Because of the many financial difficulties that come upon families when death comes knocking at the door, life insurance and estate planning has become a surprisingly great team, pretty much like how Batman and Wonder Woman teamed up in Justice League. Wealthy or not, for as long as a person will be passing on assets or liabilities upon death, there is a need for estate planning.
Unfortunately, many people perpetuate the wrong notion that estate planning is only for the ones left behind. This is contradicted in Atty. Angelo Cabrera’s Thy Will Be Done, truly a bible in the field, as he would reiterate countless times that the primordial reason for conserving and preserving the estate is the welfare of the owner himself. Yes, there are various ways in which estate taxes may be entirely avoided, but except from getting a life insurance policy, most of these involved transferring one’s properties during their lifetime, and the evil consequences thereof are often regretted in the end.
Surrendering property rights before death would leave one financially dependent on others at a time when liquidity should be the rule. In the twilight years of a person’s life, the same day-to-day costs would still be incurred. Where health concerns may be an issue, there is more reason for the individual to have wealth at hand. Regrettably, not everyone is lucky enough to have good relations with their in-laws. In fact, as much as how self-assured we may be that we’ve raised children who will look after our welfare when we’re old and grey, circumstances may not permit them to be the loving kids we expect them to be, as they too will have their own affairs to put before ours.
I and my husband have spent some time reflecting on this vis-à-vis our current financial situation. On our own as a family, we have laid down enough preparations for when we shall pass on to the other side. Both of us are sufficiently insured such that when the time comes that either of us has to go, our family will continue to prosper. Yet there is one thing we are not prepared for – our parents’ time to go.
As open-minded as we are today, talking about our parents’ passing is an uneasy matter to talk about. However, the reality is that we come closer and closer to that dreaded point as days go by. In the natural order of things, parents do not bury their children; it is the other way around. What’s worse is that the children’s finances are sometimes stretched to its limits when hefty hospital bills come into the picture due to prolonged illness and costly medical care. A young family like ours cannot take such stress without putting our savings and investments for other goals at risk of being dissipated. The only answer is to have some form of estate preparation for our parents.
The plan is pretty simple actually – get a life insurance policy. For as low as P12,000 annual premium per insured parent, we can already rest assured that whatever liabilities or expenses we will have to meet as a consequence of their death will be taken care of by the proceeds of the policy. While term plans are much cheaper, they may be converted into limited-pay whole-life plans before the expiration of the renewability period. If you think about it, the premiums we pay for the protection we get is a small price for peace of mind. To help you to get started, it is best to talk to a financial adviser about your needs and priorities. Discuss your goals as a family and determine how much you can save on certain aspects of your finances so you can channel it to other more important matters such as financial protection.
Put simply, life insurance works wonders in estate planning, primarily because it creates new wealth where otherwise there would have been only grief and financial distress.