In 2018, my BF decided he wanted to get life insurance and asked me to look into some companies. Armed with no knowledge at all about the insurance world, I googled “best life insurance provider 2018” and Sunlife came up. I contacted the agent assigned to my area through Sunlife’s website and then we scheduled a day to meet. I initially told the agent to just make a quote for my BF and none for me but she ended up bringing a quote for me too. Long story short, she was able to convince me. But how on earth will I make space in my budget for life insurance.
I was earning only around P23,000/month around that time. I was renting, paying my own utilities, providing for my own and my family as well. I got the VUL (insurance + investment) by the way so payments are a bit bigger. I told the agent to give me a month to study my finances so that I can sustain the payments.
So How Did I Do It?
Finally Really Tracked My Expenses
Looking for ways to pay the insurance premium payments is what really prompted me to track my expenses. By tracking my expenses, I can see where my money is going and look for ways how I can cut my spending. I have been tracking my expenses here and there but never religiously. After a month of tracking, I finally learned where I can cut expenses so that I can allocate them for insurance payments. I was so surprised that I still had space for insurance in my budget even though I had a lot of bills to pay.
When somebody asks me what’s the first thing they should do to be good with money, I always tell them to track their expenses.
Made a Realistic Budget
Since I had a clear picture of where my money is going, I was able to make a realistic, “stickable” budget since it is based on my average expenses. Before doing this, I wasn’t able to stick to my budget because they were more of a forced limit on spending rather than a freeing one.
With another bill to pay, I’d have less money for my “wants”. I made a deal with myself that if I wanted something brighter for my future, I’d have to sacrifice things now. I promised to buy fewer books and clothes and less eating out. This helped me not miss any payment.
Should You Get a Life Insurance?
If it doesn’t make sense to you, don’t get it. It made sense for me because I am a breadwinner and the eldest sibling. At that time, I was the only working child. My mom was employed but was just earning a minimum wage. All my siblings were still studying so it made perfect sense to me to get life insurance at that time. I have one sister who is earning now but because of the pandemic, my mom got laid off. It still made sense to me to keep the life insurance. I don’t have significant wealth yet that I can “handover” when I die today. But if I die today, my mother will get 1 Million. A friend in the personal finance community once told me that my beneficiaries can easily get the 1M (less the necessary deductions) without paying for estate tax. An estate tax is an amount that needs to be paid first before your assets can be transferred to your heirs. Life insurance is exempted from that however, all other assets, bank, and investments accounts are “taxable”. In short, before my assets can be transferred to my heirs, they will need to pay a an estate tax first. For life insurance, they don’t have to.
If this is incorrect, please let me know. This is what I was told and what I’ve read.
If you are single and just spending for your own (no children or parents to support), getting life insurance isn’t really a good idea even though the agent tells you how much beneficial it will be for you. Health and critical illness insurance will benefit you more so take that one instead. Take this “no-dependent” stage to build your wealth. Invest that money to the stock market instead of paying for insurance premiums.
I was already DIY investing in the stock market through COL during this time but I also wanted to invest in a managed fund. I know the fees are expensive but I also wanted to have an expert manage my portfolio.
Everybody’s financial journey is different so you can’t exactly copy mine nor you can roll your eyes at somebody else’s financial decision that doesn’t suit yours.
I hope this was helpful. If you have any questions, you can comment down below, on my Instagram account or message me there.
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