Real talk: Death doesn’t end with sadness at the passing of someone we love. Death and illness come with their own financial shadows. In fact, perhaps one of the most painful lessons that comes from this pandemic is that whether you are the CEO or the lowliest member of the crew, the cost of medical care and untimely death can truly wipe out every drop of savings being set aside supposedly for a long, happy life.
But thank heavens for opportunities to start anew. While we cannot control who passes on, we can get ready to fight the financial shadow. And there’s no better time to start taking the right steps than the beginning of a new year.
Here are six financial strategies that will better equip us to be future-ready. Steps that are a must for everybody, whatever the age, gender, or income level. Let me stress that this is not just for boomers, or sickly people, or low-income groups. As you know, no one is immune to the need to be prepared.
1. Stop procrastinating on that exercise or yoga session, and change your diet to one that keeps your insides healthy, not just your waistline small. I went back to yoga because running and hardcore exercise have stopped working. I needed to go back to the basics of breathing steadily even while sweating profusely. I stopped following diet fads and went back to the basics: nutrients that nourish the body. Stow away the gadgets and sleep at least eight hours and power naps. Soak in daily sunlight. These are not new breakthroughs, and yet we keep ignoring them.
2. Set up a financial protocol for your household in case somebody gets sick and passes on. Put all financial documents in one place, where each spouse could find them easily. Organize them by using a one-page financial inventory worksheet. Include details like the name and contact number of your insurance agents, relationship managers, real estate brokers. This saves everyone A LOT of time.
3. Aim for a zero-consumer debt lifestyle. Sometimes we think that that high paycheck will last forever. Well, that’s another thing COVID has taught us. Crises are also inevitable and no paycheck has guaranteed immunity. Pay off all credit card debts in full every due date. And please get out of “5-6”or any loan from online lending agencies. Their effective interest rates are through the roof.
4. Build an emergency fund worth one year of living expenses. I know, I know, that sounds terribly big. But a three to six month emergency fund appears to be insufficient now. As you know, we will soon be passing the second anniversary of the pandemic. Set up a one-year emergency fund that can provide you with protection for all kinds of real emergencies. (Oops 11-11 is not an emergency, in case you forgot.)
5. Get critical illness and life insurance. For those of us who do not have enough cash to pay for the cost of illness and death, life insurance and critical illness coverage is an essential, post-COVID. Many survive the high cost of illness, but lose the cash for the rest of their days.
6. Create your estate plan. Draft your will. This is not a sign you are giving up on life; this is a love letter to those you hold most dear. Think about how you would like to pass on your assets to your family, so there is clarity on who gets what. That is the most powerful “I love you” anyone can ever articulate. Teach your spouse and children now how to grow the business you have built from scratch. Do not wait until the last minute.
There is much wisdom in choosing the right life and critical illness insurance that have all the features you need. Look for insurance products for the living, not just for those who are giving their final goodbyes. Most of all, one that has provisions for helping you stay healthy, while at the same time protecting you from the costs of critical illnesses.
As someone whose leisure time is spent studying all possible products that can protect our changed lives, I have recently realized these are the things you need to look for in life and critical illness insurance:
First, protection from loss of life. COVID has made going to the hospital for treatments so much more difficult. So much so that more people are dying even from causes unrelated to coronavirus.
Second, we need boosted coverage that can take care, if possible, of all the common risks we can encounter in our lifetime, such as critical illness, personal accident, total and permanent disability. If we can get double benefits for risks such as accidents caused by acts of nature or while using public transportation, much better.
Third, products that allow you to squeeze more out of your savings through investments at this time are a big help.
And finally, the best bonus is having a product that’s not limited to covering your financial needs, but also takes care of your physical health. If you can have an insurance product packaged with a program that can give you rewards, discounts, perks, and loyalty bonuses for living healthier, why not, right?
AIA Philippines’ newest product, the All-in-One Plus (or AIO Plus), covers all these. It provides not only basic life insurance but also offers coverage for total and permanent disability, personal accident, and most common critical illnesses. It comes with the AIA Vitality program that incentivizes you with rewards for knowing and improving your health, as well as giving you up to 50% additional coverage on your insurance for maintaining a healthy lifestyle. You can also receive a Loyalty Boost on your tenth year, which means a possible increase in your plan’s investment value depending on your annual Vitality status.
If you want to super charge your coverage, you have the option to add the daily hospital income, where you can receive cash in case of hospitalization due to covered illness or injury.
However, the best feature of this product is its investment component. If you’re one of the lucky ones who don’t need to use your coverage for any of the situations above, the money you put into your plan has the potential to keep on growing. It can maximize the growth of your savings, depending on your risk appetite, the investment fund it goes into, and market conditions.
When death and illnesses surround us, let us not forget that we CAN still enjoy these little bursts of generosity.
COVID has taught us the “essentiality” of life and health insurance, because the pain it brought made us realize the vulnerability and, yes, the beauty of life.