There are various ways you can invest your money. Aside from savings, you can also try other investment options like time deposit, mutual funds, UITF, or if you are willing to take that risk, stocks.
Apparently, most OFWs stick to savings account only because it is easier to open and maintain, coupled with remittance features. One of the investment options often overlooked by OFWs is life insurance.
“Ayoko magbayad ng premium. Hindi ko naiintindihan yan,” you might say.
Before you close your doors, here’s what you need to know about life insurance and whether or not it is worth it.
What is life insurance?
Life insurance is a form of protection against financial loss as a result of premature death of the insured. This means the beneficiary of the insured will receive the proceeds of the policy in order to provide financial security in exchange of the premium paid.
There are different types of life insurance available in the Philippines:
- Endowment – This type of life insurance is for people who are looking for maturity benefits at the end of the specified period. This is ideal if you are after shorter terms in order to fulfill periodic financial goals and to secure the financial future of your dependents. In case of death prior to the maturity of the term, the insurance company will offer lump sum amount to the beneficiary.
- Whole Life – This is bought for lump sum benefits upon death of the insured and to be given to the beneficiaries. It also offers lifetime coverage at low premium payments. This type of life insurance is recommended if you want to buy an insurance coverage early and pay the premiums during your productive years.
- Term Insurance – This is the most popular form of life insurance because your beneficiary pays for the face amount only upon death. If you cannot invest in endowment or whole life insurance plan, then term insurance is highly recommended because of low premium payments.
- Variable Universal Life (VUL) – This type of life insurance is where the premiums you paid will be invested by fund managers into market-linked instruments like stocks, with the investments administered as a separate account. This is recommended because there is no maturity, death component is not limited to the face amount, and there is a possibility of growing your money.
The Benefits of Life Insurance
Why get a life insurance? There are variety of reasons, which includes the following:
- A form of financial protection for your family since the lump sum amount can help your beneficiaries to cover up for the sudden loss of income.
- Works as your savings and investment tool, especially if you go for the Variable Universal Life policy.
- Serves as your retirement income since life insurance products come with long-term maturity.
- Helps settle immediate financial needs as a result of sudden death of the insured.
Tips in Choosing Life Insurance Policy
- Educate yourself about life insurance. Read reviews, watch videos, attend seminars (if time permits), and talk to registered financial planners or insurance agent, if possible. Don’t be afraid to ask questions about concepts you don’t understand. The more informed you are, the better the decision-making will be.
- Shop around, request for a quotation, and then compare before you say yes.
- Always go for reputable and legitimate insurance companies.
- Look for an insurance policy with online facility. This way, you can still avail of a policy even if you are abroad.
- Think about your family’s future. This should be your guide to help you decide on what to get.
Should you get a life insurance?
If your budget permits, then go ahead and get an insurance policy. Keep in mind that the OFW life is not forever. In fact, it will always be full of uncertainties and you’ll never know what will happen in the future. It’s better to be prepared than feel sorry in the end.
