I remember the first time when a financial advisor tried to introduce life insurance to me. I immediately cut off the conversation for it reminded me of my death. The idea of dying scared me. Then I met another insurance agent. I remember him asking for ample time to discuss my finances. Because he’s a friend, I agreed to meet him. In our meeting, he introduced to me his company, highlighting its achievements and many years of operation. Then he proceeded to analyze my finances. I raised queries much as I answered his questions. Later, he offered me a product that he believed was very right for me to consider. I said “No,” for I could not appreciate its importance.
Like most people, I was not really a fan of insurance. This was my mind-set, until I got fascinated with the idea of financial planning. As I acquired more knowledge, my attitude changed. I would now listen to financial experts, including the ones I rejected before —financial advisors stressing the importance of life insurance.
Here are the things that I consider as barriers in appreciating the value of life insurance. We must get rid of these and try to change the way we think.
1. “I don’t believe in life insurance.”
“I don’t believe in insurance. Life insurance is not a need for the living. I have money to sustain my living and my goals.”
True enough, life insurance is perceived to be intangible. And because people mostly appreciate the things that are seen, that which we can use and enjoy, life insurance is widely believed as “not needed” in our society. In effect, we are only forced to see its significance and importance when death comes. We only appreciate its worth when disability strikes. We will be thanking it for its usefulness when critical illness hits. While premiums tend to be a long-term outflow in your budget, it will serve as a protection while you are saving and investing for your goals in life. You may be able to sustain your status with your current source of income, but when contingencies happen, how prepared are you? You must believe in life insurance. It is one of the foundations of your financial well-being.
2. “I will not earn from insurance.”
“I am paying premium for years! I can’t imagine myself being able to sustain this payment for a long period of time with nothing in return, unless I die! You are just making more money from my hard-earned money.”
Life insurance is a need, because death is certain. While it is certain to happen, however, nobody knows when it will happen. If your whole family depends on you financially, it may cause them not just emotional but financial trauma when that which we fear the most happens. This might impede the long-planned dreams you have set for them. Insurance companies, through their financial advisors, are trying to help fill and secure the gap between the present and the future dream. This is what they are trying to make us fully appreciate, yet we keep resisting the inherent value of life insurance. Certainly, you are not throwing away a part of your income for nothing. Some products can give a guaranteed amount of money after certain years of regular payments. Others have fund value depending on the performance of the fund where they are parked. Some offer add-ons like hospitalization benefits, apart from death benefits. And here’s what you should realize, you are, in fact, paying less for more both in monetary and intrinsic value!
3. “It will go bankrupt!”
“Insurance companies will cease to exist just like other companies!”
The Insurance Commission strictly supervises insurance companies. Huge amounts of assets are needed to establish a life-insurance company, as this involves an immense business risk. You might have heard issues in the past about claim difficulties and even bankruptcy. Thus, you must be very vigilant in choosing a life-insurance company, including the advisor. You must also distinguish a preneed firm from a life-insurance company. Many of them have been operating for years. Always remember, the very foundation of it is trust.
There are obstacles other than the points listed above. While you walk in that path toward the many aspirations you have in life, do not forget the basic financial necessities you must have. To keep a strong tree while bearing plenty of fruits, you must protect its foundation. This is the role of life insurance. When a storm strikes, your financial tree is protected.
That’s why the need to change your mind-set.
Don-Don Crisostomo is a registered financial planner of RFP Philippines. To learn more about the essentials of personal financial planning, attend the 49th batch of registered financial-planner program from August 22 to October 10. For more details, inquire at email@example.com or text <name><e-mail><RFP> at 0917-3464126