Sometimes, no matter how much you’d like to continue paying for your policy, you just can’t; due to budget concerns.
As much as possible, don’t let your policies lapse. First of all, you won’t get a refund from your fund value, your life insurance benefit will cease to exist, and most of all, all those careful planning you’ve patiently built for the past few years will be gone!
3 Steps to Avoid an Insurance Policy Lapse
A typical Pinoy will let a policy lapse due to budget concerns and also because they decided to change their financial priorities. But I always tell them to go back to the reason why they purchased the policy in the first place. Because this policy was created for your future.
So here are some tips for you:
1. Adjust Payment Options
Adjust your mode of payment! If you started out paying PHP24,000 annually, why not change it to PHP2,000 monthly? The installment basis can help you keep up. If you are a VUL policyholder, there are no additional charges for changing modes of payment.
OR Top-Up whenever you can
If you are a VUL policy holder, you will have a fund value in your policy, which serves as the investment portion of your plan. Top-Up whenever you can. If you are paying PHP24,000 annually, keep topping up in a staggered basis. Example: Top-Up PHP1K for the first month. PHP2K for the second month. PHP1K for the third month. PHP4K for the fourth month. And so on…
You’d be surprised how a single Piso can go a long way.
2. Check you dividend options
If you are a traditional life insurance policy plan holder, your plan will have a dividend component. You can always opt to change these options so that your dividends can help pay for your premiums. Depending on your policy and year, you may reduce your premiums, or your policy might be eligible for fully paid-up!
3. Reduce your Face Amount
If you can avoid this, please do. But if you have no choice, you may always opt to reduce your benefits for a cheaper premium. I would suggest to do this as a last resort, because reducing your benefits will mean reducing your future financial stability.
There you go! If there is a will, there is always a way.
A note from the financial blogger:
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