Money Matters: Choosing Insurance Policies at 40

We have most often welcomed financial advisers wanting to present insurance policies to us in our home to hear what they have to say. Through the years we’ve been visited by financial advisers from PRULife UK, Manulife, and quite a handful of them from Sun Life Financial haha!

And I thank them for it. As we keep listening and asking our questions, it becomes clearer and clearer to us what we can do to secure our children’s financial future and save up for our retirement.

insurance-policy
I’ve said it once before, we started out with our financial journey a little late. But all’s good because we found out that there are still some things that we can do to augment that.

The sense of urgency at 40

The first thing Jay and I had to do was to accept our realities:

  • We have about 10-20 years to work on our retirement fund and have something prepared for our children’s future.
  • Only Jay has a stable source of income right now, mine can be inconsistent (for instance, a contract with a client ended this morning).
  • We have three young children whose needs we have to provide for.
  • We’re 6 months away from being credit card debt-free.

On a side note, I mentioned a couple or so Sun Life Financial products here because those are the ones I know a bit more about. Feel free to look into insurance policies from other companies. The more you find out, the better you can decide on what’s best for you and your family.

Here are 3 things I learned from talking to seasoned financial advisers:

1. We have other options other than Mutual Funds

You see, one of the things about shedding off the initial negativity on financial advisers and actually listening to them, you realized that although it is “business” for them (they have to earn too you know), they can also show you other options.

The entire time I thought that Mutual Funds was the only thing we can afford to put money into. It turns out that there are other low risk policies such as Variable Universal Life or VUL, there’s also Life Assure and Term Insurance among others (from Sun Life).

VUL is a combination of a Life insurance and savings investments. If I get into an accident, went through a critical illness, or suddenly dropped dead, my beneficiaries will receive a reasonable amount of money.

How reasonable? Of course the more money you invest, the higher the returns. That goes for any insurance policy and it’s only logical.

Now, if you don’t die, get seriously sick or get into an accident, your policy can become an investment fund.

By the way, don’t assume you need big money to be able to pay for VUL. That was one of the reasons we were afraid to talk to Financial Advisers before. We thought we’d be embarrassed by our finances. The proposal that my friend Che generated for me based on my age and financial capability (and other data) is just about Php 3K+ every quarter. That’s not bad at all!

I would not have known about this if I kept warding off insurance people from presenting to me.

2. We have to figure out the hierarchy of our priorities

The reason why all the financial advisers that came to us ask us the same question “what are your goals?” is for them to help us figure out what policies are not only befitting for our goals and financial capability, but to also figure out what investment to start with.

For instance, Jay and I cannot pay for several policies all at once. We have to start with one so we have to choose the most logical one to put our savings into.

Oh we want many things! We want to have money when we retire, we want to leave an inheritance for our children when we die, we want to buy a house and a new car, we want to travel. WHO DOESN’T?

Again, we have to go back to being logical about this. Take for example, a house is only an asset when you already own it, but if you are looking at 15 years or more of payment ahead of you, that is not an asset yet but a liability.  A debt is a liability.

That goes the same with a car.

(Read: Should we buy a house?)

After some serious discussion last night, it makes more sense for us to work on the first two I mentioned – retirement and funds for our kids. For the rest of it, I’m sure God will help us figure that out along the way.

At the end of the day, we don’t want to enslave ourselves just to be able to do these things. Of course there are sacrifices we have to make, but not to the extent that we sacrifice our children, our marriage and other things that matter to us for one or two goals.

We’re working on what we have and this is what we have right now. We’re thankful. I’ve said this again and again – God is faithful.

(Read: Teaching Kids to Manage their Money)

3. You have to choose the right investment partner

As a mom, I say this from the bottom of my heart. The money I earn is precious time away from my children and energy spent outside the people I love. It may be small, but it’s all I’ve got.

I understand that there are risks – everything money is a risk, but I want to do it with someone whom we feel will give us and our kids the best fighting chance at it.

I don’t want to regret when I’m 60

When you’re starting out at 40, looking at the figures I’ve been presented can somewhat be discouraging, but I’m keeping my chin up.

