A friend shared in Facebook that an accident occurred recently and claimed the lives of two people. The reason for the accident? The truck driver was looking at his cellphone and didn’t notice that traffic in front of him had stopped. The truck ran over the car in front and crushed the two people to death. This gist of the FB post was this:

Life is indeed short. You never know when it’ll be taken away from you.

What is it going to take to get people to stop looking at their cellphone or texting while driving? Consider the facts:

In 2012 more than 3000 people were killed by distracted drivers.
That’s nine deaths EVERY day.
And more than 400,000 people were injured by distracted drivers.
That’s more than 1,100 injuries EVERY day.

Being an insurance guy,  a thought came to mind. Just how many REALLY care about protecting themselves against life’s risks? In the US, I read somewhere that 40% are insured. In the Philippines, if I’m not mistaken, only 14% are insured and most of them are even under insured.

People say insurance is an expense. Well, it maybe but a good one. It protects your life’s savings and investments should for example, a critical illness hits you. Instead of dipping into your hard earned money, why not create another fund to protect your savings and investments and draw from this fund as a safety net?  This is the purpose of insurance.

carry insuranceWhile it may be difficult to spend on something not seen like insurance, owning one will give you peace of mind. Consider the different types of insurance and the intangibles:

Life Insurance –  Life insurance is not only about death benefits. Nowadays, life insurance can be packaged with investment linked funds. This give you the flexibility to save and invest for the long term while staying protected. Getting pure protection is also a way to minimize the cost by paying small premiums while getting a big coverage.

One of the most important purposes of life insurance that has often been overlooked is its important role in Estate Planning. By getting life insurance for this purpose, this helps you save money when paying taxes to the government. Yes, everyone ultimately dies but not everyone prepares for it.  Death in itself is costly. Do not leave a financial burden to your family by not taking care of the things that have to be taken care of if you can do something about it now. Who will pay for the estate tax if you did not leave any provision? Is it easier for you to allow the government to share in your wealth intended for your family or would you rather take care of that tax provision by buying a life insurance policy?

Health Insurance – Critical illness can strike like a thief in the night. Hospital bills are increasing. What if it happens to you? Are you prepared or will you just allow your life’s savings to be drained to pay for the medical expenses? It doesn’t stop there. What if you grow old and did not claim any health benefits from the provider? Some companies like AXA will allow you to claim some form of savings at a certain age. In a way, this debunks the myth that having this type of insurance is an expense. More than having peace of mind, it also allows you to have some form of savings.

Non-life Insurance – With this type of insurance, let’s stick to the basics:  home insurance, car insurance, travel insurance.

Home insurance – If an act of God happens and destroys your property, do you have enough money to go through the renovation or even restoration of your house? With a comprehensive insurance that can protect your property against such perils as fire, lightning, typhoon, flood, earthquake, why not spend a few thousand pesos annually instead of drawing from your life’s savings or worse, borrowing from financial institutions to get back your house in its original condition?

Car Insurance – If someone steals your car, do you have enough savings or worse borrow again from a bank to replace your car? While the amount that will be paid by the provider may not be enough to enable you to buy a brand new car, it is still good enough to get you to buy a used car (second hand). If it breaks down because it got stuck in the flood, do you have the extra cash to pay for the repair?

Travel Insurance – If you get sick while abroad, the govt. of the host country will not spend for you. Travel insurance takes care of travel inconveniences like this one. Among others, it also pays for the trip cancellation, lost passports, luggage and even the transportation expenses of a family member if he/she needs to follow you to take care of you while you’re in the hospital in another country. This type of benefit  is called Compassionate Visit. Benefits vary so be sure to check the benefits of your desired provider.

The irony of insurance is this – You buy insurance when you don’t need it because when you need it, you might not be able to buy it anymore.

So how do you keep calm from certain life’s risks? Buy insurance and have peace of mind.

Ronnie Reyes is a Financial Advisor of AXA Philippines, a joint venture between AXA, a French conglomerate and a global leader in insurance and investments and Metrobank, one of the biggest banks in the Philippines. He also carries non-life insurance (home and car insurance)  with UCPB General Insurance Corp. and travel insurance with Starr companies. You may contact him via email at reyes.ronnie@gmail.com.

Follow him at Twitter (@iamronniereyes) and connect with him at LinkedIn (iamronniereyes).




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