trips.

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