Over time, having been exposed in the Insurance industry (both life and non-life insurance) since 2001, the valuable experience helped me determine the types of insurance that one should have in life.
Just what is Insurance? It is basically a thing that provides protection against a certain risk. And you get this form of protection by paying a certain premium to the company that guarantees this compensation for a specified loss, damage, illness or even death.
Here are the basic insurance types that one should have.
1. Life Insurance.
Financial Planning suggests that one should have adequate protection before even venturing further into the higher path of financial planning which is wealth building and estate planning.
Any person needs life insurance to ensure that your family or loved ones will be protected “temporarily” from emergency expenses like death. Life insurance exists to mitigate the cost of dying and the loss of income, not to mention taxes.
2. Health Insurance.
Next to life insurance, we need to protect our health. Health is wealth as they say and preventive is better than cure. But in life, you will always have to deal with uncertainties and one of these is getting hit by a critical illness. If you were hit by one major illness, how then can you have the capacity to work and earn income? Most people, esp the employed, depend so much on HMOs or health maintenance organization. This type of benefit provided by some companies enables the employee to go to any accredited clinic or hospital to receive consultation or medical treatment from accredited doctors without paying cash (the HMO card addresses that). The problem with this benefit is that coverage ends when the employee resigns or retires from the company.
Health Insurance remedies this problem. The company I represent as a Financial Advisor, AXA Philippines, a joint partnership with the Metrobank group, is a pioneer in offering health solutions beyond retirement age (coverage is up to age 100).
Think of it this way. Just when most people would look to depend on health protection in their retirement years, the HMO benefits cease to function as it is co-terminus with the retirement date of the employee. Ironic isn’t it? What then is your fallback? If you have saved and invested enough, well and good but it will still eat up into your retirement fund that you originally planned for something else.
In the Philippines, a critical illness may cost about half a million pesos on the average. The sad truth is that it is painful to let go of one’s hard earned money through the years by spending it on hospital bills, when it was originally intended for something else like travel plans, buying properties, etc. You work hard to the point of getting sick only to use your hard earned money to pay for your medical bills. Ironic isn’t it?
While working hard and saving for the rainy days are commendable, why not consider health insurance that extends up to 100 years? That way, a safety net is provided for in case of emergencies esp if one is hit by a critical illness.
In my next blog, I will discuss other types of insurance that one cannot live without.