In my opinion, starting late is better than not doing anything at all. I may regret the earlier years that I had not been responsible with my money, but I don’t want to reach 60 and regret even more.

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“A good man leaves an inheritance to his children’s children, but the sinner’s wealth is laid up for the righteous” Proverbs 13:22.

“Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it” Proverbs 21:20.

“Commit your work to the LORD, and your plans will be established” Proverbs 16:3.

Special thanks to my dear friends, Che Gernandizo and Dads Valencia  for the great chats on this last night!

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39 Comments

  1. I love these series of posts you have, May. It’s not to say things are hopeless at 40 but it’s very important for younger people (like me, ehem) to know how significant these things are when you get them early on. We certainly don’t have our finances completely figured out yet but it’s a good thing we have a great start already. Here’s to better financial decisions at 20, 30, 40 and beyond! 🙂

    1. Hi Pam! Thanks. I’m glad that I’m getting through younger people – in the same way that we hope to get this established in our children as well.

  2. Hi, May! Thank you for sharing this; very informative and encouraging, if I may say. My husband and I are also looking for ways to be able to save for our and our daughter’s future. It may have been late but not too late, I believe. 🙂 And just like what you’ve said, “starting late is better than not doing anything at all.”

    I specially like it when you’ve said, “God is faithful.” Indeed! I couldn’t agree more. 🙂

    Again, thank you for sharing! Blessings! 🙂

  3. Worth reading, thank you may I ask what is your opinion .. Planning to buy insurance VUL .. Which is life insurance +investment . I keep asking myself do I really need insurance so my kids they can have money when I pass on???? it is really necessary? I ask this because both my kids are grown up and finish college and I’ve been a bread winner for my family for the last 18 years till now ;not only for my kids also my siblings ,parents, relatives I an always the there to lend money without paying me back. For the past 18 years in counting I am still here working ,if want to retire now I won’t be able to survive coz I don’t have enough savings.. For the past year, 100% of my salary given to my family I am living from pay check to pay check it’s very sad but it’s true If I am literate about finance earlier, invest my 20% of my salary I should been a millionaire by now and I can retire.

    Now I’m 40 I want to prepare for my retirement can I just get health insurance so I have money if I become sick , for hospitalization instead of life insurance . Well I have Philhealth and SSS and I guess is not enough
    By the way I am a single parent ( not legally separated)
    Apologies for the long essay . Thank you
    Marilyn

    1. Hi Marilyn,

      Thank you for your comment. First of all, I just want to clarify that I’m not a financial expert so I’ll be answering your questions based only on my personal views of your situation.

      First of all, I believe you need to start thinking of saving up for retirement, because if everyone else is dependent on you, who will provide for your needs when you need to retire?

      Secondly, I think you need to prioritize on who needs financial help and encourage those who are capable to start learning to be independent from you. Kasi paano na when you’re no longer able to support them? What will happen to them? Besides, it’s too big of a responsibility to be the only one that provides for everyone. You need help in that area.

      Yes, from all the policies I’ve learned about, I think VUL might be your best option as it can serve as your life insurance or be your retirement fund. However, I also think that we can’t be relying fully on these insurance policies. They’re useful and helpful, but they may not be enough. Some of the books I read said that we should also look into other types of investments to grow our finances so we have more to prepare for our retirement.

      With regards to your children, yes, why not?

      Pray for them. All is not lost. You know, had you known me when I was younger, you wouldn’t imagine me talking about handling finances and insurance policies. If I learned late, so can they, and your investment for them will not be put to waste. 🙂

  4. I’m on SunLife too. I got a VUL for Skye’s future and a VUL for my retirement. My main reason for getting one for myself is because I don’t wanna burden my child when I’m old. Nice read as usual, May. Dami ko natututunan dito.

    1. Yes diba? We want to secure ourselves too to free up our kids so they can live their lives. 🙂 Thanks Celerhina!

  5. It’s so true. Better late than never! Jinoe and I started paying for our insurance and investments when we started receiving our salaries and I’m so thankful for my Aunts and my Mom for making us understand that we should prepare well for the future.
    Praying for your debt-free goal. It’s really possible.

