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Life Insurance 101
RICO YAN IS DEAD. How, amidst his ripe showbiz career, can
a young actor be taken so early is a question only left for
God to answer. How much fortune from his acting career and
various restaurant business did he leave as estate, ask the
media. Was he insured? You bet.
He was young and single, a wholesome teenage heartthrob,
earning a lot, and a good prospect for insurance agents. The
value of his insurance is not what we're after though. It's
just that when death comes to somebody known to us, we automatically
think of how his loved-ones are able to cope with the demise.
But with the mileage Rico Yan was able to make for himself
being an actor, money is the least of his family's concerns.
It is quite safe to assume that his insurance took care of
all his burial expenses and that he has left enough proceeds
for his beneficiaries. Maybe more than enough that some can
be given to charity.
The big question is, if this happened to you at the same
age as he passed away, have you prepared something to handle
the cost of dying? Have you prepared something for your dependents
in view of the loss of your income? Are your mortgages covered
with a corresponding insurance to pay off the remaining balances?
Or are you bound to give more headaches instead?
A lot of people drive away insurance agents, dismissing them
as chatterboxes who speak at 150 words per minute. Some see
them as fancy financial advisors who intrude into one's private
financial affairs. They are even perceived as doomsayers who
count the years until the day you die. But no matter what
you call them, you have to give them a penny for their thoughts
some time soon.
Basically, life insurance is an agreement between you, the
insured, and the insurer. The life insurance contract binds
you to pay premiums for a certain period of time and in exchange,
the insurer promises to pay a certain sum to your beneficiary
(ies) in the event of your death.
Think of all the debts and mortgages you are servicing right
now: real estate loan, car loan, credit card bills, and the
eventual hospital bills you might incur during a sudden illness.
True, your estate (this includes your cash, real estate property,
cars) might be able to help pay off your debts. But would
your beneficiaries be happy to sell your house and your car
to settle the debts you left behind? Fixed assets like your
house and vehicle also take time to be sold. In the meantime,
the bills keep rolling in. Proceeds from a life insurance
safeguards your estate and provides liquid cash to settle
your outstanding bills while your family can still sleep soundly
in the house built by your blood, sweat, and tears.
The cost of purchasing life insurance depends on your age
and the value of the policy you want to purchase. So far,
as long as you are in the pink of health, there is no impediment
in getting a good policy at a good price. The reason why policies
are cheaper at a younger age is because you still have many
more years to live until you meet your Creator. Thus, you
give the insurance companies more time to do business out
of the insurance premiums you paid. In turn, they give you
a discount by offering lower premiums.
So think about the death of a young Philippine actor not
as an opportunity to gossip about his past love affairs, love
triangles, or love quarrels. If that were you, will you leave
a legacy or would you leave your family in a bind? *
Renzi is a graduate of Economics with a Masters
Degree in Business Administration from the University of St.
La Salle. While working full-time in the Trust & Investments
Division of one of the 10 largest banks in the Philippines,
she dabbles into writing and does mountain biking as her weekend
hobby. You may email the author at renzijuarez@philippinestoday.net
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