"Ayoko magbayad ng insurance. Mag-iipon na lang ako."
I respect that, honestly. It's a real strategy, called self-insuring: instead of paying premiums to an insurer, you set aside enough of your own money to absorb the risk.
It can work. But it works only if you do the arithmetic, and most people haven't. Let me walk through it.
What self-insuring has to cover
Insurance protects against events that are unlikely but very costly. To replace it with savings, you'd need a pool large enough for the worst version of those events, not the average.
Start by naming the risks:
- Death or disability while others depend on your income.
- A critical illness with months of treatment and lost income.
- A long hospital stay.
- Care needs in later life.
The arithmetic
For each, ask how much it could cost, and compare it to what you'd have saved by the time it happens.
Take income replacement. If your household lives on ₱50,000 a month and would need support for ten years, that's ₱6,000,000. To self-insure that, you'd need ₱6,000,000 sitting somewhere accessible, from the start, not building up to it over time.
The reason insurance exists is that it gives you that pool on day one. A savings plan doesn't. If something happens in year two of your saving, you have two years of savings, not ten years of cover.
The timing problem
This is the part people miss. Self-insurance is weakest early, when your savings are small, and exactly when people with young families are most exposed.
Insurance is strongest early: the cover is full from the start.
When self-insuring does make sense
It can be reasonable if:
- You already have substantial assets, so the pool is real.
- No one depends on your income, or you've already built enough for them.
- You insure the catastrophic parts and self-insure the small ones. A high deductible or co-pay, for instance, is partial self-insurance.
That last option is how many sensible people actually do it: they don't skip protection, they choose the layers they'll carry themselves.
A fair test
Write down the largest bill you could face in each category. Then ask:
1. Do I have that amount today, in a place I can reach within days? 2. Would paying it set my plans back for years, or end them? 3. If I have dependents, would they be fine without my income for as long as they'd need?
If the honest answer is yes, you may be able to self-insure. If it's no, the savings plan isn't wrong. It's just not finished.
The takeaway
Saving is good. It's the other half of the plan. But for the risks that can't wait for your savings to grow, insurance is the way to buy the pool you haven't built yet.
Do both: build the savings, and cover the gap in the meantime.
The free Life Ready Checklist at lifereadywithvenus.com has a page for working through this at your own table, free and with no sign-up.
