The world is not round

Question: My parents say that life insurance is not necessary as they lived long lives and did not need a company to back up their finances when they were still young.

Answer: Consider this: the Earth is not round. The Earth is actually closer to an ellipsoid. By around 70,000 feet, the planet is pudgier at the equator than at the poles. This is caused by centrifugal force arising from the Earth’s constant rotation. More importantly, the shape of the planet changes periodically, as with daily tides that affect both the ocean and the crust, slowly and steadily, as with the drift of tectonic plates, and sometimes violently, as with earthquakes, volcanic eruptions or meteor strikes.

Now, put a pin on that and consider the following story.

Many years ago, I took a 4 a.m. flight to Cagayan de Oro (CDO), hoping to be just in time for a training program that would start at 8 a.m. I estimated that my four-hour allowance for travel time would be enough to get to the training venue on time.

But as the plane took off, I noticed that the left engine sounded different. Whereas the usual engine sound would be high-pitched, this time around, the engine gave a low-grinding noise, like metal against metal. But since I didn’t see the crew and pilots paying attention to it, I just dozed off.

After a short nap, I woke up in time to see the captain step out of the cockpit and walk up and down the aisle. This was unusual for domestic flights as pilots would normally remain in the cockpit for the short trip.

After returning to the cockpit, the captain announced that he was diverting the plane to Mactan for safety precautions. Diverting a plane for possible technical problems is unnerving, to say the least. But throughout the 20 minutes of maneuvering for an emergency landing, the flight crew did their job flawlessly.

We eventually landed safely at Mactan airport. As I stepped off the plane, I saw that the plane suffered a bird strike that damaged two of the left engine’s fan blades. It could have been worse.

We eventually took another plane to CDO from Mactan and landed two hours later than scheduled. Needless to say, I also arrived at my training venue two hours later than originally scheduled, but still on time for my training run.

Time and time again, many long-standing beliefs have been proven to be inaccurate by life events. That is why we need the equivalent of life’s flight crew to help us weather unforeseen risks. And that is why risk management is very important. In personal finance, part and parcel of risk management is getting adequate life insurance. And it goes without saying that the more stable the insurance company we lean on, the more at peace we will be.

It also helps if the insurance company we choose trains its people in knowing the practical approaches to money management in general (i.e. cash, debt, risk, and wealth management) and not just risk management in particular.

The art of exuding nothing but optimism, confidence and caring (from the time they greet clients on the phone or meet them for the first time all the way up to when they handle clients’ claims) is a must for insurance personnel.

For your part, it pays for you to get life insurance early as it gives you and our family the capacity to maneuver well for unexpected risks. Such maneuvering can come in the form of lower premiums and larger coverages, additional benefits arising from dividends, larger fund values and additional coverage in case of critical illnesses.

Get adequate life insurance and get it early in life. And if you eventually do not make early claims, be happy. That would be the equivalent of having the ideal uneventful yet enjoyable flight. INQ

Send questions via “Ask a Friend, Ask Efren” free service at www.personalfinance.ph, SMS, Viber, Twitter, LinkedIn, WhatsApp, Instagram and Facebook. Efren Ll. Cruz is a registered financial planner and director of RFP Philippines, seasoned investment adviser, author of best-selling personal finance books in the Philippines and a Yaman Coach. To consult a Yaman Coach, email [email protected]. To learn more about personal financial planning, attend the 103rdd RFP Program this Sept. 2023. To inquire, e-mail [email protected] or text 09176248110.