"What we have is a program that will allow the delinquent client to keep the value of their premiums if they fail to continue to pay," said Jack I. Howell, president and chief executive officer of Philam Plans. "That is applicable as long as the client has already paid at least 20 percent of the plan cost."
The general practice of the industry is that delinquent payees are allowed a 60-day grace period to pay unpaid premiums. Failure to pay will lead to a complete forfeiture of the plan.
But Howell said the new feature of their pension plan will force all players to redesign their products to remain competitive.
"iPlan, the new pension product of Philam Plans, will pay a maturity even on a lapsed or cancelled plan," he added.
It will solve the problem of a lot of pre-need planholders who find difficulty in paying their premiums, as they can still receive a certain amount from whatever they have invested as long as it is over 20 percent of the total amount of the plan.
Howell said starting this year, they will design all their new pre-need products in the same forfeit-free mode.
The pre-need industry has seen a drop in sales due to the inability of several major players to pay claims or specifically pay the maturity claims in education plans. This has resulted in an overall decline in sales of the rest of the industry which is also marketing pension and life or memorial pre-need products.
Aside from the inability of the pre-need company to pay claims, the other concern of the industry is the lapses or the inability of the client to pay the complete premiums for the plan.
Meanwhile, Philam Plans reported that its policies-in-force stood at 300,000 with trust funds amounting to P27.7 billion. Initial cash brought in reached P560 million.
Philam Plans senior assistant vice president Rico T. Bautista said 60 percent of total plans are pension products, 30 percent are education products, and the remaining 10 percent in memorial or life pre-need product.
Investments, which are held and managed by trustee banks, are in government securities (80 percent), equities, and other cash equivalents.
Philam Plans uses the services of four banks to serve as its trustee banks. These are the Bank of the Philippine Islands (BPI), Equitable PCI Bank, Deutcshe Bank AG Manila, and sister-company Philam Savings Bank.
Philam Plans is a subsidiary of the Philippine American Life and General Insurance Co. Inc. (Philamlife), both recognized leaders in their own industries.