Today’s blog post on Above Precious Rubies is about the different types of insurance that’s available for us. This sponsored post is in collaboration with Mason Finance.
Many of us know how important it is for one to have insurance, be it health, car, or life insurance. You or your loved ones got sick? Fees are lesser with insurance. Had an untoward accident on the road? Insurance covers for the repair of your car. And even in the topic that we don’t normally discuss – death – insurance is beneficial. This is true especially if you’re the breadwinner.
The thing is even though many of us know the primal importance of insurance, only a few avails of insurances. For example, my family: for health insurance, Dane and I only rely on Philhealth currently. Additionally, I’m the only one who’s insured. Our parents do not have any of these at all. You see, this is why during emergencies, we always have to spend more.
I can’t say that we are all good when it comes to insurance now because we are still working on it but hopefully, we’ll get all this settled a few years from now. The thing here is, we’re not the only couple who don’t have insurance. A lot of families in the Philippines are in the “no insurance” kind of situation.
Since I am slowly learning more about finances, I have learned that there are many different types of insurance that we can avail as well. Which is great so we have more options to choose from and we can decide what is best for us.
Term Plan – pure risk cover
Term insurance is a type of life insurance policy that provides coverage for a certain period of time, or a specified “term” of years. If the insured dies during the time period specified in the policy and the policy is active – or in force – then a death benefit will be paid (Source: Investopedia). I learned that these term plans are among the cheapest there is. However, the price gets high as one gets old.
Insurance + Investment opportunity
A Unit Linked Insurance Plan (ULIP) is a product offered by insurance companies that, unlike a pure insurance policy, give investors both insurance and investment under a single integrated plan (Source: Wikipedia). This is the insurance that I currently own (and still paying, LOL). I got it as a gift for myself on my 29th birthday. That still has a lot of years of contribution before maturity but that’s fine, I know it will be for the benefit of my family.
Endowment Plan – Insurance + Savings
What is a modified endowment contract (MEC)? It is a tax qualification of a life insurance policy whose cumulative premiums exceed federal tax law limits. The taxation structure and IRS policy classification changes after becoming a modified endowment policy.
Whole Life Insurance
According to Axa, Whole life insurance “is a type of permanent life insurance. That is, the coverage and possibly the premiums last for your entire life. As long as your premium payments are made as agreed, your insurance coverage lasts throughout your life, and the death benefit is a guaranteed amount.”
How to know which one is best for you?
There is no “one-size-fits-all” insurance. So before choosing which of these is best for you, it’s important to understand the pros and cons first. Talking to a financial advisor also helps greatly, there are a lot of FAs out there who are not just after commission. Weight things out and then decide which insurance fits you best.
Cheers to financial freedom for us! We’re not there yet but I’m hoping we keep going towards that direction.