First education micro pre-need product out next year

MANILA, Philippines - The first micro pre-need product focusing on education is set to hit the market early next year.

Commissioner Emmanuel F. Dooc of the Insurance Commission (IC) said the first micro pre-need product in coordination with the Technical Education and Skills Development Authority (TESDA) would cater to vocational and technical education programs for the children of underprivileged families.

“Our focus is the poor families who can’t afford to send their children to college or university, but can acquire affordable vocation or technology courses for better education and employment opportunities,” Dooc explained.

The IC is crafting a prototype education microproduct that could suit the tech-voc programs of TESDA.

The pre-need companies interested in participating would have to submit their proposed product for review and accreditation.

The pricing of the micro products have yet to be finalized.

However, it is similar to that of the microinsurance framework and the just-released Insurance Memorandum Circular 2015-51, setting the micro pre-need regulatory framework.

The cash or installment payments, computed on a daily basis, must not exceed 7.5 percent of current daily minimum wage rate for non-agricultural workers in Metro Manila.

At the same time, the maximum sum of guaranteed benefits or services is not more than 1,000 times the daily minimum wage rate for non-agricultural workers in Metro Manila.

The products will be unitized or the prospective plan holder can buy a product worth P30,000 for a six-month course. Then, it can be strengthened by another unit or like buying blocks.

The micro product is payable in five years.

There are 16 pre-need companies licensed by the IC. However, only six have existing licenses to sell education products.

“Everyone wants to participate, but those without existing education licenses have to first apply for one,” Dooc said.

A pre-need company must have a minimum paid-up capital worth P50-million, which allows them to sell one line. Pre-need products are pension, memorial (also called life) and education.

That means an additional P25-million for a second line and a total of P100-million for all three lines.

Dooc said the introduction would boost the government’s aspirations for financial inclusiveness of the economy, by among other things, the opportunity to acquire micro-financing, micro-insurance, and soon, micro pre-need products.