5 Common Questions About Life Insurance: General Overview (UPDATED)

This quote from Zig Ziglar, the renowned American author and motivational speaker, resonates deeply with me because its words are undeniably authentic and relevant. In the past, I often lamented not having acquired life insurance sooner. However, that regret did not deter me from ultimately obtaining a policy, a decision I now wholeheartedly appreciate.

It was year 2018 when I got my insurance plan. My financial advisor happened to be a consultant of my employer's financials during that year. And one of our conversations before was about personal finance which she was able to share a real talk scenario in life. Such conversation struck a chord with me as she emphasized the uncertainty of life, underscoring the importance of preparation. Reflecting on this, I realized the gravity of the situation: the possibility of leaving my loved ones burdened with financial responsibilities in the event of my untimely demise.

Motivated by this realization, I made the decision to acquire life insurance before reaching my thirties. Admittedly, at first I was hesitant, perceiving it solely as an expense. Well, that time I didn't fully understand the importance of life insurance and had numerous lingering questions. Nevertheless, I gradually shifted my perspective, and as I delved deeper, my concerns were addressed, and clarity ensued.

So, today let's answer these five (5) common questions about life insurance that you might be keeping in your mind.

• What is life insurance?

• Where to apply for life insurance?

• Why do you need to have life insurance?

• How to avail of life insurance?

• Who will be your financial advisor?

5 Common Questions About Life Insurance

1. What is life insurance?

According to research, life insurance is a contract between an insurer and a policyholder. It is a legally binding contract.

To further explain what life insurance is, learn the following types of life insurance:

• Term Life – insurance that lasts a specific number of years like 10, 20, or 30 years.

• Level Term – a type of insurance where premiums are the same every year.

• Increasing Term – where premiums are lower when you’re younger and increase as you get older.

• Permanent – a type of insurance where it stays in force for the insured’s entire life unless the policyholder surrenders the policy.

• Single Premium – where the policyholder pays the entire premium or one-time payment instead of monthly/quarterly/annual.

• Whole Life – a type of permanent life insurance that accumulates cash value.

• Universal Life – a type of permanent life insurance with a cash value component that earns interest.

• Guaranteed Universal – a type of universal life insurance that does not build cash value and has lower premiums.

• Variable Universal – where the policyholder can invest the policy’s cash value.

• Indexed Universal – a type of universal life insurance that lets the policyholder earn a fixed or equity-indexed rate of return.

• Burial or Final Expense – a type of permanent life insurance that has a small death benefit.

• Guaranteed Issue – a type of permanent life insurance available to people with medical issues who will not pay a death benefit during the first two years the policy is in force.

It's wise to gain a thorough understanding of life insurance before deciding to purchase a policy. Speaking from personal experience, once I became familiar with life insurance, my motivation to pay premiums became more neutral. It's establishing a positive mindset regarding why you're investing in insurance coverage.

2. Where to apply for life insurance?

Have you asked yourself what insurance provider is the best? Or have you delved into thorough research, meticulously comparing features and benefits among various providers?

That’s commendable!

It's essential to ensure that your chosen insurance provider or company boasts a strong standing in the industry. It's wise to verify facts about them. Not to brag, but I take immense pride in the performance of my insurance provider over the years.

Well, here's an update from Insurance Commission’s official website last December 2023. Take a look on the data to help you decide as to where you'll be getting your life insurance plan.

Source of the below infographics: Grit Ph

As to Assets of Life Insurance Providers

As to Networth of Best Life Insurance Companies

As to Premium Income of Life Insurance Providers

As to Net Income of Best Life Insurance Companies

3. Why do you need to have life insurance?

I once pondered, “Why do I need life insurance?”

And I found my answer: “To spare my family the burden of financial obligations when I'm no longer here.”

The topic of finance is deeply personal to me, and I'm a strong advocate for it. Why? Because I believe in dispelling the misconception that it's too early to start preparing for retirement. Witnessing the challenges my parents faced, I'm determined to prevent a similar situation for my siblings and me. Well, I don't assign blame or harbor disappointment toward my parents. Rather, I seek to empower young adults to seize opportunities for a better tomorrow. If there's a chance to secure a brighter financial future, why hesitate?

Hence, my primary motivation for obtaining life insurance is my family.

Below image is for illustration purposes only and not my real family.

To dive deeper as to why you need to have life insurance, here are some benefits or reasons from a reliable source:

• Income Protection – if something happens to the breadwinner, life insurance will serve as a means to provide income to the people left.

• Peace of Mind – people who matter to you will be financially protected as long as they’re policy’s beneficiaries.

• Money Protection – the money we worked for should be protected from getting lost.

• Health is Wealth – life insurance helps cover hospitalization costs and also accident or disability benefits.

4. How to avail of life insurance?

Obtaining life insurance has been made simple these days. With the growing number of legit insurance agents, it's just around the corner.

As I recall from my own experience during the application process for my life insurance, I underwent a casual interview with a financial advisor. Questions such as whether I had started saving or investing at my age and what financial preparations I had undertaken to responsibly manage my hard-earned money. Upon expressing my interest in life insurance, I proceeded to complete necessary documents and provide relevant references for identity verification. Subsequently, the process progressed to approval, culminating in the initial premium payment.

For your easy reference, here's your guide to obtain a life insurance:

• Get a quote – request a quote online or over the phone by just telling a little bit about yourself.

• Speak with an Agent – questions about medical history to provide a specific plan for you.

• Complete an Application – providing the needed information to approve the coverage.

• Take a Medical Exam – if necessary, this will determine your eligibility to finalize the coverage.

• Underwriting begins – the process in which the provider reviews the application and assesses your insurance risk, and this may take a few weeks.

Sometimes, applications for life insurance aren't approved. However, this doesn’t imply that you'll be unable to secure life insurance in the future. The optimal course of action is to seek guidance from a financial advisor or expert to determine a more favorable approach.

5. Who will be your financial advisor?

Choosing a financial advisor was one of the things I consider when I made the decision to have a life insurance policy. Why? My rationale was straightforward - to align myself with an individual who could offer more than just financial guidance. I desired someone who possessed empathy for their clients' financial circumstances and was eager to impart pertinent financial knowledge.

Let me share some facts about my financial advisor that persuaded me to select her over other candidates. Perhaps these points could aid you in your own selection process.

Disclaimer: For illustration purposes, not sponsored.

I called it the 3 C’s describing my financial advisor.

• Compassion to help – she does beyond what she gets and provides me with helpful information to prepare my retirement years or any other financial matters.

• Consistency to reach – she never gives up on me when she sees the need to start investing in financial security, like she consistently reach out to me.

• Competitive – she continues to excel so that clients will find her as an authority and this validates her excellent service.

In addition to this personal experience on choosing your financial advisor, take note of the following:

• Someone who understands your own financial needs.

• Someone whose qualifications are excellent and authentic.

• Someone who is an expert in financial matters, and a certified/licensed financial planner is an advantage.

• Someone who is well-experienced.

• Someone who will be compatible with your preference.

• Someone can be truly trusted.

• Someone who is transparent and keeps records.

FINAL WORD

Ultimately, life insurance isn't just about protecting your loved ones financially—it's about providing peace of mind and security for the future. By understanding these common questions about life insurance and seeking the right policy for your needs, you can ensure that you're prepared for whatever life may bring. Also, you empower yourself to make informed decisions that safeguard your loved ones and your future. Remember, life insurance is not just a financial product—it's a vital tool for building a foundation of security and resilience. And the best time to secure life insurance is always now!