7 Years: Painfully Called It Quits And Started Over

Oh the so called 7-year itch. For the uninitiated, there is this notion of a point in a long-term relationship that it will be severely tested around the 7th year. If the relationship survives, it will last. If it doesn’t, well you get it.

Recently, I ended a key relationship in my life that is; you guessed it, 7 years this year. Before any violent reactions, this is not with a person but with my insurance. I got my first policy in 2015 when I was learning about personal finance and was referred to a trusted church friend to avail of a plan. Fast forward 2022, I decided to surrender it. Let me tell you my reasons why.

Why I cancelled my 7-year insurance

Coming from a family that is not so financially literate, I am a believer of life insurance. As death is certain and nobody knows when our turn is, having a life insurance policy is a wise way to protect your loved ones financially. However, it’s important to have a policy that is aligned with your priorities and financial capacity and not just to have a policy for the sake of having one. Here are the things I looked at.

The coverage doesn’t fit the priorities I currently have.

Insurance policies comes in different forms and coverages. As we enter different seasons in our lives our priorities and dreams changes. When I got my policy in 2015 I want to build wealth through investments and financial mediums. The insurance part when I die is a good thing to have but not really my priority back then. Who wants to think they will die, right? I was a young professional back then with a bit of responsibility. However, today that’s not the case anymore. Death is so real to me now. It’s not an idea that I can still ignore. Furthermore, I am now a husband and a father. People that I care and love with all my existence might have a terrible time living on when the Lord takes me home. For these reasons, I want to have as much coverage as I possibly can.

Monthly premium is higher than ideal for me.

Payments should be made to maintain an insurance policy. How nice it would be if the government can cover the people’s insurance so we can have it for free. Well, a man can dream. Anyway, my old policy was a Variable Unit Linked (VUL) type of insurance product. It’s a combination of an insurance and an investment that is paid as one. Due to the nature of the product, I was effectively paying monthly premium for both products in one go. As a result, my monthly payments or premiums will be higher than just paying for a stand-alone insurance or investment product. Given that the coverage it provides versus the premium I’m paying I realized that it can be managed better.

The charges of keeping it is not worth it.

Another aspect I looked at are the charges. These are the fees the insurance company charges for the insurance products and to earn profit. It makes sense for them to charge higher fees to cover my insurance and manage my investment portfolio at the same time. Due to this, I decided to look for a product that has a more manageable fee structure but still meet the coverage I want.

If a child, a spouse, a life partner or a parent depends on you and your income, you need life insurance.

Suze Orman

What to look at when getting an insurance policy.

I am 100% decided on terminating my insurance policy given the reasons I stated. However, I made sure that I will still have insurance coverage before I proceed with the termination. It’s one thing to decide that you indeed need a life insurance coverage and another level of difficult to decide which one to get. This process of deciding and choosing somehow contributes as why people do not push through in getting themselves covered. Here are some important things I looked at when I was choosing.

Insurance company’s reputation

Before deciding on what product and other specifics of a policy you will get, it’s important to give utmost attention on who you’re getting it from. No matter how good your coverage is, if the company will not be able to pay it as agreed then it’s useless. Good thing about the leading insurance companies in the Philippines is that you can easily do a search about them on the internet. Here are some things you can check about the insurance provider you’re interested in.

• How long is the company operating in the Philippines?
• How easily can clients claim their benefits from the company?
• Is the company profitable?
• Does the company have assets to cover possible claims?
• Is the company involved with any scandals or scams?

Your priorities vs insurance product’s coverage

There’s a lot of products you can choose from depending on your needs. First, you have to know your priority so you can properly choose what product fits your needs. Here are some things you can ask yourself.

• Income protection – I want my family’s finances to be covered if I die or become ill.
• Wealth generation – I want to have an investment that I can use after several years.
• Health Coverage – I want to have available funds if I get sick
• Estate Planning – I want to properly manage my wealth for my heirs

These are just some of the usual things we get policies for. Remember that no matter how nice a product is, if it does not meet your priorities and needs, it might still not be a good idea to get that. Another thing to remember is that you are the client. Usually, agents offer VUL by default since these products are usually the most profitable for them. Be comfortable to say no and ask for other products if you think the ones being offered does not meet your needs.

Premiums and charges

Awww the fees. As you know these are the usual reason people don’t get insurance. Most think that the additional “expense” is not worth it until it’s too late. It’s important for you to know how much you need to set aside regularly for the policy and what fees you are paying. Always read the proposal and the fine print as much as possible so you know what you’re getting into. It’s your money so never be afraid to ask questions.

Frequency and duration

After knowing how much the policy will set you back, you have to know how many years you have to pay and how frequent. Terms can vary depending on the type of products you availed and your preference if the term can be customized. Once you know how long you need to pay for the coverage, you can properly map out the duration of payment and how it would affect your other financial plans.

Once you’ve decided on the product and coverage that suits you and you can afford, do not delay on making the purchase. There are so many stories online of people who wants to be covered but already too late. You don’t want to be one of those. Insurance products can be a life saver for those you love and unlike me, you want to make the right decision as much as you can from the start. Fortunately, despite ending a long relationship with my first insurance policy, I am now more confident with my new coverage. I hope that as I start with these new relationships and commitments that I made the right decision for the people I care about.

Disclaimer: I am not a financial advisor nor selling any financial products. I am just sharing my experience and knowledge to help people who might be in the same situation as I was.