Tuesday, 4 March 2014

MONEY MATTERS : 5 QUESTIONS TO ASK BEFORE GETTING AN INSURANCE POLICY

A little flashback: I was 8 years old when my mom got me an educational plan in the 90's, pre-need insurance plan was such a boom those days. Then years later, she got another for my Jay (my younger brother). By the time I entered college, we benefited from my plan. But unfortunately, Jay's educational plan was an epic fail.

Needless to say, it took me so, so, long before I decided to get my feet wet and consider availing an insurance plan. It was through my friend, Tara (of Chronicles of Vanity) that the story began. Allow me to share some questions a young professional may think about before signing your insurance policy.

What's my goal?
This is the universal question of life. Getting a financial product, such an insurance, is no exception. Most common misnomer about insurances is you have to be dead to benefit from it. I know, because that's what I thought all along. As much as there's so many coffee flavors, there's also different types of insurance plans. 

If you're single, you might be lured into thinking that you don't have dependents; ergo, no need. That's valid. But, what about some health benefits? God forbid but you have to be ready. Think of it this way: If you need to have a brain transplant today, do you have enough emergency fund to pull out and give to the surgeon? Insurances come into play in this scenario. You pay your premium and from Day 1 - you are covered with the entire coverage.
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How much can I set aside for premiums?
Admit it. There's no such thing as free lunches. Having said that, it's a fact that we need to set aside funds to keep our policy active and binding. Be realistic with what you can afford for now {or a better question is if you can afford one now}. At the end of the day, it is you who will decide whether to avail it now or later.

I hate to be a pooper here but it's funny that one can sustain an everyday-posh-coffee lifestyle without thinking about their long term needs that will surely come. I have a friend who decided to get one for Php 2,500 a month (this translates to Php 83 a day). Not bad, isn't it? 

Another misconception about insurances is one has to pay the premium for like, forever! This is not always true. Best to consult with someone in the know, which leads me to my next point.

Who will be my financial advisor?
It's imperative to confide to someone whom you can trust. Personally, I've been referred to Agnes (she's the lady in blue top). I've included this as a crucial consideration because it is your advisor who will answer all your questions before, during and after your policy. I find her knowledgeable and credible alongside her sunshiny traits. We've become friends ever since. She's also became my mentor. What I like about her is that she didn't push me into what I don't need. She answers my queries straight to the point and gives me workable options which I so appreciate.




How long should I pay?
A sequel on the how-much part. Pretty much like most products these days, insurances have evolved as well. Gone are the days when life insurances are to be paid until your dying day. Now, you have the option to pay for like 10 years and let your investment fund take care of the remaining premium dues. Again, it's best to explore your options with someone who knows what they're offering.
In fairness, there are so many insurance companies that offer an equally competent package. However, to me, I chose Sun Life because 1) They are number one in life insurance sector and 2) I find people working for the company trustworthy enough to take care of my hard earned money.



Do I want an additional investment?
Not sure if you've heard of Variable Universal Life Insurance (VUL). There's a technical definition about it, visit Investopedia HERE, but think of it as insurance with investment element. Say, you pay a Php 3,000 monthly premium - a portion of which will go to your insurance while the other portion gets invested in stock market, bond or money market instrument depending on your risk appetite. I availed this personally. I see it as a part of my asset diversification. 

Some Notes: This is NOT a paid advertisement of Sun Life. This is all about my personal experience. I hope you learned a thing or two on this post. Also, feel free to visit my write-ups on stock market, personal finance and other money matters experiences HERE. -CMK
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6 comments

  1. Hi ms. Kristine, may I know how can get a TIN? Have COL send you an email regarding this? Because I have receive one email from them that is telling me that they need to have my TIN. Unfortunately, I don't have one because I'm still studying. What should I do? :( please help me.

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    Replies
    1. Hello Dear! :) TIN or Tax Identification Number can be obtained from any BIR Revenue District Office (RDO). Anyone (even students) can get a TIN without any cost involved.

      I also received an email from COL about their request to update my profile with TIN. I think it has something to do with future tax requirements. It's requested but not mandatory (for now). Hope this helps. :)

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  2. VULs are a very big boom these days, since many Filipinos are looking for investments (in addition to your traditional life products). They're an excellent choice for people looking at both insurance and investment plans.

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  3. Hello Kristine! What term health insurance do you highly recommend for a single, less than 30 years old female?
    Thanks!

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    Replies
    1. @Sarj I have term critical illness from Sun Life. Not exactly a recommendation, but I could say that I have only good things to say about my agent and the company. Sun Life also has term life insurance which is cheaper than the critical illness. It is renewable and convertible if you decided to change it to permanent.

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  4. It is usually better harmless rather than sorry afterwards. There are lots of options for everybody around. You can go for a family insurance plan or an individual insurance plan; you can also go for a short-term or long-term plan.
    Smart Medigap Plans

    ReplyDelete

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