Why Invest in Life Insurance

Thousands of years ago villagers didn’t need insurance because relatives always looked after their own. Hundreds of years ago people didn’t need insurance since families took care of their own.

With the advent of the industrial revolution families started living in communities apart from relatives, and people earned just enough just to take care of their immediate family.

Thus the practice of villagers and relatives pooling resources at times of need evolved into individual strangers investing in financial institutions that managed funds for future emergencies.

In a way, insurance has a very unique concept of giving. One shares a fraction of what his family may receive in case of death, accident, or property damage.

At the end of one year would you be sad that you didn’t use you fire extinguisher or thankful that you didn’t?

Compare your family’s financial success as a bus trip to the top of a mountain, the road winds and spirals from the bottom all the way to the top of the mountain. For most people, when the bus stops running their trip up the mountain stops, while others would take a long slow trek to finish the trip, very few would finish it.

If you had life insurance, when that bus stops, your loved ones take an elevator to the top of the mountain.


How to use life insurance
Compute your monthly expenses multiply by 12, multiply again by ten, and then add your loans & debts. This is the amount of insurance coverage you need.

[(Monthly expenses x 12) x 10] + loans & debts = insurance coverage
[(P30,000 x12) x 10] + P400,000.00 = P4,000,000.00
Insurance Coverage = P4,000,000.00

Multiplying monthly expenses by 12 you get your annual expense.

Multiply annual expense by 10 gives you an amount that if invested in the right financial instruments would earn 10% every year; thus your loved ones would not miss your income contribution for a long time.

Adding your loans and debts would ensure that you leave your loved ones debt free without touching your income contribution.

Depending on one’s age a term or accident insurance to cover P4,000,000.00 will cost about P10,000 to P20,000.

Term insurance covers you only for a year, and you have to renew coverage every year? Why term insurance? Because your annual income and expenses increase and decrease, thus you can freely adjust your coverage every year without buying a new insurance. Plus the cheapest insurance is term insurance.

Ultimately, the goal of financial independence is to reach the top of the mountain, and by then you wouldn’t need that elevator. Unless of course you have large properties and need insurance to cover your estate taxes, but that’s another story.

The best time to buy insurance is now. So call your insurance agent now.