    1. My parents told me to save but I wasn’t listening and I didn’t understand what they meant. Sayang nga! But good for you!

  6. I agree it’s better late than nine at all.Thank you for these pieces of info which are very useful also for couples starting out like us.We want to prioritize retirement and inheritance as well.Hope we can all accomplish these goals! 🙂

  7. I agree with you. I am also thinking about this, getting insurance. Mostly Filipino parents always rely on their children when they get old. I didn’t want that to happen when I reach my retirement stage. Thanks for posting this. I really should do something about the future. You are right, starting late is better than not doing anything at all.

  8. My husband and I are believers of insurance and mutual funds, actually. That’s why we have those. It really pays to be prepared for the rainy days. Good information you have been sharing here, mommy. Keep at it! 🙂

  9. It’s never too late and its a good thing na you still think to get one even if your in your 40’s na. I encouraged my mom to get an investment but the bank (BDO) that we went to offered her a VUL instead where she can only pay for 5 years. She’s on her 50’s na. We also didn’t have much knowledge about investing, I just learned from all the blogs that I am reading. We should really have a lot of post like this encouraging or giving knowledge to other people. I have my VUL from Sunlife for 3 years now and I can say that it also needs discipline on spending to pay for it. It’s not easy but I have a goal and that is giving me the motivation to keep on going. 🙂

    1. Good move. You’ll be surprised at the options we actually have. Nagulat ako! 🙂 But of course, on my end, I’m really choosing the financial adviser I want to partner with me. I want someone who knows exactly what I’m going through and understands. I don’t want unnecessary pushing.

  10. Awesome read May! Napapanahon! I just recently attended a financial literacy program and I just realized that regardless how tight the money has been, putting a piggy bank is a must talaga. I’m considering getting mutual funds din for the kids, instead of putting their savings in the bank.

  11. Getting an insurance is definitely not easy. You have to find the right one that would fit your lifestyle and your needs, thanks for the tips!

  12. This is has been informative and helpful at the same time, May. I’m toying with the idea of mutual funds but I’m not so sold on it and it’s a blessing in disguise that you talked about having other options out there. I’ll check on the other options that you mentioned in your post.

  13. Honestly Insurance is a topic I most dread to talk about. It usually means something bad will happen before this benefit is felt. Nonetheless I have made my investments in this, but I still do not like talking about it.

    1. I’m glad you faced your fears head on then, Fred. I’m also terrified to leave my children behind..but I’m more frightened at the idea that I will leave them with nothing.

  14. investing for the future sure is helpful, esp if you want security. thanks for sharing this information. i hope it will help people that does not have any idea abt insurance.

  15. This is interesting. I’m 23 years old but I have no financial plans yet. I don’t want to join insurances yet, but I want to learn the things about it. I’ve enjoyed reading this article and I’ve clicked the other links.

    1. It was at that age that we should have started on investing on insurances, but we learned that late in life. The good news is that insurance payments are relatively lower at your age than it is when you reach our age.

  16. Life surly gets tough. Doesn’t it?
    Thank you for providing such and insight. Have never felt the need of insurance before and after reading it,It seems to be quite an essential tool for happy life.

  17. I sure can relate to this, me and husband got married late and we are also late bloomers when it comes to career and financial breakthrough. So when we decided to have a policy, my advisor told me that I should be the one to get the insurance policy instead of my husband because we cant afford yet to get us both, and I am 36, my husband is 43. and I did that. I am now on my 3rd quarter of VUL. By the way we have no kids yet in our 4 years of marriage. So I was thinking VUL can help us in our funds if ever we have kids in the future.

    My concern now, did we make the right decision to get the policy in my name instead of my husband because he is the head of the family? we both have stable job, and we have almost the same income. I am just kind of having second thoughts about it now…

    Thank you.

    1. I can’t answer that since ideally, your FA will advise you on what he feels is best for you based on the details that you have provided him. 🙂 But I think it’s okay to have your VUL too since it’s not only a life insurance, it can be your retirement fund, too. 🙂

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