Whole life insurance is good. You may also want to get additional 10-year or 20-year term (to save on premium cost) and invest the difference to an Equity mutual fund.
What is the best life insurance for businesspeople with kids?
My husband and I are fans of your column in The Philippine STAR; we also support your advocacy to promote savings as a national habit. Do you think bank interest rates will go down this New Year? Should a medium-sized business take more loans or still be conservative? What is the best life insurance product for a businesswoman and my businessman husband with two young kids, should the size of our policies cover also the size of our existing business loan?
Dina de Mesa, 36 years old, businesswoman, Iloilo
Answer
Thank you, Dina, for your question. In answering, it’s most ideal that I be given additional information on your existing financial plan. In the absence of this information, however, I will make a few suggestions that are generally applicable to most people in your situation. As a couple with two young kids, your family is susceptible to the risk of losing one or both breadwinners. Your children are fully dependent on you. As such, their interests are best served if both you and your husband have individual life insurance policies to make sure they are provided for in any unforeseen event. If you have already secured such protection, you will be best advised to secure an insurance endowment plan, which can provide your children the funds for their college education.
As for your question about if the size of your policies should also cover your business loans, it depends on the terms of the loan you applied for. Normally, banks will offer term insurance that matches your business loan repayment period. This temporary cover expires when you have fully paid up your loan, enabling you to get just the right amount of insurance for the limited period you need it. There are a number of insurance products in the market today that will suit your individual requirements.
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