Why Do You Need Life Insurance – Part 2

This is part two of a two-part series where we shall be tackling the reasons why you should get your life insured and how it could secure yours and your family’s financial future.


Sickness, Accident and Disability Coverage
Does your family have a history of hereditary critical illnesses like certain type of cancers? Many insurance plans include add-ons, otherwise known as riders, that offers coverage not only on your life but during SAD (Sickness, Accident and Disability) events. These add ons usually give lump sum payouts once you’re diagnosed with critical illnesses or encountered accidents and you would need substantial amount of money to pay for hospital and therapy expenses. Critical illness benefits usually already covers a wide range of illnesses like common cancers, kidney failure, loss of hearing or sight, heart diseases, etc. A total disability rider could also already cover your insurance charges on times when you become permanently disabled and could not afford to pay for your insurance premiums, you don’t have to continue paying anymore but still be insured. I know it’s hard to talk about topics like critical illnesses and disability but this is important as this would give you PEACE OF MIND and would provide your family the FINANCIAL HELP just in case events like these happen. It’s always BETTER TO BE PREPARED.


Your Children’s Education
Once of the joys of being a parent is being able to send your children to school.
College tuition fees and other miscellaneous expenses increase every year and many of the parents of college-aged children struggle to keep up. Well you don’t have to struggle anymore as many insurance plans already enable you to start investing early for your children’s future. There’s a type of insurance plan, VUL or Variable Universal Life, that is already tied up with investment and I strongly suggest that you get yourself one for your children’s college expenses. Basically, what this policy does is it set asides a part of your premiums to invest, this investment may grow to a significant amount that would help in your child’s education expenses. What if something happens to you before your child reaches college? Because this plan is still life insurance, the insurance proceeds will help pay for your child’s education.
So what you’re doing here is MAKING SURE your child gets through COLLEGE.


Forced Savings
Because of your so many priorities and wants, most of the time investing and saving take a backseat. As mentioned above, a VUL or Variable Universal Life is an insurance+investment combo which not only could provide financial coverage during untoward health events and death but also forces you to set aside of your earnings into an investment fund. The key word here is FORCED. The amount that you would otherwise spend in things that you don’t really need as diverted into investment that could help you in the long term. It’s the gift of FINANCIAL FREEDOM to YOUR FUTURE SELF.


You can’t work forever.
After decades of the tiring daily grind, the last thing you’d like to worry about on your first day of retirement is how to survive for the rest of your life because you don’t have anything left in the bank. Go on a trip out of town or out of the country, take a walk in the beach or just lounge around all day, your call because you started early with your VUL policy you have enough to get through retirement and still a lot in excess to enjoy the fruits of the dozens of years of hard work. It all comes down to what you want to do, spend everything today and have nothing during retirement or start the habit of investing and look forward to a happy life when you retire.

You don’t have to start big. As small as 1500 a month or that’s 33 a day for only 10 years, you could already insure yourself and invest! Your investment could grow to 1.4 million pesos when retirement comes. (Computation is based on a policy for a 30-year old female with 700,000 life coverage with Accidental Death Benefit with Total Disability Benefit and premium payments for 10 years and with 10% annual investment increase (growth varies and not guaranteed), actual computation may differ due to certain factors such as but not limited to age, gender and health conditions).

Are there anything discussed in this post that you could relate to?
Do you need help in starting your journey towards financial security?
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Why Do You Need Life Insurance – Part 1

In this two-part series, we shall be tackling the reasons why you should get your life insured and how it could secure yours and your family’s financial future.


Income Continuation
When you are a working parent with children dependent on your income or still single but the family’s breadwinner, you can’t afford to die. Well, unless your life is insured. In your absence, the income that your family is totally dependent on will stop and that’s when your life insurance proceeds kicks in. For example, if your dependent’s expenses is about 20000 pesos a month, a 2 Million life coverage will provide for them for over 8 years after you’re gone! That should give them enough time to emotionally recover from your demise but shouldn’t have to worry about the financial setbacks of you going away.


Mortgage Redemption Insurance
Most banks require you to purchase MRI or Mortgage Redemption Insurance equivalent to the loaned amount before they release the loan proceeds. This is for the bank’s and your beneficiaries’ protection in the event of your demise. The insurance proceeds will pay out the remaining payable loan and will enable your beneficiaries to transfer the house/condominium in their name without the burden of taking over the loan payments.


Estate Tax
All the properties and other assets, including cash deposits, you’ve accumulated throughout your lifetime don’t just get transferred under your family’s name after you die. They have to pay the government estate taxes equivalent to up to 20% of the total estate that you left behind. You beneficiaries may be able to immediately claim your insurance proceeds and use them to pay for the estate taxes. In the absence of life insurance, your family must shell out the estate taxes on their own and may be forced to sell assets at a discount just to raise the required tax payment.