Investing Money 101: Eliminating Risks

Hi! My name is Chad Senga, a licensed financial advisor of Pru Life UK. If I may have a brief moment of your time, I would like to share with you a wonderful means of securing and investing your hard-earned money:

With regards to saving, putting away a portion of your monthly income to your bank is good practice, but where that money goes and what can happen to it is also something we should consider.

We spend a good portion of our lives to earn money because a lot depend on it: bills, food, rent, and supporting a family if you have one. Other than that, money is also essential in buying the things we want: a car, house, a vacation budget, a new phone, etc.

Long story short, your income is important and it would only be natural to protect it. Protect it from what? Risks and threats that would force you to spend your savings due to unexpected events.

Let me share with you a brief scenario:

Saving P5,000 a month leads to P60,000 after a year. But if something unexpected happens, say, you get diagnosed with a critical illness or get into an accident, your precious P60,000 you worked hard on for a year will only go down the drain. Worse, it may not even be enough to pay the costs you suddenly incurred.

Having an HMO is good practice as well. However, there are certain limits: you could have one only because of your company, and once you resign or if you’re unable to continue to work duo to certain circumstances, then your insurance will be revoked. You will be vulnerable on the instances you are unemployed. Also, insurance will depend on your HMO- not everything will be covered, and the amount covered is usually for a fixed amount. Overcoming these lapses calls for good financial planning.

It’s not just about the medical expenses, but also what will come after: if you are the breadwinner and you become unfit to work, you will have no income nor even a buffer of funds to spend until you and your family find another solution. This will spell disaster for everyone.

THE PROBABILITY OF RISK

I casually say that you could get diagnosed with a severe illness or get into an accident like it’s just a common occurrence, but it’s not, yes?

Agreed, but I can’t be entirely wrong.

We work constantly and tirelessly on a daily basis while our bodies grow older and more fragile. So it’s not far-fetched to accept the fact that there may be a price to pay for this imbalance in the future. Even those with the healthiest lifestyles don’t get a free pass from getting sick. Five, ten years from now? Even we ourselves don’t know what our health will be. The moment we actually decide we need insurance may be too late.

These are the risks that pose a threat to our income- risks that are out of our hands. If we cannot completely eliminate said risks, then the next best thing we can do is be prepared should these dreaded events happen.

How can we be prepared? We at Pru Life UK offer a solution:

*Computation is based on a 25-year-old male
*Investment is flexible, can be higher or lower than 3k, values will differ

*Withdrawable fund is not guaranteed and will depend on future market performance
*Computation is based on 10% performance, Pru Life UK Peso Equity is at 17%

Instead of spending all your savings when an unexpected event occurs, securing a life insurance policy at Pru Life UK can work wonders. There’s a cash-out for you should you be diagnosed with a critical illness, get into an accident, or become disabled. This cash-out can help along with your HMO if you have one. After all, the expenses won’t end at your medical bills.

INVESTMENT, NOT PAYMENT

The money you will be allotting to Pru Life UK will be invested in stocks and bonds. They will grow through these investments, resulting in the Withdrawable Funds mentioned above. The values mentioned are not guaranteed, but close to what our market performance has been for the past years. Instead of saving P720,000 for 20 years in a bank, why not invest and get P1,500,000 or more, and even get illness, accident, disability and life insurance at the same time? In the long run, the insurance will be paying for itself, you will be protected, and you will be getting more money than other investment schemes.

BATTLE INFLATION

Banks offer an average of .25-1.25% yearly interest on your savings accounts, but the average yearly inflation in the Philippines from 1958-2016 is 8.62%. What does this mean? It means if you just let your money sleep in the bank, chances are they will lose value through the years. Looking back, P10 can get you two jeepney rides 15 years ago, but now it can only get you one. Also, the money you can buy with a brand new car 15 years ago can only buy you a 2nd-hand one today.

Pru Life UK has many investment funds, including the Peso Equity which has an average 17% performance since its inception in 2007.

DEATH IS TABOO, BUT ESTATE TAX ISN’T?

The Filipino culture where talking about death is taboo still exists today, that selling them life insurance is like us wishing them to die soon. It may already be a no-brainer, but keeping that attitude going will leave us unprepared. We need to get over the fact that death is inevitable, and those left behind will be dealing with problems caused by it: medical expenses, funeral expenses, and the dreaded Estate Tax.

Did you know that for the heirs to get their inheritance from their late parent/s, they must pay a good sum of up to a million pesos to the government? If they have millions to inherit but don’t have the money to pay for the tax, the estate will not be released. This is exactly why we need to get over that taboo and settle things before it’s too late.

The Death Benefit feature of Pru Life UK can be exempted from Estate Tax. Basing from our earlier computation, the heirs will get their P1,000,000 from us, and can even use it to pay for their Estate Tax. Quite helpful, yes?

YOU WILL BENEFIT IF YOU NEED…

  • Income Protection – to prevent you from losing your hard-earned money unexpectedly
  • Emergency Fund – to be financially prepared when emergencies happen
  • Savings for Personal Use – budget for car, house, travel, etc. in the years to come
  • Savings for your Child’s Education – tuition fees are expensive, even more so in the future
  • Retirement – when income stops but the expenses are bigger, are you prepared?
  • Bereavement Costs – can be exempt from estate tax; can help in upcoming expenses

All six of these are instances in life we would eventually face. Securing a policy, regardless of your current stage in life, can be a most prudent decision. The younger you are, the more returns you will get.

To see our various packages at Pru Life UK, click here.

LET’S TALK SOME MORE

Thank you for taking the time to read, and I hope you have learned something new with regards to managing your hard-earned cash! There are more wonderful things life insurance has, so if you want to talk more about Pru Life UK, our services, or if you already want to get a policy, just contact me here:

Richard Senga, Pru Life UK Financial Advisor
Mobile: 0918 959 20 45
Email: chadsenga@perfectrenders.com

 

ABOUT PRU LIFE UK

Pru Life UK was established in the Philippines in 1996 (21 years) as a life insurance company, and is a subsidiary of United Kingdom-based financial services giant Prudential PLC. Pioneering the sale of variable unit linked (VUL) products in 2002 and one of the first approved to market US dollar-denominated policies, Pru Life UK is among the leading insurers in the industry.

ABOUT PRUDENTIAL PLC

Established in 1848 (169 years), Prudential PLC has an extensive network of life insurance and mutual funds operations around the world, active in the United Kingdom (UK), Europe, the United States and in Asia. It has 24 million insurance customers worldwide and manages £509 billion in assets as of December 2015.


Prudential plc Headquarters in London / Pru Life UK Branch Opening in Manila

USEFUL LINKS

Pru Life UK (Philippines) Web Site
Prudential PLC (United Kingdom) Web Site
Pru Life UK 2015 Annual Report
Pru Life UK 2015 Annual Report Highlights Video
Pru Life UK Fund Fact Sheet (May 2016)

Disclaimer: this article is made by Richard Senga and is not an official presentation of Pru Life UK.