While writing my biggest OFW mistake, I realized I have another mistake which made me spend from not so much to unnecessary expenses.
I guessed it’s common for OFW to make mistake and my story is another thing of the past. But I wrote about it anyway so that others can AVOID and don’t have to go through what I’ve experienced.
It’s a lost of time and money and all that was left is an experience we can learn from. So all is not lost.
Like other newcomers, I have no idea what I have gotten myself into and realized one day that I need to do something about it. What am I talking about.
I paid for an insurance that doesn’t fit my needs and the circumstances.
It was way too fast. Faster than my mind to comprehend what was going on.
Insurance is something I didn’t think of having when I decided to go overseas. I thought of someday buying a house, travelling to seven wonders of the world, having the courage to sing with my short-breath voice and so much more.
And lo and behold, I signed a contract of something I didn’t understand. The insurance seemed like a budol budol gang at that time.
Or was it plain ignorance.
What You Don’t Know Can Ruin Your Budget
So here’s what really happened. Take note of the pattern and think of how you would react if you were in my shoes years ago. Will you make the same insurance mistake? Hop on to the time machine.
An insurance agent was recommended by my relatives. They came and explained the importance of insurance for everyone.
This wasn’t the first time I’ve encountered the dreaded word insurance. I remember signing a document with illegible handwriting when I was young for an educational insurance. Luckily, I was able to graduate with the tuition mostly covered by the insurance.
So insurance is important. Period. End of the line. Eat some dessert for realizing the essence of insurance in our life.
Don’t go for a break yet. That ice cream can wait. Or cake.
I paid for somewhat five years for a universal life insurance. I’ll let Investopedia define the term.
Universal life insurance is type of flexible permanent life insurance offering the low-cost protection of term life insurance as well as a savings element (like whole life insurance), which is invested to provide a cash value buildup.
Insurance with an investment seems like a good deal.
Not really because I was paying too much. How so? I’ve read a lot of books, ebooks, and blog post from my favourite personal finance blogs.
Then came the strategy that fits my needs and budget: buy term, invest the difference.
It might not be for everyone. As for me, my focus is to invest and save while protecting my family against the unexpected event.
Redemption from the Insurance Mistake
You might be wondering what insurance do I have now.
Right now I have a renewable term life insurance and critical illness insurance which only costs me $50 ish. An affordable amount for the invaluable peace of mind.
Whenever my brain is questioning my decision to keep paying for insurance and seeing any assets like cash or unrealized gains, there are three words I always remember PEACE OF MIND.
That’s it. No more debate. Only the sound of wind chimes as if I’m meditating in a zen garden.
How to Get the Right Insurance
This blog post isn’t complete without teaching you how to avoid my costly insurance mistake because time is of the essence.
You should let your money grow and make decision in line with your personal finance goal that includes retirement plan.
1. Listen first to any advice. Don’t sign any contract yet. Let the insurance agent know that you want to take the time to decide and learn more not just from the one-hour discussion. You’ll have information overload. It’s the worst time to commit to any insurance being offered.
2. Educate yourself. Sear for insurance company and understand world of insurance. I wish I had read the book Stop Over-Thinking Your Money!: The Five Simple Rules Of Financial Success by Preet Banerjee. The book along with the many resources helped me to make a confident, informed decision. No one can decide for YOU so invest in every form of education.
3. Ask for recommendations. A lot of recommendations. But don’t make any decision yet once you have decided what kind of insurance and company you are going to commit yourself into.
4. Do not overthink. While I was learning about insurance, I realized how much more I have to learn. But I came to a point that sufficient information will allow me to choose wisely. Identify your needs and match it with the best type of insurance for you and the beneficiaries.
This is only temporary. I reminded myself that there are unforeseen events. Sooner or later, I will have to change my current insurance after asking an advice to the trusted insurance agent who have your best interest in mind other than commission.
Term Life Insurance for Filipinos in the Philippines
This is an update. I finally wrote a blog post with a list of term insurance plans in the Philippines.
It turned out that term life insurance products are not that many. But such breed do exist coming from Pru Life UK and Sun Life Financial to name a few.
One of the term insurance from the latter is Sun LifeAssure. It is a life and health protection; why not have both in one plan.
I hope that you will make the right choice in your first insurance. If not do NOT cancel your current insurance while looking for another one.
If you are having second thoughts with your current insurance, it’s time to assess and read the policy. Do you need to downgrade or upgrade.
Or look for another insurance company like I did. Don’t rush. We’ve all been there, confused yet determined to achieve financial independence (and retire young).
Did you make the same mistake? Share your story or question in the comment.