Pioneer Life: Insurance and savings for every Juan

MANILA, Philippines - For a struggling worker who barely makes ends meet, the idea of getting a life insurance or having savings may be far off. For, how can a minimum-income earner afford a typical insurance plan that entails payment of thousands of pesos worth of monthly premiums? Everyone can dream, all right. But local insurance firm Pioneer Life Inc. offers cheap life insurance packages that aim to make ensuring a bright financial future a reality even for low-income Filipinos.

“We’re targeting the lower C and D market,” says Noel de Guzman, Pioneer Life’s Assistant Vice President for Agency and Institutional Alliances. “Unlike the country’s biggest life insurance firms that seem to scramble for the very limited A and B markets, Pioneer Life opts to cover the much wider but financially challenged lower classes of C and D.”

Pioneer Life, a 100 percent Filipino-owned insurance company that started in 1964 and a part of the half-a-century-old Pioneer Group, was ranked as Best Insurer in Asia in the 2010 Insurance Survey of international financial magazine Euromoney.

Just this year, Pioneer Life started offering life insurance packages costing as low as P400 a year or a little more than one peso per day. Dubbed Sparxx Hub Solo, this bite-size insurance package is especially designed for farmers, fisherfolks, public transport drivers, construction laborers, and factory workers.

The Sparxx Hub Solo insurance package covers cash burial assistance worth P30,000 and accident insurance of up to P100,000.

For those with a little higher income like in multipurpose cooperatives, barangay councils, religious groups, and telecommunication companies, there is another option: the Sparxx Hub Sakto, which costs P800 per year, P300 of which goes to savings with a guaranteed compounded interest rate of 2.5 percent-three percent a year.

A still higher package called Sparxx Hub Sumo, worth P1,400 a year, is offered as a third option to professionals, entrepreneurs, teachers, and athletes. This, too, has a savings component of P300. The benefits here are wider, including a higher cash burial assistance of P50,000, accident insurance of P150,000, fire insurance worth up to P50,000, and accident medical reimbursement of P5,000.

Pioneer Life’s Sparxx Hub insurance packages are actually off-shoots of the bite-size Sparx and Sparxx savings packages for children and adults and the Pamilyang OFW savings program that the company has been offering since 2008.

“We believe we’re the first to offer such bite-size insurance packages in the Philippine market, long before the government, through the Insurance Commission, built a framework for micro-insurance financing in 2010,” says De Guzman.

According to De Guzman, Pioneer Life’s Sparxx insurance package series are, so far, the only micro-insurance policies offered in the local market with a savings component.

“We’re the first to get a grant from the International Labor Organization for such programs,” he says.

The company’s Pamilyang OFW Savings and Wellness Club, which encourages families of migrant Filipino workers to safekeep hard-earned overseas money, is likewise the first and only one of its kind in the country.

But De Guzman stressed that these are not meant to replace or compete with the benefits offered by the Social Security System and the Government Service Insurance System.

“We view Sparxx and OFW club as supplementary to whatever the government institutions can give to their members: SSS for private employees, and GSIS for government employees,” he said.

So far, estimates De Guzman, Pioneer Life’s OFW cilub has registered about 2,000 members, and the company is still enlisting distributors for the Sparxx Hub program, initially in selected areas in Luzon, including some parts of Metro Manila.

De Guzman pointed out, too, that the savings component of Pioneer Life’s Sparxx Hub insurance packages is not a form of mutual fund.

“Unlike in mutual funds,” he explains, “where interest rates on investments vary depending on market forces, Sparxx savings grow at a fixed interest rate of 2.5 percent-three percent, compounded every year.”

“Its nearest comparison is time deposit, where your savings are locked for a certain period,” he says. “But Sparxx’s advantage is that when you die before the end of the holding period, your beneficiaries will get the full maturity value of your savings. With time deposit, those you leave behind will get only the amount your savings have reached at the time you die.”

Needless to say, interest earning in bank deposits is much lower, not going far more than one percent for such a small amount of capital.

Aside from affordability, what sets Pioneer Life’s insurance and savings products apart is the conduct of free financial literacy and livelihood seminars for policyholders.

When Pioneer Life embarked into an insurance and savings program for OFWs in partnership with the Catholic Bishops Conference of the Philippines, one defect observed among itinerant Filipinos is money management or the lack of it.

 “They seem to not know what to do with the money they painstakingly earned,” notes De Guzman. “That’s why we started conducting non-technical, easy-to-understand financial seminars among our policyholders, although we were already giving such education among the company’s employees way back.”

He said Pioneer Life’s offering of cheap insurance policies and savings opportunity for the lower income bracket of Philippine society is not only a business tack, but a corporate social responsibility as well--aiming to build a nation of savers with adequate protection from life’s unforseen adversities.

“You know,” De Guzman adds, “it feels good when we see that our policyholders, who used to regard insurance only as an expense or, at best, a dream, seem to wisen up and feel secure while enjoying saving for their future.”