Life insurance can be a critical component of your financial plan. That is because life insurance can assist you in ensuring that your loved ones have a stable financial future following your death. Not only can life insurance help cover your final needs, but it can also act as a financial safety net for your family by helping to replace your income or providing an inheritance for a loved one.
When is the best time to purchase life insurance?
There is no one-size-fits-all response to this, as it is dependent on your stage of life. However, it is true that the earlier you begin life insurance, the better. The cost of life insurance in your mid to late twenties can be drastically different from the cost of insurance later in life. This is because an individual should have sufficient money to meet current expenses and a little more to invest in future payments at this age. Premiums would also be reduced at this age compared to later in life. Moreover, keep in mind that you must pay premiums on time when you purchase insurance, as late payments may result in the cancellation of the life insurance policy and its benefits.
What other forms of life insurance policies are available?
In the Philippines, there are two basic types of life insurance: traditional life and variable life. Traditional life insurance’s principal purpose is to offer assured death and or living benefits. On the other hand, variable life insurance is investment-linked, enabling policyholders to earn a higher rate of return on their living use while still receiving a death benefit.
Therefore, life insurance in the PH can be a valuable financial security strategy that safeguards the future of your loved ones. This is why some people find life insurance unappealing; for you will be paying premiums for several years before your loved ones and not you will receive the benefits. On the other hand, if you have life insurance, it can help you protect the financial future of your dependents in the event of your untimely passing.
What amount of life insurance should you purchase?
When determining how much life insurance to purchase, various things must be considered. You must consider your financial needs, your income, and the amount of savings and other investments you currently have, among other factors. However, as a general guideline, the Philippine Life Insurance Association, or PLIA, recommends purchasing life insurance with a face value of five to seven times your current yearly gross income.