Preparing for the future in more ways than one

Mark and Mia are married, in their 30s, with two kids in preschool. Both Mark and Mia are gainfully employed, and the family lives in a rented townhouse with a two-car garage. Although things look great right now with the family living a comfortable life, Mark cannot help but sometimes worry about the future. “If something happens to me or Mia, or to both of us, I worry about whether my kids will grow up well,” he said.

No one can tell what will happen in the future. But that does not mean people should not prepare for what may lie ahead. But how can one be adequately prepared?

The answer lies in insurance. It’s about protecting the family and ensuring that family members will still maintain the same quality of life now when the head of the family gets sick, passes away, or loses a job. It’s about ensuring that children will still be able to finish school no matter what happens. It’s about making sure one will have enough funds to sustain his lifestyle when retirement comes.

Everyone has heard of insurance, but with the slew of financial products in the market today, how does one go about choosing the best one that will fit his or her family’s needs?

For Citibank cardholders and bank clients, shopping for the right insurance product has been made easier with the assistance of Citicorp Financial Services and Insurance Brokerage Philippines, Inc. (CFSI), Citi’s insurance and investments arm in the country.

“At CFSI, we assess the needs of our customers first. Then we scan the market for the relevant financial products for our clients, and look for the best fit. Many of our customers appreciate how we can take them through a wide range of choices backed by different insuring companies which makes it easier for them to make their final selection,” related Teng Alday, CFSI’s Insurance Director.

Insuring your credit

For Citibank’s more than one million credit cardholders, their introduction to CFSI is primarily through CreditShield, the first-in-market credit card balance protector.

Cardholders who opt for this insurance coverage pay a monthly premium charge of 0.69 percent of their outstanding balance. In turn, the cardholder enjoys protection and peace of mind in the event of illness, accident or death.

While CreditShield is in effect, the insurer will pay off the minimum balance due on the credit card bill for up to six months should the Citibank cardholder become temporarily disabled. They will also settle the outstanding balance of the credit card account at the time of the cardholder’s death, occurrence of the permanent disability or diagnosis of the covered critical illness, so the family won’t have to take on this burden.

Insuring your future

But CFSI also offers a range of other insurance products: life insurance, educational plans, retirement/pension plans and health insurance. Currently, CFSI works with several established companies that belong to the top 10 insurance companies in the country.

“Clients of Citibank, Citifinancial and Citibank Savings welcome the convenience we offer – we know there is no one-size-fits-all when it comes to financial products, and so we take pains to ensure that we present tailor-fit recommendations,” explained Alday.

“Insurance is an integral part of the financial planning process. While we would like to help our customers create and build their wealth, it is also very important that they protect it as well. As one goes through the different life stages, wealth protection is key, and it is best to start this at the early stages of life.

“While needs differ from one individual to another, CFSI has expertly positioned these in four categories, or four protection needs.

1. Protection for the family. According to a study made in 2005 by the Center for Retirement Research at Boston College, 75 percent of adults aged 51 to 61 will experience a negative event such as health problems, job loss, divorce, widowhood or onset of frailty among parents or in-laws. These events may throw a family off balance. Having adequate insurance to cover these events will safeguard the family’s well-being.

2. Protection for a child’s education. CFSI has noted that the total cost of education in a private local university today may run from P1.1 million to P2.3 million. In 16 years, this will double to P2.2 million to P4.6 million. Since tuition fees increase every year, one must plan well to be able to meet future educational needs.

3. Protection from critical illness. About six in 10 Filipinos are expected to likely die from cancer, stroke, cardiovascular diseases and kidney diseases, according to the Department of Health website. Since treatment for these diseases do not come cheap, it is imperative to prepare well in the event any of these diseases occur in the family.

4. Protection for retirement. Retirement is one of those things people do not want to think of while they’re young. But by planning well ahead of time, one can possibly fully enjoy the retirement years. According to a study made by T. Fahey and H. Russell at the Economic and Social Research Institute, about 73 percent of those who retire cannot afford to retire in comfort. Rather than work beyond age 65, one must save now for this important time someday.

“In anticipation of the above needs, a lot of people turn to insurance as a form of disciplined savings that is not easily withdrawable, with the regular premium payments they make. Insurance products such as variable life and investment-linked insurance offer a savings component. Risks are also transferred to the insurance company. For example, an education fund may not be completely paid, in case an unfortunate event happens. With insurance, one is assured that the education fund is ready when the time comes it is actually needed,” Alday pointed out.

But these are just extra benefits. The main thing is that with insurance, the family will be taken care of in any eventuality. That gives one peace of mind, and for a lot of people, that’s all that matters.