Why life insurance is one of the most important investments that anyone can make
For many Filipinos, the thought of why life insurance should be prioritized can be daunting. Still, it’s essential to understand that it can provide financial security for your loved ones and help with estate planning.
In this blog post, I’ll discuss the benefits of owning insurance, its different types, how it works, who needs it, and why it’s essential to consider having adequate coverage.
Life is unpredictable, and it’s essential to prepare for the unexpected.
Whether it’s to protect your family’s future, pay off debts or loans, or ensure that your business continues to run smoothly, an insurance policy can provide a safety net that can protect against financial difficulties that may arise.
With the right life insurance policy in place, you can have peace of mind knowing that your loved ones will be cared for in case of your unexpected death or disability.
Also, some types of insurance policies also provide other benefits such as tax advantages, cash value, savings, reimbursements, and many more.
Let’s delve into the various benefits of having life insurance and the different types of policies that you can choose from.
Benefits of Adequate Insurance Coverage
There are several benefits of having life insurance, and these benefits extend beyond the peace of mind that it provides.
One of the most significant benefits of life insurance is that it can provide financial security for your loved ones.
The payout from a life insurance policy can help your beneficiaries pay off debts or loans, cover final expenses, maintain their standard of living, and continue to chase the dreams that you have for them.
Life insurance can also be an essential component of estate planning.
With a properly designed life insurance policy, you can ensure that your loved ones receive the financial support they need to carry out your wishes in case of your death
Additionally, a life insurance policy can help your beneficiaries pay estate taxes and avoid having to sell off valuable assets to pay for them.
Another benefit of life insurance is the tax advantages it offers.
The payout from a life insurance policy is generally tax-free, which means that your beneficiaries won’t have to worry about paying taxes on the payout.
Additionally, some life insurance policies can provide savings growth on the cash value or investment component, which can help you save for your retirement.
In AIA Philippines, insurance policies can have additional riders that will give you Daily Hospitalization Allowance, Accident Reimbursements, Disability Coverage, and even exclusive Health & Wellness Rewards for simply living healthy!
Types of Life Insurance Policies
Here in the Philippines, there are different types of life insurance policies that you can choose from.
The three main types are term life insurance, whole life insurance, and variable universal life (VUL) insurance.
Each type of policy has its own set of advantages and disadvantages, and the right policy for you will depend on your specific needs and goals.
Term life insurance is the simplest and most affordable type of life insurance policy.
It provides coverage for a set period, such as 1 year, 5 years, or until age 65, and pays out a death benefit if the insured dies within the coverage period. Term life insurance policies do not have a cash value component.
Whole life insurance is a type of permanent life insurance that provides coverage for the insured’s entire life (which is technically up to age 100).
It also has a cash value component that grows over time and can be loaned or used to pay premiums.
Variable universal life insurance is another type of permanent life insurance that provides more flexibility than whole life insurance.
This type of policy allows you to adjust your premium payments by doing top-ups which can affect your death benefit amount over time and also add to your savings fund associated with your policy.
How Does It Work?
Life insurance policies are contracts between the policyholder and the insurance company.
The policyholder pays premiums to the insurance company, and in return, the insurance company provides a death benefit to the policyholder’s beneficiaries if the insured dies or gets disabled within the coverage period.
When you apply for a life insurance policy, the insurance company will assess your risk based on factors such as your age, health, occupation, and lifestyle habits.
The insurance company will use this information to determine the premiums you will pay for your policy.
Generally, the healthier and younger you are, the more economical your insurance payments will be.
Computing the amount of coverage you need will depend on several factors, including your income, outstanding debts, number of dependents, and lifestyle.
It’s important to choose a coverage amount that will adequately provide for your loved ones’ financial needs in case of your unexpected death or disability.
Who Needs Adequate Insurance Coverage
Life insurance is essential for anyone who has loved ones who depend on them financially.
This includes parents with young children, married couples, young professionals who are supporting their parents financially, and anyone who has outstanding debts or loans.
If you have children, your insurance policy can provide financial support for them until such time that they are already independent and set for life.
Additionally, if you have a mortgage or other outstanding debts, the proceeds of your policy can help ensure that these debts are paid off and that your loved ones would not carry the burden of paying them off out of their own pockets.
Business owners also need to consider life insurance as a way to protect their business in case of an unexpected death.
It can help ensure that the business continues to run smoothly and that business partners or key employees are taken care of.
Don't wait until it's too late
Life insurance is an essential investment that everyone should consider.
It provides financial security for your loved ones, offers tax advantages, grows your money, develops savings habits, and can be an important component of estate planning.
There are different types of policies to choose from, each with its own set of advantages and disadvantages.
When choosing a life insurance policy, it’s important to consider your specific needs and goals.
If this is your first time considering life insurance, download my free e-book specially made for first-time life insurance buyers like you.
Don’t wait until it’s too late to consider life insurance.
Start exploring your options today and take the necessary steps to protect your loved ones’ financial future.
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