🧩 Insurance 101: A Beginner’s Guide to Protecting What Matters

When the Ground Shook

I live in Cebu. And when the magnitude 6.9 earthquake hit last week, the first thing I felt was fear. In those seconds when everything around you starts to move, you realize how fragile things are: your home, your savings, your sense of control.

When the tremors stopped, I wasn’t just thinking about safety anymore. I was thinking about resilience. How do we protect not just our lives, but also the things we’ve worked hard for? How do we prepare financially for disasters we can’t predict?

That’s when I thought about insurance. Not as a product but as a safety net most of us never think about until it’s too late.

In today’s edition, we’ll go over:

• What insurance is and how it works

• The 3 main types of insurance

• How to choose the right insurance for you

TLDR;

The Bottom Line

• Insurance is your financial safety net. You pay small, regular premiums so you’re not alone when big, unexpected expenses hit.

• Start with the basics: health, life, and non-life insurance (add “Acts of Nature” riders if you live in the Philippines). Choose coverage that fits your lifestyle, risks, and budget.

• Build in order: clear high-interest debt, build your emergency fund, get insured, then invest.

The content

So What Is Insurance?

At its core, insurance is simple: you pay a regular amount (called a premium) so that when something big and unexpected happens (a hospital stay, an accident, a disaster) you don’t face it alone. It’s protection, pooled together by thousands of people, so no one person bears the full brunt of life’s bad surprises.

The same way you stock food and water for emergencies, insurance is what keeps your finances from collapsing when the unexpected hits.

How Insurance Works

You’ll pay premiums (monthly, quarterly, annually). If something covered in your policy happens, you file a claim, submit the required documents (like receipts or medical certificates), and the insurer pays out either to you or on your behalf.

The tricky part? Knowing what’s covered and what’s not. Always read the fine print. Some policies exclude “Acts of Nature” like earthquakes or floods unless you pay for an additional rider.

 The 3 Types You Should Know First

1. Health Insurance
   Covers medical expenses when you’re sick or hospitalized. If you only have the HMO from work, know that it ends when your job does—so it’s good to have backup coverage you own.

2. Life Insurance
   Protects the people you love. If something happens to you, the payout helps your family cover expenses, debts, or rebuild stability.

3. Non-Life Insurance
   Protects things you own:your car, your condo, your small business. In the Philippines, you can add “Acts of God” or “Acts of Nature” riders that cover earthquakes, floods, and typhoons.

Bonus: Prepaid Health Insurance Cards

Perfect for freelancers or anyone without an HMO. These cards are straightforward. You pay a fixed amount and get basic coverage for emergency care or consultations. 

When I left my corporate job in 2023, I bought one for my dad (a ₱50,000 coverage plan that cost ₱5,000 for a full year). It gave me peace of mind knowing he had a safety net even without my company’s HMO plan.

Actionable Tips For You

How to Choose the Right Insurance for You

Step 1: Identify your biggest risk.
What keeps you up at night financially? Hospital bills? Property damage? Your family’s security? Start there.

Step 2: Check what’s already covered.
Know what your company HMO or insurance already covers. Your company HMO offers 2 free dependents? Maximize that. Prioritize other gaps like life or property insurance.

Step 3: Know your budget.
Don’t over-insure. Start small and scale up later. The goal is consistent protection, not overcommitment.

Step 4: Research providers.
Look at established companies (Sun Life, AXA, Pru Life, Manulife, Insular Life). Check reviews, customer service, and claim processing feedback. Talk to a licensed agent, but don’t let anyone rush you. The goal is to understand, not to be sold to.

Step 5: Understand before you sign.
Ask your agent to explain benefits and exclusions in plain language. If you don’t understand it, don’t buy it.

Which Should I Do First: Insurance or Investing?

There’s an order to building financial stability: clear debt, build savings, protect, then invest.

If you’re paying 20% on credit cards but earning only 8% from investments, you’re still losing money, so tackle high-interest debt first. Next, save three to six months’ worth of expenses for emergencies (read up on building your emergency fund here). Once you’ve built your safety net, get insurance to protect what you already have. Only then should you start investing.

You may do both insurance and investing if you’re debt-free and have savings, but never invest while buried in debt or with no emergency fund.

Other Disaster-ready Tips

1. Check your coverage. Many property policies in the Philippines exclude earthquakes, floods, or typhoons by default. Add the coverage now—before you need it.

2. Go paper-light but record-ready. Digitize IDs, policies, and receipts. Keep a backup drive or cloud folder you can access from your phone.

3. Map your liquidity. Know which accounts give instant access to cash and which ones take a few days. After a disaster, time is as valuable as money.

4. Lean on community. Disasters hit hardest alone. Join local co-ops or mutual aid groups that can offer temporary support.

Stuff Worth Sharing

The Link Lowdown

• The Psychology of Debt: Escaping the Utang Cycle - read our last issue here.

• Earthquake Preparedness Checklist - because you can never be too prepared.