When you hear the words ‘life insurance’? What does it mean to you? Does it mean an additional expense on your budget? Or does it mean a product for your financial security?
I was offered several life insurance products before but admittedly I declined because as most people, I thought it was just an expense. This was my notion not until I took the licensure exam from Insurance Commission and became a financial advisor myself that I learned the importance of life insurance.
In most cases, people would either live too long or die too young. Both needs to be addressed in terms of financial security.
When you die too young, your dependents will suffer especially if you’re the breadwinner of the family. They will lose the major income earner which they depended for many years. Aside from the hard time coping for your loss, they will also have a hard time coping for the expenses of the family. So how do you make sure that the financial needs of your loved ones will be taken cared of when you suddenly pass away? The answer is life insurance.
Consequently, when you live too long, you need some retirement funds to address your needs when old age comes. Nowadays, Filipino men have a life expectancy of 68.72 years while Filipina women are at 74.74 years. When you live that long, you would need some funds to address your needs most especially your health. You don’t want to be a burden to your sons and daughters when that time comes. So how would you address this need? The answer is investments.
Variable Universal Life Insurance or VUL
Life insurance has evolved to address the needs of dying too young and living too long. And this is where Variable Universal Life Insurance or VUL comes into play.
This is a type of permanent life insurance that pays the death benefit to your beneficiary when you “die too soon”, but also has an investment component just like a mutual fund that generates income and builds on cash value which you will receive if you “live too long”.
A win-win situation right? To understand more about VUL insurance products, Pesos and Sense made an educational video below:
VUL insurance products have been designed to come up with riders to protect more of life’s uncertainties. Upon studying some of them in detail, I can say that the most important are the accidental death benefit, the critical illness benefit, and the hospital income benefit.
Accidental death benefit doubles the face amount that the beneficiary gets when the insured dies due to accident.
Critical Illness Benefit gives additional benefit the moment when insured contracts any of the 36 diseases listed as critical illness. This will be a big help on medicines and hospitalization expenses.
Hospital Income Benefit gives additional 2,000 per day when insured gets confined in a hospital due to sickness or injury.
The Best Time To Invest in Insurance
As with most investments, TIME is the best ally and the most important factor in investing in life insurance. The younger and healthier you are, the lower your premiums and the more time for the investment component of your insurance to grow and build cash.
Dying young or living to old age, we need money in both cases. Life insurance is the only product that we need to have when we don’t need it because we can’t avail it when we already need it. It’s like an umbrella. You don’t need it not until it starts to rain but if you don’t have it with you when it’s already raining, its too late to go home and get it.
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