Open any life insurance policy to the schedule page, the one near the front with the boxes and figures, and you'll find a lot of numbers. Most people read none of them.
You only need three to start. If you can say these three out loud about your policy, you understand it better than most owners.
1. The sum assured
This is what the policy pays if the thing it covers happens. Death benefit, critical illness lump sum, hospital income: each benefit has its own figure, and they are not the same number.
It is the most important number on the page, because it is the one your family will actually receive. Everything else is how you get there.
Ask yourself: if this paid out next month, how long would that money keep my household going? Not in theory. In months of rent, food, tuition and bills.
2. The premium
This is what you pay, and how often. Look for two things beyond the amount: the payment mode (annual, semi-annual, quarterly, monthly) and the due date.
A policy only protects while it is in force, and it stays in force by the premium being paid on time. The premium is the number that determines whether the first number exists on the day it's needed.
3. The cash value (if there is one)
Some policies build a value over time, and some don't. Pure term coverage has none. Whole life, endowment and many investment-linked plans do.
Where there is one, the policy usually shows a table: year by year, what the policy is worth if you stop. Read the early rows. In many products they're low, sometimes zero, for the first few years. That isn't a trick. It's how the product is built, and you should know it before you decide to stop paying in year two.
What to ignore on the first read
Everything else. The clauses, the riders, the endorsements: all worth reading eventually, and we'll go through them in other pieces. But if you start with forty pages you won't finish, and a policy you haven't read is the one you're most likely to cancel or neglect.
Start with three numbers and one sentence.
The sentence
Write it down in your own words:
"If something happens to me, my family receives ₱____. I pay ₱____ every ____. If I stopped paying today, I would get ₱____ back, or nothing."
If you can't fill in a blank, that's the first thing to find out. You can ask your insurer, or your advisor, or bring the paperwork to someone who'll read it with you.
Nothing here is difficult. It's just that nobody sits you down and does it.
The free Life Ready Checklist at lifereadywithvenus.com has a page for writing these down, free and with no sign-up.
