Financial IQ: Life versus Car insurance?

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Financial IQ Philippines Quick Hit(s):

I agree.  Life insurance is much more important than car insurance.


Why not insure our lives, Since we all insure our cars?


I support your advocacy of promoting life insurance awareness in the Philippines, because we should ask: Are you and your life less valuable than a car, since by law you are required to insure your car with third-party liability? Why do most people not buy life insurance when the repercussions of death are so much more than that of the losses in a car? My elder brother died in 1997 at only 43 years old and he had life insurance, so it was good for his family because he was also a believer in the importance of life insurance. I suggest people learn how to manage their wants and priorities; are our expenses necessities or not? Life insurance is a necessity for all. Come to think of it, an iPad can pay for one year’s life insurance premium for a young person under 30 years old.


Johnlu Koa, 52 years old, married, founder & CEO of French Baker, Inc., Mandaluyong City


Answer


Mr. Koa, thank you so much for supporting our advocacy of financial preparedness and security through life insurance. You have correctly pointed out yet another of life’s ironies: our lives are more valuable than any of our material possessions but we would rather insure the worth of our cars and houses than ourselves. Yet it is our ability to create/earn income for our loved ones that enables us to acquire all our worldly goods. 


In my many years in the life insurance industry I have come to the conclusion that the principal reason why many Filipinos are still not insured is because they have not been properly educated on the meaning and importance of financial risk management. I believe this is why many of them don’t see the value of life insurance. The most common misconception is that life insurance is a needless or even unaffordable expense. This is simply not true! 


First, it is not an expense but a financial instrument that accumulates money through the years wherein it inevitably comes back to the insured or his family in an amount greater than what has been put in, and if time runs out before the intended financial goal (represented by the sum insured or face amount of the policy) is attained, the insurance company will complete the balance (which no other financial institution can do). Second, there are so many life insurance products today that are quite inexpensive. It only takes less than what a person would spend monthly for his cellphone load to have some amount of life insurance coverage. 


You are entirely correct in saying that it is a matter of managing one’s wants and priorities, and this is precisely the mission that Insular Life is determined to play a major role in pursuing  to make more Filipino income earners understand and appreciate how to balance their financial activities with the right priorities on expenses, savings and investments while effectively managing the risks and uncertainties of life through insurance.   

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