Many people embarking on financial planning for the first time may be stumped, or simply overwhelmed by the endless 101 financial planning guides telling them to do different things. This can apply to anyone, not just the usual “millennial” crowd. The truth is if you're an employed working adult, you're rarely starting from ground zero.
Here is a list of things that you might already have as part of your financial protection arsenal that you should be aware of:
Filipinos aged 15 and above are eligible to be part of the government social insurance program, Social Security Program (SSS), which covers you with a package of benefits and compensations in the event of sickness, maternity, disability, retirement, death and funeral. In order for an SSS member to claim lifetime monthly pension, you have to be at least 60 years old with at least 120 monthly contributions. In case of death and if qualified, either the primary beneficiary of the insured person is granted a monthly Death Pension plus a 13th Month Pension payable every December, or the lump sum benefit is paid to designated beneficiaries or legal heir. Check out the SSS website for more information as this should be something you have in mind when you consider your coverage as part of financial planning.
Most private companies in the Philippines offers coverage from Health Maintenance Organizations (HMO) to their employees on top of the PhilHealth membership contribution. These plans are usually customizable depending on the premium paid by the employer or individual, but limited to a certain amount of annual allowance. If you are currently employed, one of the first things you should do is to review the policy documents of your company’s group health insurance to find out what it covers (e.g. hospitalisation and surgical expenses, outpatient treatments, personal accidents, critical illness etc.) and what are the policy limits/payouts.
Once you know the details of your group health insurance policy, you can maximise it by using it whenever possible, and decide how much you can pay for a in exchange for a lifelong and more comprehensive coverage, while building up an investment profile on the side.
One of the biggest mistakes in financial planning is not understanding what you have and end up spending extra on existing coverage. In this case, you should have a clear view of what coverage is offered by the group health policy, to avoid using private health insurance policies for hospitalisation, treatment and medical expenses which are usually fully or partly covered by the group plans.
Check with mom and dad. Your parents might have already purchased insurance plans for you when you were young. You'll want to avoid purchasing duplicate insurance plans, or policies with overlapping coverage.
To start your financial planning strategically, it is important to have this conversation with your parents as soon as you step into the workforce, or even earlier if you want to kick start your insurance planning. This process will help you understand what you already have and greatly assist you (and your potential financial consultant) in coming up with a suitable insurance plan.
Once you're armed with knowledge of what you have, the next step is to review the gaps and overlaps in coverage. These gaps and overlaps present an opportunity to remove or add coverage to your private insurance policies. For example, if you have a but your HMO already covers it, you may want to avoid the overlap and save on premium payments by sticking with the group coverage if the protection is sufficient. Alternatively, if your group insurance policy doesn’t have life protection coverage and you’re not covered for it by your existing private policies - you can fix this gap by adding it as a rider or getting a new policy.
Starting out on a clean slate with financial planning can be a daunting task, but there's always somewhere to start if you feel hesitant to before doing any research. More often than not, you would already have some form of insurance protection without even realizing it. Arm yourself with the right information and start your financial planning process right!
Now that you understand what is financial planning and what the steps are, you can kick start your financial review.for a conversation.
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