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Life Insurance 102
IF last month’s column created an eye-opener, inspiring
you to purchase a life insurance, let this second follow-up
give you tips to guide you in your buying process.
Being employed in a company often entitles you to a group
life insurance. This means that if something happens to you
while you are in the employ of the company, your employer
will claim insurance proceeds to be paid out to your beneficiaries.
More often than not, your coverage in the group life is termed
for as long as you are employed in the company only. By the
time you leave your employer, you are ceased from being covered
by the group life insurance.
This fact should give you the motivation to get a separate
insurance for yourself in order to have a continuous coverage
throughout your living years. Insurance companies sell one-year
term accidental death and disability insurance package that
turn out to be less expensive than life insurance as the former
cover you for only one whole year. The affordability of this
term insurance will motivate you to get one. However, failure
to purchase another one upon the expiry of the term leaves
you uncovered.
Getting your own life insurance while you are still young
requires less expensive premium payments than you would pay
when you get it at an older age. Being insured entitles you
to full coverage whether you are still employed in a company
or not.
Choosing a beneficiary for your insurance doesn’t mean
choosing just anybody for that matter. Your beneficiary should
be someone who has insurable interest. In other words, this
person’s life will be greatly affected by the loss of
your income in the event of your untimely death. Thus, if
you’re married, you should appoint your spouse as primary
beneficiary and your children as secondary beneficiaries as
they will bear most of the financial burden upon your death.
Singles normally write down their parents as their beneficiaries.
Changing your beneficiary is allowed and is done by sending
a letter of instruction to your insurance company. The insurance
company implements this by attaching an endorsement to your
insurance policy.
Divorce or annulment of marriage, however, does not automatically
eliminate your spouse’s name as beneficiary. If your
divorce decree allows you to change your beneficiary, it will
be the only circumstance by which you can do so.
Take extra thought before choosing a revocable or irrevocable
beneficiary. Once you appoint an irrevocable beneficiary,
under no circumstance can you change his or her name in your
policy.
In the same manner, you should choose a stable and reputable
insurance company before you sign a contract to pay your premiums
in exchange for a hefty insurance coverage. Look into the
size of the company, its reputation in the industry, its reliability
in processing swift liquidation of insurance proceeds. You
can even ask what are their trustee banks (banks who manage
and invest their funds) and see whether these investment managers
are also trustworthy.
Lastly, choose an honest insurance agent who is well-versed
with the product he is selling. Make sure that the premium
payments you give to him are directly paid to the insurance
company. Sometimes, they give you temporary invoices upon
receipt of your check. Make sure to get the official receipts
as soon as possible and keep these in a separate folder that
is accessible to your family just in case the time comes for
it to be enforced. *
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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