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Tuesday, September 27, 2011

What Is the Best Insurance?


What Is the Best Insurance?

Truly Rich Club
I got an email from TrulyRichCLub recommending to their member to get an insurance. Here, Bo Sanchez explained why we need an insurance and what type of insurance we must get. The email is goes like this, (read below).

The purpose of insurance is simple:

If God calls you home today, your kids won’t go hungry. Many people misunderstand this simple logic. I know some people who buy insurance for their kids. I heard one person bought insurance for his baby. Huh? I don’t get it. Who’s the kid supporting? Her Barbie doll? Her kitten? Or some single people buy huge amounts of insurance— even if they have no kids or no aging parents to support. 

Sure, they can buy a little insurance to take care of their funeral expenses, so they don’t become a burden to their siblings. But they don’t really need big insurance.

I repeat: Buy insurance if you’ve got people depending on your income. So that if your income suddenly disappears because you disappear, the insurance money will support them. But some insurance agents will try to sell you stuff you don’t need, just to earn their commission.

What’s the Goal?

But our goal in the TrulyRichClub is very simple: To build your wealth over time so that you don’t need insurance anymore. In other words, the goal is to be self-insured. But that doesn’t happen overnight. Building millions in your investments will take many years. So while your millions aren’t there yet, buy insurance.

What kind of insurance?

Buy Term Insurance. For TrulyRichClub members who are learning how to invest, you should buy pure and term insurance. It’s the cheapest insurance. Any other insurance product is a bundled product combining insurance and investment. It sounds nice. They even come by nice names: Whole Life insurance, Universal Life insurance, etc. Compared to pure and term insurance, these are very expensive insurance products—precisely because they have an investment component.

These bundled products are Okay if you don’t know how to invest. And the truth is that many people really don’t know how to invest. And many people are so undisciplined, they need an insurance agent following them up every month to give their monthly payments, with the threat of “forfeiting” or losing their entire insurance if they don’t pay. But if you’re a TrulyRichClub member, you shouldn’t buy these bundled insurance products. Why? First of all, you already know how to invest (in equity funds and in the stock market). Second, you’ve got the discipline to do it each month. No need for “threats” hanging over your head.

Here’s the shocking truth: Most of these bundled insurance products with investments only earn between four percent to seven percent each year. Yes, that’s better than the bank. But that’s much lower than what you’ll earn if you invested your money yourself in equity funds and the stock market, where you can earn between 12 percent to 20 percent each year—if you invest long-term, over 20 years or more.

That difference is huge over time. So buy term insurance. “Buy Term, Invest the Difference!” So instead of buying bundled investment product which is expensive, buy term insurance—which is cheap—and invest the difference yourself.

That’s where the wise statement come from, “Buy term, invest the difference!” Warning: Some insurance agents will not like you to buy term insurance. Because their commission is tiny if they sell this product. They will always push for bundled insurance products. So ask for it. Tell him, “I like to buy term insurance only.” If you don’t know of insurance agents, you can ask my team of TrulyRichClub Financial Coaches: Email Fely Santiago at fely.santiago@gmail.com or Lyndon Malanog at lyndonmalanog@yahoo.com. Aside from helping you get term insurance, they can also help you with your other basic financial needs—such as “longterm” health insurance (we’ll talk about this in the next issues) and equity fund investments. Below is a bonus article from Lyndon Malanog on insurance.

Happy learning!

May your dreams come true,
Bo Sanchez

P.S. As you can see, TrulyRichClub members have an incredible edge over 99 percent of the population: You don’t end up buying the wrong products and waste your money.

One Million Insurance Is P30 to P50 a Day Only
By Lyndon Malanog, Financial Coach of TrulyRichClub

When you’re still building your wealth, you need pure and term insurance. To most of us, our present investment portfolio cannot even sustain the needs of our family for the next 3-5 years if the bread winner dies to soon. We need insurance to replace our income for our family’s sake.

And it’s for our peace of mind. This will only cost you P30 to P50 pesos a day. Skip on merienda and you can now afford a P1 million insurance coverage to replace your income in the event of an untimely death. Remember that insurance is not for us to enjoy but it’s our gift of love for our family.



4 Reasons for Buying Term Insurance

First Reason: It’s much cheaper than bundled insurance because you are only paying for one component which is the dying part of it both for natural and accidental cases. This type of insurance has no savings that’s why it has no “money back” component.

Second Reason: For your savings, you should be the one to oversee it in order to harness its full potential. You have to invest quality time to learn and participate in the different investment instruments.

In so doing you can take more risk and grow your investment portfolio substantially instead of receiving the guaranteed 4%-7% PA from the insurance company if you get a bundled insurance or the insurance with savings.

Third Reason: Why term insurance only? We only need insurance today because we are still on the process of accumulating our millions. I would suggest a 20-year term insurance and at the same time continuously invest on the other investment vehicles for value and capital appreciation. 

After 20 years of diligently and consistently investing, your investment portfolio will now be in millions and insurance coverage is no longer a must anymore.

Fourth Reason: If your investment portfolio is now in the tune of multi-millions, but you still want to add more value to your portfolio, then secure another 20-year term pure insurance. The insurance money is so liquid and is free from taxes and can be used to pay off your estate tax within 90 days from your death to avoid any surcharges. 

This is now a part of your estate preservation and transfer plans. Insurance money can serve to replace the bread winner’s income or to pay off his estate to facilitate transfer of estate to the beneficiaries. So that they will continue the wealth building process from where you stopped.



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