Uncategorized

Are you properly insured?

 

A lot of us are making fun about getting Life Insurance. We think that we need life insurance only when we are going to die and we think that it is an expense. Ironically, we need life insurance when we are young and healthy because we don’t know when we are going to die and if you get life insurance when you are old and sick most likely you will not be approved.

Having a life insurance is not enough but you have to know if you are properly insured. It should be part of your financial portfolio. How would you know if you are properly insured?

In my client’s case,she has extended family. She supports her Mother, Sister and a Special Brother as his father passed way already. Every month, she spends on the average of Ph10,000 for all the expenses for them. Now, she spends Ph120,000 per year. Now, how would you know if how much  life insurance she should have if death comes?

Ideally, she should have at least 10 times of her annual expenses for her dependents. She should have at least Ph1,200,000 life insurance coverage so that if death comes her family will still get a budget of Ph10,000 per month for the next 10 years. This death benefit can be used so that her dependents can adjust for the next 10 years and will not be left in poverty.

My client is saving only Ph100 per day for her to be protected and at the same time her money is earning because after the charges of cost of insurance and admin charges it will be invested in pooled funds. She is setting aside Ph36,000 per year on a Variable Unit Linked.

With Ph100 per day savings can make her insured of Ph1,200,000 with her age of 28 until age 99. The good thing about Variable Unit Linked, it has investment component that can grow from 8%-10% per year on long term. She can have a premium holiday of 10 years only, meaning she can stop putting money in 10 years only.

 

While working hard for her family,she has peace of mind that if death comes she knows that her family will be financially stable for the next 10 years but because her insurance policy has investment in it, her family can receive more than Ph1,200,000 but if she will live long, she can  achieve her financial goals for her family.

Let’s say if she dies at age 40 her family will receive the guaranteed death benefit plus the fund value if it earns 10% per year. On the assumptions of earning 10% per year ,life insurance would be Ph1,200,000 plus Ph620,398.13 with a total of Ph1,820,398.13. But if she will live long until retirement at age 60, her money would have grown to Ph4,831,067.45 which she can use for her retirement and she is still insured with Ph1,200,000. This is what the Variable Unit Linked can do for the policy holder who just save Ph100 per day.

Now, you can now assess yourself if you are properly insured or not. You can check your expenses that you provide to your dependents and imagine if you died yesterday,do you think they would  be financially stable when you would be gone. Get life insurance not because you are going to die but get life insurance so that your family will not be hungry when you are gone.

I hope the you learn about insuring yourself properly. If you want to know more about insuring yourself and at the same time growing your money, you may reach me.

Thank you very much.

Archie M. Yuki
Financial Planner,Investment Consultant and Insurance Specialist
The Insular Life Assurance Ltd.,Co.
4th floor Karina Bldg., No. 33 Shaw Blvd. Pasig City
Tel No. 571-3274
Mobile Number. 0917-5769607, 0923-4941362
Email Address: archieyuki30@gmail.com
Uncategorized

Diversify Your Money

diversification
Most of us heard the saying,”Don”t put all your eggs in one basket”  which I totally agree. You can do this in financial aspect by diversifying your money. It has benefits and let’s define its meaning, according to Investopedia:
Diversification is a risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio constructed of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.

But, most of us don’t really do it. Most of us put our money in the banks. The total deposits as of June 2016 was Ph 9,638,125,481,000 according to PDIC.

There is a need to diversify for us to minimize the risks that might happen and also for us to maximise the returns of our hard-earned money. Even the bible tells us about diversification, as it reads “Cast your bread upon the waters, for after many days you will find it again. Give portions to seven, yes to eight, for you do not know what disaster may come upon the land.” (Ecclesiastes 11:1, 2)

In diversification, you should know where to put your money and what will be your purpose. You have to know your financial goals so that you can choose the appropriate returns that fit your goals.

These are the three portfolios that you must have when diversifying.

1. Savings- Your purpose of saving is to accumulate money that you need for short term like from 1 year to 3 years. This can be your buffer fund that you can use if emergency expenses arise. Ideally, you have at least 3 months of your monthly expenses or your salary in the bank. Savings can be easily withdrawn  thus the interest is low,  it ranges from 0.5% to 1% per year.

2. Insurance- There are different kinds of insurance. There is Life Insurance,HMO and Non-life Insurance. Insurance can give you peace of mind if risks happen like accident,diseases and death. This can protect you of the expenses that you cannot control which can give you funds to answer to the risks that might happen. Without insurance, your savings will be used up easily if risks of life happen.

3.Investment- This can make your money grow. These are the investment vehicles you can choose: Money Market,Bonds,Stocks, Pooled Funds, Real Estate or start your own business. Investing should be carefully studied because it is possible to lose all your hard-earned money. You have to understand the risks that might happen and the opportunity to earn. Ideally, you have to think long term when you invest,it requires patience and discipline thus you can earn in the future for your future financial goals. In long term investing, your money can grow from 6%-20% per year on the average for at least 10 years.

It is wiser to learn to diversify as early as possible so that you can manage your money well and maximize the returns you can get. This can be done by creating a Financial Plan which you can ask an advice from a professional Financial Planner. You will have a hard time to do it alone unless if you have time also to professionalize yourself when it comes to Financial Planning.

I hope that you learn something about diversification. You may share this blog for us to spread Financial Literacy to fellow Filipinos.

Let’s all be FREE!
Archie M. Yuki
Financial Planner,Investment Consultant and Insurance Specialist
The Insular Life Assurance Ltd.,Co.
4th floor Karina Bldg., No. 33 Shaw Blvd. Pasig City
Tel No. 571-3274
Mobile Number. 0917-5769607, 0923-4941362
Email Address: archieyuki30@gmail.com
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