life insurance; how is that working out for you?

i am so like my father in so many ways.

where we differ, however, is on how we look at the impending uncertainty of death. for father, conversations about life insurance is tantamount to talking about people actually dying. though, he is like every other people i know; life insurance is that one ugly maiden no one seems interested in paying for a premium.

i have one life insurance policy and a number of term life policies you would think my days are numbered. and i have my purpose for it; when i took those policies, my discipline on savings is pathetic so i needed a product that will force me into setting aside money. the crazy thing about insurance policies is that they are almost worthless if you prematurely stop paying for the premium. the idea of losing what i have already paid continuously give me that urgent force to make sure i do not make any single insurance premium to lapse.

looking back at it now, i know i could invested my money into another financial vehicle and would earn twice or thrice what i would eventually get from my insurance policies. but the thing is, insurance are not supposed to be viewed solely as investment vehicles (they really are not designed that way). you do not take a health insurance to earn money from it; you carry a health insurance to protect you from sudden medical expenses that you otherwise would have to pay from your own pocket. life and term insurance are the same; you do not put your eggs there and depend solely on that for your extra $$$ when you grow old or die or get disabled you cannot earn your normal source of income anymore. you take a life insurance policy to protect the people dependent on you financially.

and so, that was what i did.

so, when a financial planner from one of the banks i used offered a VUL (Variable Universal Life insurance) product to me as an answer to where i want to put my extra money, i told her i really do not want to pay for another life insurance policy anymore. she insisted that it was better for me to put the money there because not only do i get the flexibility to invest it in equity or bonds or money market, i also get an insurance coverage along with it. i firmly told her i believe i have put aside enough funds for my insurance policies i would rather concentrate on capital growth this time around. she insisted- as if her life depended on my saying yes- that VUL is better than putting my money in a time deposit and that it is also better than putting money in mutual fund or UITF too because there is also an insurance that comes along with it. i pointed out to her that the insurance rider is not free; she insisted it is. unfortunately for her, i am a certified life insurance broker so i know all about the shit she was throwing at me.

do i believe insurance should be something every parent or breadwiner should set aside funds for? unless you are filthy rich then yes, absolutely (ironically, it is the people who have enough money to burn that sees the real value of having an insurance). how much life insurance coverage should one get? a lot of insurance agents would tell you to get a coverage equal to 5x to 10x your annual salary. kind of crazy, isn’t it? i’d say, get a coverage you can afford even if you lose your job next month. the worse thing you can do is get a Php10MM term insurance coverage and let it lapse in a year’s time because you couldn’t sustain the payments.

as for me, i have reached my limit for the amount i want to commit for my insurance premium. Now that i am in my 30’s, with my emergency fund intact and Grape’s college tuition all prepared for- i’d love to take a little bit of risk and work on growing my money. i could only work for money long enough, it is always a good thing to start making money work for me.

and hey, maybe someday when i get rich, i could splurge on a business class Round the World trip with Grape!


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