What’s my financial position? How well do I manage my income and cash flow? These are some of the questions you need to ask yourself, to prepare for uncertain times. Unfortunately, we tend to ask ourselves these questions once we are between a rock and hard place.
A good scenario is the COVID-19 pandemic that has interfered with the global economy. It has made it hard for one to generate an income. At the same time, the war between Ukraine and Russia now seems to cause an economic challenge as well. Though the effect might be felt by the two countries, other states will still suffer. For example, the high oil prices due to Russia being a major player globally.
Which begs the question, how protected is your income in the Philippines? You never know what the war will do to your economy. This is why we give you the best 5 ways to protect your finances in uncertain times. Stick around to find out!!
What is Income Protection Insurance?
It’s an insurance cover that acts as a soft landing in case you lose your source of income. This could be because of an injury or illness. And during this uncertain event, the insurer is mandated to provide you with cash to meet your needs.
That is done by the insurer until you can get back to work and start earning. Additionally, the cover extends once you have passed away (knock on wood thrice)!
Sean Martin D. Plantado, head of customer service for Digido.ph, notes that any life and health insurance protects you as long as you pay your premiums on time. If you miss them, the policy is invalid and will not protect you.
Why Protect Your Income?
Income protection is a strategy you need to adapt to survive the harsh economic times. Yes, you might have a huge income flow but without financial discipline, nothing counts. You won’t account for every single coin at the end of the day.
Therefore, you need an income protection strategy to; have extra cash at your disposal, provide a soft landing during unemployment, and develop more skills to remain viable in the market.
Best 5 Ways to Protect Your Revenue in the Philippines
1. Have an Emergency Fund
This is emergency money you spend when something unplanned happens. This could be a medical emergency (God Forbid), car repair, tuition fee you name it. Henceforth you’re expected to set aside a portion of your salary.
You can choose to have a savings account or a highly liquid asset. In which, having either of the two helps to limit your borrowing. Plus, you will take care of the time-sensitive commitments immediately and move on as if nothing happened.
2. Upskill and Reskill
According to the World Economic Forum report, we expect 75 million jobs to be lost by this year. Though, 133 million new jobs will be created. That is a bit confusing but true, thanks to technological advances and digital transformation.
Well, we have seen this trend from 2020 since the pandemic began. Businesses and organizations have moved their services online and we expect this to be the new norm. For this reason, you are required to upskill and reskill to remain relevant in the market.
That said, there is a difference between the two. Upskilling is all about learning new skills while reskilling is acquiring new skills. In which, upskilling or reskilling gives you a competitive advantage unlike before. Plus, the ever-changing job market finds you prepared and tailored for their needs.
As a result, find new and creative ways to upscale your skills. You might choose to:
- Enroll for online classes
- Advance in your education
- Read books and other related materials
- Seek internships
3. Stay Healthy
Your health is your health, you can’t make cash if you are unhealthy, would you? Therefore, invest in your health both physically and mentally.
Additionally, we agree these are uncertain times and even second counts, but your health matters as well. A lot of Filipinos spend time hustling just to make ends meet. And once their bodies give in they are back to where they started. All the cash they toiled for goes to foot their medical bills.
For that reason, listen to your body, have enough sleep, drink a lot of water, eat healthy and exercise. Your body needs to relax, unwind and rejuvenate. Don’t take it for granted!
4. Create a Passive Income
If there is a secret to amassing wealth and fortune, it’s through passive income. No millionaire or billionaire in the Philippines depends on their monthly income. Passive income gives you a chance to invest and save more. Unlike your salary which is fixed and only takes care of your bills.
But how do I generate a passive income? You might ask, well, you can create passive income through:
- Rental Properties
- Online business
- Investing in business
5. Seek Income Protection Insurance
It’s an insurance cover that protects you in case you lose your source of income or job. In doing so you are required to pay premiums to enjoy the monetary benefits. At the same time, you could add riders to your cover such as critical conditions, hospitalization among others. That helps to generate added benefits.
4 Best Income Protection Insurance in the Philippines
In the Philippines there are 4 major players when it comes to income protection insurance. The firms include:
The company has partnered with GCash to ensure you reap the full benefits. This means you can easily claim their protection plans. The best thing about SingLife is it covers your family’s regular expenses for a couple of years.
2. Sun Life
SunLife is another insurance firm that offers 3 income insurance packages. Each package comes with its unique benefits. The insurance plans are:
- SUN Safer Life
- SUN Startup
- SUN Smarter Life Classic
3. AXA Philippines
The firm has two packages when it comes to your income protection. They are:
- Protection with guarantees: FelXiProtect
- Protection with investment growth: MyLifeChoice
- Protect and LifebaiX
4. AIA Philippines
Last but not least is the AIA Philippines which comes with exemplary benefits you can’t resist. The AIA’S Income Assure 7 is a gift basket many Filipinos would love to have. That is because it comes with guaranteed returns. This includes an annual payout of 3.5% of the initial payment or better still a total of 24.5% cash payout in 7 years. At the same time, in case of your death (God Forbid), your family will receive a total of 110% from the initial payment.
Things to Consider When Choosing Income Protection Insurance
Though selecting an insurer might seem a walk in the park it’s not. There are crucial things you must consider before accepting any insurance policy. They are:
- A plan that is tailored to your needs: In this case let’s say you are recuperating from surgery, take a plan that covers you for the next six months, not less.
- Reading the insurance policies between the lines: It’s said the devil is in the details, hence never assume. Remember the insurer has to benefit as well for the business to remain afloat. Therefore, take time to read the fine print on the rules and regulations. And in doing so, you will avoid unwanted fees or charges. Plus, you can know how much shall be paid, for how long and what it doesn’t cover.
- Being Honest about your health status: If you have any terminal illness this could be heart disease, Cancer, Asthma, Diabetes, or any illness for that matter. Kindly disclose it to the insurer so they can give you a package that suits your needs. You never know they might be lenient on the premiums charged.
1. What should I look for in an income insurance cover?
You should look at two major things: this includes the level of coverage and the duration.
2. Should I apply for an income insurance cover yet I have an emergency fund?
Yes, you should, an emergency fund only covers you for 3 to 6 months which is good. But, what happens if you lose your source of income for one year or even more? Hence you need an insurance cover that takes care of your uncertain times.
If you are not yet convinced about having income insurance, then you are doomed. Nothing is certain in the world we are in. One day it’s a pandemic, the next it’s war or even unemployment. Thus firms have come up with customized insurance policies that fit your needs.
Your income matters, that is why they are willing to protect it at a premium. That said, not all firms are good. So are after their interest which leaves you hanging. Therefore, do your due diligence before seeking any service.