Don’t Cripple Your Finances: How to Prepare for Unexpected Life Events

As a famous saying goes, tomorrow is never promised. If there’s one thing you should know about life, it’s to always expect the unexpected.

As you grow older, there will be plenty of unexpected events—and not all will be happy and magical. Sometimes life throws a curveball that completely topples your finances.

If you don’t prepare for the unexpected, one major unexpected situation is all it takes to deplete your savings and leave you with mounting debt. The only way to avoid this is to plan how to respond to significant life changes financially. 

Unexpected Life Events to Financially Prepare For

Prepare yourself financially so you’re equipped to handle these unexpected events should they come your way:

👉 Critical Illness

Getting diagnosed with a critical illness can put your finances in a precarious situation. This unwelcome and unexpected event will force you to re-evaluate everything, especially your savings, emergency fund, life insurance, and medical coverage.

After all, it’s not just a regular ailment where you’re sick and then recover after a few days. The road to recovery can take several months, or even years.

Aside from the physical and mental toll, medical bills will pile up. Urgent medical procedures cost a significant amount of money. This can quickly deplete your life savings if you don’t have medical or critical illness coverage that provides cash benefits if diagnosed with a critical illness.^[1] 

👉 Sudden Disability

As with a critical illness, you will need to pay for ongoing medical expenses when you suffer a sudden disability. While your employer-sponsored HMO can cover costs like emergency care and hospitalization, you must pay out of pocket for medications, therapy sessions, and in-home care.

On top of that, you’ll suffer from stress and anxiety over not being able to pay for living and recovery expenses. In case of permanent disability, you also need to consider how you can still enjoy a good quality of life if you can no longer work full-time.

Related: Personal Accident Insurance: What is It and Where to Get One?

👉 Death

No one knows when it will happen. But just like that, life can be over in the blink of an eye—and it will be emotionally and financially devastating for your loved ones.

When it happens, you want to ensure your loved ones are cared for. Leave a legacy that will help them ease into their new lives as easily as possible. The last thing you want is for them to grieve while stressing over household bills, mortgage, debts, and the loss of household income.

How to Prepare for the Unexpected

Financial preparation is the key to overcoming these unexpected challenges. Here’s what to do to prepare for unforeseen circumstances: 

✔️ Evaluate Your Financial Situation

Assess where you’re at in terms of finances. How much are you currently earning? What are your recurring expenses and other financial obligations?

Before coming up with a financial plan, it’s important to know your financial capabilities and limitations.

✔️ Build an Emergency Fund

In times of financial difficulties or unplanned expenses, an emergency fund will give you a sense of security. Ideally, an emergency fund should cover up to six months of standard living expenses. But if you can save more, the better—it can cover a more extended period when the need arises. 

An emergency fund requires significant savings. Build it over time until you reach your savings goal.

To help you get started, check out the Emergency Fund offered by Singlife, the first purely digital life insurer in the Philippines, via the Singlife Plan & Protect App. Place your savings here to earn up to 5% interest per year.

While working on your Emergency Fund, you are covered via Protect from Emergency, a life and disability insurance with a cash benefit equal to 3x your monthly income.

✔️ Get Insurance Coverage

If you don’t already have one, get a life insurance policy. When you pass away, your loved ones dependent on your income will benefit from the life insurance payout. For example, it can help cover your children’s education or pay for living expenses while they regain their footing.  

If you already have one, review your current life insurance policy to see if it adequately covers your needs. Update your protection so that it covers critical illness and disability. Review your coverage as your family, income, or expenses increase.

Consider getting income protection insurance via the Singlife Plan & Protect App to ensure your loved ones are financially protected with a regular monthly income if something happens to you. Singlife's Protect from Income Loss provides a monthly benefit for up to 10 years to help pay for your living expenses or your family’s expenses in case of disability or death.

Read more:

• Should You Get Life Insurance? Consider These 8 Factors
• Secure Your Future with the Best Life Insurance in the Philippines
• Starting a Family? Consider These 10 Family Insurance Types

✔️ Get Adequate Health Coverage

Health insurance coverage can help pay for your medical bills in case you have a health emergency. This way, you won’t have to dip into your savings or pass the financial burden on to your loved ones.

Singlife's Protect from Medical Costs, available on the Singlife Plan & Protect App, is a health insurance plan that provides cash benefits of up to ₱5 million in case you get confined in the hospital or diagnosed with a critical illness. Its affordable premiums and comprehensive coverage offer financial protection from expensive medical costs. You can also choose your payment terms according to your budget and adjust your plan as your needs change. 

This way, you can focus on getting better and feel at ease knowing your medical bills are covered.

✔️ Invest in the Future

While preparing your finances for immediate needs is a must, thinking about the future is also essential. Invest in mutual funds, stocks, and bonds to build wealth and achieve all your long-term financial goals.

But if you want an easier and more rewarding way to protect and achieve your goals, opt for a variable unit-linked product like Singlife's Protect Your Goals, which will grow your money faster. From an affordable starting point of just ₱500 a month, you can gradually increase it when you’re able to.

You can grow your money quickly since there are no entry fees or commissions. 100% of your money will be invested. Plus, you simultaneously get to enjoy coverage worth 125% of the premiums you’ve paid.

Lastly, you’re in complete control. Invest, adjust, or pause your policy 24/7 via the Singlife Plan & Protect App—minus the financial advisor!

Final Thoughts

Tomorrow is never promised. As a financially responsible adult, you shouldn’t leave your future to chance. Fortunately, you can prepare for unexpected events before they affect your savings, emergency fund, or investments.

Save for emergencies, plan your financial goals, and protect them via the Singlife Plan & Protect App. With just one powerful and easy-to-use app, you get the best gift—peace of mind that you won’t be thrown off by unexpected expenses.

DISCLAIMER: This article was created in partnership with Singlife Philippines. While we are financially compensated for this collaboration, we ensure to maintain our editorial integrity to provide you with the best recommendations that can help you make smarter financial decisions.

Source: ^[1] Critical Illness Insurance: What Is It? Who Needs It? (Investopedia, 2022)