There is crisis in the financial market! People are losing faith in banks and insurance companies. People are stopping their insurance policies and are less open to the idea of planning for their future. A lot of people in the financial services line may lose their job anytime. Banks are working hard to salvage the situation and others are seizing this crisis to make a windfall as well.
These are the current news that are populating the newspaper and news media…
But should we be so affected by this current crisis?
>> For those who say yes!
I understand from there are many whom have been putting quite a fair bit of their savings/hard-earned money into their insurance policies or into those that claim high returns yet seemed too good to be true kind of bank products and are fearful that once the crisis get way out of hand, everything that they have put into may just go down the drain.
For that, there are many good reasons that we should be really affected by this current crisis!
But, on the other hand, there are some factors to consider like for instance:
On Your Insurance Policies:
You may have bought (for many years already) into a few Protection plans and/or Savings plan and these are meant for peace of mind against any instance of unforseen circumstance like illnesses or even in preparation for a good retirement or for your life long dreams and goals.
The crisis has just started without any finalization as yet. Should you be deciding to (really) terminate your policies – consider this… What if you do suffer a illness during this period, but you have terminated your policies, where will you be looking to get those money? From a new insurance policy that is not approved yet? You get the answer… Also if your insurance policies have not break even – imagine the losses you will be getting.
On Those Bank Products:
I believe this can only be meant for a lesson to be learned. There are no perfect products in this world. My only advice is that you have to study the product carefully, especially all the fine prints and the risk involved to participate in the product. Also that you should not be putting all your savings into one single product.
>> For Those Who Say No!
For you who say no, I guess you may be getting some good opportunities out of the crisis or that you are simply a very positive person.
Seriously, what can we learn from this or any crisis?
There is a chinese saying that states that there’s always an opportunity amidst any crisis which is very much the case like for instances:
- Other insurers, that are not deeply affected by the crisis, get to have a certain percentage of the “lost” clients going to them.
- Investors, that have noticed the incoming crisis, have their resources ready to get a good buy in the Stocks market
- There are also few educational programs coming out of the blue to teach people like you and me – how to survive in this crisis or the type of business/product/services that you can have to make a profit out of this or any crisis.
For me, my personal view out of this crisis, in terms of financial planning and insurance is that:
- Diversification: For any insurance products, you should not be getting all of them from just one company, even if the Financial Planner is your closest sibling. For e.g. if you do know that you need around $200,000 worth of life protection, you can get your coverage between 2 – 3 insurance companies, so should there be a (real) crisis in one of the companies – your loss is just half or a third and not 100%. And not only just that, for any bonuses in your policies, you are not deeply affected by one company’s performance. If one company should face a stagnant growth, which you have no say at all, you can always depend on the others for better returns.
- Opportunity: I do agree that for any crisis, there’s opportunity. But I should not be talking much on the “lost” client coming to me. Instead I want to focus on insurance related topic like investment-linked products (ILP). I am currently into a ILP using the Dollar-Cost-Averaging method. With the value of unit trust (especially Equities) going down over the next few weeks, my similar dollar buying into the next month will mean that I am getting more units -> break-even faster -> profit higher and faster (when the value picks up in the next few months or years). If you do face a similar opportunity, seize the chance fast!
- Know Yourself Better: There are many out there who do not know themselves well. They commit to a certain product because of the good recommendation. Like for example, you are not a risk-taker, therefore if I recommend you to take up an investment in equities, despite my recommendation that it will have a double digit growth (on the average). You should not be taking the plan up as any negative growth will only make you more worried and higher chances of giving up the policy. Therefore you need to know yourself and your personal limits better before making any commitment!
In summary, with the crisis in sight, if you are deeply affected by it – you can only learn how to make your own judgement, be more patience and be open to any opportunities. Let’s keep our fingers crossed and hope for the worst to be over!