I had my first life insurance policy when I was 21. I did not think I needed it, death was furthest from my mind at that time.
But everyone was getting one (at the office, at least) and so I did too. The bi-monthly deductions hurt (though it did not even reach the one million mark) so it was kind of a hard decision to make. But after courting me day after day, making sure I get the medical exam and pass it, after we did the dance of joy (I signed up), I never saw that insurance agent again. I left the job and forgot the insurance and never knew what became of it. I did not know I had options – take the cash surrender value, buy an extended term insurance or a reduced paid-up insurance or even reinstate within a three (3) year period. I did not do anything because the agent did not take the time, nor cared, to explain my options to me.
And so I look at insurance agents with skepticism. One call, one meeting, and I would find an excuse not to see them again or sign up. It went like this for several years. I did not know I was making unavailable to myself the most basic step in establishing financial freedom – protection.
D and I were to learn this the hard way when our uninsured truck was stolen. We never looked at insurance the same way again.
To have protection is to breathe easy. At the face of uncertainty, there is comfort in knowing that, as in the case of non-life insurance, a loss can be replaced, or in the case of life insurance, premature death will not be a burden to those who are left behind.
But there is another component in life insurance that appealed to me – the savings component, or more accurately, forced savings. The money does not disappear, but is just being transferred from one pocket to another (both mine) and just a little harder to get (which is good). It can earn dividends too that ranges from 4% to 8% to 12% per annum or way above what my bank gives me, and in case of death, my beneficiaries would get a windfall.
Also consider this:
- Unlike savings, the amount intended to be saved in life insurance is guaranteed to be saved, whether or not one lives, or stays healthy long enough to actually save the amount intended.
- Unlike investments in other areas, money invested on a life insurance policy are managed by investment managers with investment expertise and with the necessary element of large volume and diversification.
- Life insurance does not require adequate time, and eliminates the element of uncertainty that characterize other income sources.
- Both the Insurance Commission and the Securities and Exchange Commission look out for the policy holder, making sure laws are followed and certain stringent requirements, like reserves, are met.
And so we are insured. Yes, the payments could be a burden at times but we have peace of mind. We actually should have done this sooner. Aging presents a whole slew of problems, or questions, or challenges for the uninsured.
Lay down the basis for wealth. Find the right policy, find the right agent who will give you the most value for your money, ask the right questions and protect yourself. Make this your concern – now.
Article by Issa. Art by D. Copyright 2009.
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