At the start of 2023, many economic experts warned about the world slipping into a global recession. In light of this development, what steps should ordinary consumers, especially family breadwinners, take to assure financial security in the face of economic uncertainty? Do you have a Plan B?
What’s Your Plan B in the Global Recession 2023
During a recent online seminar, “Life Insurance: Plan B against Economic Uncertainty” hosted by financial guru Chinkee Tan, BDO Unibank SVP and chief investment officer Frederico Rafael “Fritz” D. Ocampo said: “Taming inflation usually requires slowing down economic growth by raising interest rates. It’s a tricky balancing act that central banks and policymakers need to tread carefully in order to avoid falling into recession. As everyone has seen time and time again, a recession is bad for businesses. At worst, this will mean curtailed expansion, possibly downsizing, layoffs, and even closures. When this happens, many families are impacted, the usual causes of which are beyond their control.”
Time to Assess
Ocampo said individuals will need to re-assess their investments, especially around the riskier types (e.g. equities) to ensure they match with one’s investment horizon and risk profile.
“One instrument that many often dismiss as unnecessary, but in fact remains essential to enhance one’s family’s financial security and survival, especially during challenging economic times is life insurance. The more difficult the economic environment, the more an individual needs financial protection in place, one that ensures the family’s financial dignity in the event of the breadwinner’s premature death,” he explained.
For his part, insurance expert Renato Vergel de Dios, President and CEO of BDO Life, said: “During recessionary periods, people’s financial plans and goals (or ‘Plan A’ for short) are under a more severe threat. By Plan A, we refer to his program of savings and investment, which is funded by income savings from one’s salaried job, professional practice, or business.
“For a responsible head of a family, having a Plan A in place is indispensable. Completing a Plan A is the means to enjoy the lifestyle one currently seeks as well as the desired lifestyle during those less active retirement years, when one must rely largely on passive income to support personal and family requirements.
“The cornerstone of every family provider’s Plan A is life insurance protection. We refer to this as Plan B, which springs into action when the family provider dies prematurely. By injecting cash into the family’s account, Plan B narrows the gap left behind by an aborted Plan A. Without a Plan B, one can only imagine how much harder life will be for a family that just lost their financial provider, especially in times of high inflation.”
Having Life Insurance
Spending for life insurance protection is a smart decision, even during periods of economic uncertainty. It addresses the uncertainty of death and its threat to the remaining family’s quality of life. Losing the family’s main income earner is challenging enough in normal times, what more if it happens during an economically uncertain environment.
“From one’s life insurance proceeds, a family can fund their everyday needs, keep the children in school, pay for monthly utility bills, and in some cases, even provide a modest capital for a small business. As the saying goes, there are only two sure things in life: death and taxes. No matter what state the economy is in, whether in a robust upswing or entering into a creeping recession, failing health, and premature death represent lingering risks to our family’s financial security,” Vergel De Dios said.
Even as the world braces itself for a likely economic recession in 2023, there is never a better time than today to ensure that we have a financial Plan B in place.
- For more information on how BDO Life can help you start your Plan B, visit a BDO branch near you or https://www.bdo.com.ph/bdo-life.
This blog is an eye opener to us and always have plan B, if plan A didn’t work. Worth reading and sharing this.
Very informative and helpful blog post. Being financially secured especially nowadays is a must! With the help of BDO, it’s possible. Thanks for sharing.
Thanks for sharing this Mommy, importante talaga may Plan B tayo para kahit ano man ang mangyari magiging secure pa rin ang family natin. Thanks talaga sa BDO