Excel V. Dyquiangco breaks down different plans you can invest in to protect your future and the future of those you love.

 

Planning Well and Smart

Many people consider the New Year as a time for change. It signals a fresh start and a time to resolve to lose (or gain) weight, make amends with family members or friends.

 

 The New Year also heralds in a time for decision-making and planning—most especially for the future. One of the best ways to do that is to invest (yes, invest, not buy) in a plan that covers and secures your health, your children’s education plan, your death and for life’s unpredictable in between, an insurance Plan.

But what are these and how should you pick the right one for you?

 

“It is important to research first before making any financial decisions, especially when you are looking for the perfect plans for you,” says independent financial planner and expert Bernard Sy. “Look for the ideal agents and make sure that you are not dealing with sharks. Keep in mind that observance is the key.”

Here is a lowdown of these plans and what you need to know.

 

Health Plans

 

What is it?

Commonly known as health insurance, health card, HMO, the health company pays for medical expenses incurred by the insured in-patient. These include hospital confinement, surgery, medicines, and laboratory. A health plan may also cover outpatient services like medical consultations and dental visits.

 

Who should buy it?

Ideally, everyone should be covered. If you are employed, you company will usually provide a health plan. However, if you are self-employed, you will need to purchase your own health plan. “However, cost of health plans could be quite prohibitive,” admits Bernard.

 

When should you buy it?

“If you can afford, go for it,” says Bernard. This is especially true for those people who are self-employed and may suffer financial losses and opportunity costs due to disruption in productivity.

 

Why should you buy it?

Hospital bills are costly. Medicine is expensive. That’s not even counting the time when you need to take time off work while you are sick or recovering. Without a proper health plan, you could be depriving yourself of quality health care.

 

How do you know which plan to buy / best for you?

Usually, this is provided by employers as part of employment benefits, some also cover employee dependents. If bought individually, usually a family account is a cheaper way to go. Check out the options and make sure to check for things like what illnesses are covered and which hospitals are accredited.

 

Education Plans

 

What is it?

It’s putting money away now so you have money to pay for education in the future.

 

Who should buy it?

Gone are those days in which education plans would cover the full college education. “Open ended plans” led to the downfall of CAP, Pacific plans, and other pre-need education plans because it is almost financially unviable for most investments to catch up with tuition fee increase. “Because of these, I advocate do-it-yourself education plans, consisting of diversified investments such as mutual funds,” says Bernard.

 

When should you buy it?

As soon as you have child you should consider investing in an education plan or as advised by Bernard, look at building a do-it-yourself educational plan. The good thing about buying early is educational plans are usually cheaper when the children is age 0 -11 months old.

 

Why should you buy it?

An education expense is one of biggest household expenses. If you have more than one child, it is also a cost that has a direct multiplier. If you don’t have money set aside for education, tuition fees could burn a hole in your future finances. Even if an education plan won’t be able to cover the entire tuition, it will surely help offset costs.

 

How do you know which plan to buy / best for you?

According to Bernard, a proper education plan is designed and calculated. It should have the following characteristics: future tuition fee estimates, investment return estimates, how much target future amount you should have by the time your child reaches college and how much you should invest every year to achieve that amount. Choose a company that has a long-standing reputation and can be trusted.

 

Memorial Plans 

 

What is it?

Memorial plans are pre-need plans that provide for future memorial services at the time of actual need.

 

Who should buy it?

Every Filipino should have a memorial plan.

 

When should you buy it?

Now is the best time to buy a memorial plan especially if one has the means. Death is inevitable and it is always best to be prepared.

 

Why should you buy it?

You should buy memorial plans because it is best to be prepared than to leave your family and loved ones helpless at the time of actual need.

 

How do you know which plan to buy / best for you?

It really depends on your preferences and capacity to pay. There are some memorial plans which offer variety and which suit the needs of the Filipino people. “It is an optional plan, not as important as health plan and life insurance plan but having a memorial plan without life insurance defies logic. It is better to plan how your dependents will continue their life than just planning for your funeral.”

 

Insurance Plans

 

What is it?

A life insurance provides financial protection for the dependents or beneficiaries if the insured dies, he gets into an accident or he falls ill. Essentially, it is to ensure that even if the family bread winner passes away or becomes ill; his dependents will still enjoy a certain quality of life.

 

Who should buy it?

“Anyone can invest on life insurance,” says Sy. “Those who want to leave behind some amount of money for someone or those who have substantial assets that want to be protected from estate tax. As a rule, buy if you need or want something to protect.”

 

When should you buy it?

You should buy it as soon as you have dependents, or if you have something (someone) to protect. Keep in mind that the younger you are, the less amount of insurance you need to pay.

 

Why should you buy it?

Death and disability are a burden to dependents left behind. How can they continue to live if the breadwinner suddenly dies or has become disabled?

 

How do you know which plan to buy / best for you?

An ideal insurance coverage is something that will support your dependents’ financial needs for a reasonable time. A good rule of thumb is that the amount of coverage should cover at least five years of household expenses. “Therefore consult a financial planner,” says Bernard. “They will make a detailed analysis on how much coverage you should really need.

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