C.Y.A. is unofficial insurance industry jargon for "cover your ass," as Sun Life Financial Advisor Jason Imperio explains—and taking out a life insurance policy for yourself or a loved one is the best way to do just that. But like anything that deals with money, buying an insurance package is easier said than done.
It's important to know what you're getting into before blowing through your hard-earned cash, so we got in touch with Imperio to help bust some of the biggest misconceptions about the life insurance industry.
'You have to be filthy rich to get insurance'
Imperio says that when it comes to his clients, his first question is always about how much their budget is. "Kasi at the end of the day, sino bang magbabayad? Is it me or is it the client? Siyempre it's the client, di ba? So as a financial advisor, it's really important for me to ask first, then lay down all the options for my clients. Yung iba kasi talagang proposal-selling lang eh. Like, they'll tell you, 'Okay, get this. Kaya naman ng kinikita mo eh.'"
"You don't necessarily have to be wealthy for you to start something like this," he adds. "At P1,500 per month or even lower, pwedeng insured ka na nun. Pwede yang mga ten years to pay, depende sa plan mo. Also, dependent rin on age and sex, kasi alam naman natin pag lalaki, mas mapusok. Mas risky ang lifestyle versus the ladies."
'Youngins don't have to get insurance policies'
The idea is that only old people with illnesses and people with dependents need to get insurance, but on the contrary, it’s actually best to take out a policy for yourself or a loved one while still young, vigorous, and virile.
"If a 23-year old were to get a life insurance coverage compared to someone that would be getting it at around 40 years old—same value lang ng life insurance—mas mataas yung premium or yung babayaran ng 40-year old since mas mataas na yung risk for cancer, stroke, and heart disease, at mas malamang na magamit na agad yung insurance. Better to start early," points out Imperio. "For example, when my son was just one year old, I got him insurance, and it cost around P1,000 per month."
'You have to die first to be able to get something out of your insurance company'
Depending on the specifics of your insurance package, some companies will release up to 25% of your money upon being diagnosed with an early stage critical illness. Add-on benefits or "riders" as they call it, can also be attached to a basic life insurance so you can take out some cash while you're still living and breathing as long as you meet the conditions in your policy contract.
Another way you can get paid is by taking on life insurance with cash value and dividends. "Cash value means that after a certain number of years of payment, may nage-generate na [additional amount yung policy]," Imperio says. "Tapos pag kumikita naman yung company, mas mataas yung dividends, so aside from cash value, pwedeng madagdagan yung dividends mo in the future pag isu-surrender mo na yung policy." Depending on your contract though, you can get payouts even before you bite the dust, so you can use those to supplement your retirement fund.
'You'll have to choose between investing your money and taking out an insurance policy'
That might've been true in the days of yore, but lucky for you, it is just that: a thing of the past.
"Ang sikat na ngayon ay yung variable universal life (VUL) insurance which is a combination of insurance and investment," tells Imperio. "Dito, makikita mo na insured ka, tapos may investments ka rin sa stock corporations. Blue chip companies to ah—yung mga solid companies (e.g. Robinsons, Globe, BPI, BDO, Metrobank), hindi yung mga fly by night or mga pink sheets. And since part of the money is invested, in time, let's say after 10 to 20 years of paying, lumaki na yung pera and pwede mong kunin yung investment value."
Imperio continues, "Ang maganda rin sa VUL, flexible siya. You can pay more if you can. Halimbawa, bigla kang nagkaron ng bonus, you can pay in advance and at the same time, buy more shares of investments."
Oh, and remember the insurance policy Imperio got for his kid that sets him back by P1,000 each month? That's already a VUL insurance, so whatever he earns from that investment, he can give as a graduation gift to his son.
'Baka ma-CAP ako!'
"First and foremost, CAP (College Assurance Plan) was a pre-need company and not an insurance company," clarifies Imperio. "The problem with [CAP and the other businesses like it] that have folded is that they go, 'You'll be paying this amount for x number of years, and we'll take care of your kid's college education when the time comes.' However, they did not foresee tuition fee increase. Eh malaking bagay yun. Tapos let's say during that time, the company made [some bad investments] and nasakto pa na recession—nagka-financial crisis ang company—so bumaba ang value ng lahat ng mga binili nilang assets. Tapos tuluy-tuloy lang yung claims ng clients ng educational funds...edi wala talaga," he explains.
To ensure the security and stability of your insurance and investment, Imperio advises that you go with the Top 10 life insurance companies. "Because [these companies] have been around for such a long time, may reserves yan, so if worse comes to worst and they've had bad financial dealings, they'll survive."