When is the right time to practice Self Insurance?

[crabbysummers]

Let me initially make the first post and discuss this topic here. What do you guys think about doing self insurance, when is it beneficial and when is it not?

 

[mihitt]

@crabbysummers Self insurance simply means having enough financial resources to adequately handle the risk.

Sa car insurance, it means having adequate resources to replace a totally wrecked car.

Sa life insurance, it means having adequate resources to handle the death of the insured.

Kung walang dependents, it means at least having resources to handle final expenses (burial, payment of debts, taxes, hospital expenses) so that the next of kin will not be burdened.

Kung breadwinner na may dependents, it means having resources to replace the income used to sustain the dependents.

Actually, mas walang pera, mas kailangan ang life insurance.Kung ikaw ay may P10m (at walang utang) at kinuha ka ni Lord, iiwan mo lang ang P10m sa iyong pamilya. Pero kung ikaw walang pera (at may utang), ano ang iiwan mo sa pamilya kung kunin ka ni Lord ?

Ang trick lang ay kumuha ng life insurance na suitable, at affordable. Halimbawa, ang isang 30 year old, maaring makakuha ng P1m life insurance coverge for less then P6,000 a year. ( or P17 a day). Very affordable, pero kung kunin ni Lord, masagasaan ng barko, mabagsakan ng eroplano o malunod sa baha, may P1m na iiwan sa pamilya.

Kailan mag-practice ng self-insurance? Kapag may adequate financial resource ka na.

Kailan kailangan ng life insurance? Kung may dependents ka, kailangan mo na ngayon!

(paano kung masagasaan ng tren ang shuttle mo bukas? paano kung ma-"tokhang" ka?)

 

[spiritoforder]

@crabbysummers There is no right time kasi if we keep waiting for that "right time" then we would not be able to start at all. Now, assuming you are still healthy and have already established an Emergency Fund (3-6 months of your monthly expense), go to your trusted Financial Consultant as soon as possible and set a meeting to discuss your financial goals.

Life insurance is not beneficial only if you are still studying (meaning umaasa pa din sa parents) but once you finish college and are already earning, that means you should be a responsible adult na so do yourself and your family (regardless if you are a breadwinner or not) a favor by getting a policy.

Thanks for coming up with this sub, btw!

 

[pentecostal1ness]

@spiritoforder Can I ask what would be the purpose of the life insurance if your not a bread winner and dont have any dependents?

 

[spiritoforder]

@pentecostal1ness Well, eventually you will be a breadwinner too once you start a family of your own. If settling down is not part of your plan, you will still need it for its living benefits. Syempre ayaw naman natin na maka-perwisyo tayo sa family/relatives natin. Emotionally stressed na nga sila, financially stressed pa. Same goes when you get taken out of the picture. Your family will still shell out pa din. Kumbaga, at least, let the insurance company help with the financial burden.

 

[pentecostal1ness]

@spiritoforder Why not other instruments? Memorial plan for post death arrangements. Critical illness and health plans para di maka-perwisyo?

For living benefits why not an actual investment vs life insurance. Wont you be able to provide for yourself better with a direct investment geared towards retirement vs an insurance plan with endownement? The way I understand is that the living benefit is just a bonus and not the primary factor on why you would get life insurance.

Don't get me wrong, I agree that insurance is important, but it also has to be tempered. Your FA should be able to assess your current situation and actually recommend the right products. The way your initial comment was geared, well the way I understood it is regardless of situation a person should get life insurance at once.

 

[resjudicata]

@spiritoforder

Well, eventually you will be a breadwinner too once you start a family of your own

Then get life insurance only once you start a family of your own. Sayang ang pera if you get it earlier if you don't even have dependents.

Just invest it somewhere while you don't have dependents yet.

 

[resjudicata]

@spiritoforder If you don't have dependents but are concerned that your relatives don't have money to bury you, then get a memorial plan (instead of life insurance).

Getting a life insurance when you don't have dependents is terrible advice.

 

[crabbysummers]

@spiritoforder Thank you for this as well and thank you for being positive about this sub! Knowing that someone appreciates this sub despite receiving a lot of criticism is just really heartwarming.

 

[spiritoforder]

@crabbysummers Actually sa Pilipinas lang naman medyo taboo yung "insurance" eh probably because kulang talaga sa financial literacy ang Pinoy. Also, re: the VUL vs BTID issue, both have its advantages and disadvantages naman. It really depends on the person availing one and his/her goals and capacity.

 

[resjudicata]

@spiritoforder

probably because kulang talaga sa financial literacy ang Pinoy.

Tama ka. Kaya maraming nauuto na bumili ng life insurance kahit hindi naman nila kelangan.

 

[crabbysummers]

@spiritoforder I absolutely 100% agree.