An economic regression and increasing cost of living may force many people to tighten their belts seriously or look for ways to reduce essential expenses so that we can still afford them and be ready to face the future. Today, we would like to take everyone to see one financial planning option that can help us cope with rising expenses, 'Lifetime Insurance'.
Before seeing how life insurance can help us financially, let’s examine Thailand’s current economic and cost of living information. How concerned should we be so that everyone can be prepared to deal with the possible consequences together?
-Thai economy grows slowly
In 2024, several agencies, such as the National Economic and Social Development Council (NESDC), adjusted the Thai economy’s GDP growth forecast to be lower than 3%. The NESDC has revised the forecast for the Thai economy to expand from the initial estimate of 2.7-3.7%, or a median growth rate of around 3.2%, to a new forecast of only 2.2-3.2%, or a median growth rate of approximately 2.7%.
The 'Bank of Thailand (BOT)' has also adjusted its economic growth forecast from 3.2% to 2.5 - 3%, considered lower than the potential level of 3 - 5%. This reflects that the Thai economy is currently growing at a slower rate. Factors indicating whether the economy is growing at a high or low rate can be calculated as follows:
GDP = C + I + G + (X – M)
● C = Consumption - The consumption of the private sector and the general public.
The value arises from general spending for everyday life, such as buying food, shopping for goods, going to the movies, using hospital services, paying for water and electricity, and so on.
● I = Investment - Private sector investment.
It comes from various private sector investments, such as purchasing machinery, software, land, building office buildings, and real estate development projects.
● G = Government Spending - The government’s use of expenditure and investment.
It is the total government expenses, consisting of civil servants’ salaries and investments in various policies, such as building roads, constructing railways, or purchasing military weapons.
Output:
● X-M = Net Export or Net export value
●
Calculation comes from subtracting the value of exports from the value of imports. If exports exceed imports, it will positively impact the numerical growth of GDP.
The formula for calculating economic growth shows that factors related to general spending habits occur in life. Some of these factors, whether large or small, come from the cost of living.
The cost of living in Thailand is ranked 5th in ASEAN.
Thailand’s cost of living index at the beginning of 2024 was 36.0 percent, lower than New York City, United States, which is 100 percent. This places Thailand's cost of living at 94 out of 146 countries worldwide.
Thailand's quality of life index in the ASEAN group is ranked 5th out of 9 countries. Thailand's index is higher than the Philippines (at 33.6%, ranking 104th), Vietnam (at 30.8%, ranking 113th), Malaysia (at 30.5%, ranking 115th), and Indonesia (at 28.5%, ranking 126th).
The data shows that the Thai economy is growing slowly while the cost of living is increasing significantly. This has caused many people to worry and find ways to tighten their expenses to prevent a worsening financial situation. As a result, those currently paying for insurance and those looking to get insurance for themselves are hesitant about whether they can afford insurance premiums in the long run. Before deciding, let's explore the importance of insurance in helping people make an informed decision.
Importance of insurance
Having a lump sum of money or emergency reserve when unexpected events occur
Medical expenses are continually increasing. Insurance can help us have a reserve of money to ease the burden of medical costs, both for general illnesses and serious diseases, as well as in cases of accidents resulting in organ loss. Furthermore, in the event of our death, our family will receive a lump sum according to the terms of the agreed policy.
People with unstable incomes can feel secure.
We cannot know when emergencies or illnesses will happen to us and how severe the financial impact will be, especially if we have a freelance job, as a freelancer or a small business owner, where missing workdays means missing income or our monthly income is uncertain. Insurance that provides compensation when hospitalised and unable to work according to the agreed-upon policy allows us to not worry about losing income.
Employees of companies with only social security benefits may receive incomplete treatment. If they need to undergo other tests or want better treatment, having comprehensive insurance coverage will allow them to choose services according to the agreed conditions of the policy without having to pay upfront. This helps maintain financial flexibility and savings without impacting our financial situation.
Insurance is important in helping to lighten the burden of uncertain future expenses. It would be a pity to cancel the insurance now, and we do not know if we'll have enough money to pay for medical treatment if an emergency occurs. Therefore, for those who want good insurance but are concerned about insurance premiums and daily expenses, today we have 'lifetime insurance', an option that can help on days when expenses increase.
Lifetime alternative insurance on days with high expenses.
Whole Life Insurance is a type of life insurance that pays premiums for a specific period chosen by the policyholder, such as 10 years, 15 years, or 20 years, or until a certain age, such as paying premiums until age 50 or 55. This provides lifelong protection for the policyholder, and in the event of death (whenever that may occur), the insurance company will pay out a benefit equal to the sum assured that the policyholder has purchased to the designated beneficiary in the policy, which specifies the final term of the contract, such as at age 90 or 99 (depending on the case).
The key highlight that makes whole life insurance suitable for higher life coverage is that whole life insurance serves as a primary insurance throughout one's lifetime. Because it provides long-term protection, the premium for life insurance is not very high. You can choose the duration of premium payment, deciding how long you want to pay. If you start life insurance at a younger age, the premium will be even lower because insurance companies assess lower risk when you start life insurance at a younger age, making it very suitable for periods of higher life coverage like this. Additionally, you can receive high coverage without having to pay expensive premiums.
However, even though whole life insurance may have the advantage of low annual premiums, policyholders still need to consider whether we can afford to pay this insurance premium in the long term, to ensure our financial stability and avoid unnecessary losses.