"For many Filipinos, talking about life insurance is one part tempting the gods and one part admitting that they are getting old and may die any time soon. Not many realize that we have so many other policies that can be enjoyed while the buyer is still alive," said Emmie Rivera, one of the countrys 30,000 life insurance agents.
Based on the latest data from the Insurance Commission, only 3.7 million or 5% of Filipinos was covered by some form of insurance, either individual or group, in 2000. During the same year, the industry sold a total of P25.7 billion in first-year premiums and renewals for an average P6,756.75 in premiums and/or renewals sold to each insurance buyer.
By any standard, this is a very low premium equivalent or capacity to buy insurance. Ideally, the premium equivalent or capacity to buy insurance is 10% of gross income. Using the more realistic target of 5%, the countrys P6,756.75 average annual premium translates to a gross income of less than P10,500 a month, inclusive of the 13th month bonus at the end of the year.
Because insurance is considered a form of savings or excess income, it can be purchased only when the basic necessities such as food and housing have been paid for. Thus, a developed country like Japan has an insurance coverage of more than 100%, which means that most Japanese individuals and households carry more than one insurance policy.
Thus, health or medical insurance are now experimentally sold in drugstores. Simple products or those that dont need that much explanation are also being marketed through the internet.
How much insurance to take is, of course, an individual choice. In terms of income replacementeither as a retirement fund or to tide over the family after death a comfortable benchmark, however, would be at least five times the annual income of the buyer.
Before buying insurance, here are some helpful tips.
* List down what you want to save for. Aside from death, there are policies that you can buy to cover, among other things, future medical bills and your childrens college and even graduate school education. Many of these policies have maturity dates, which mean you get to use the benefits while you are still alive.
* Check with the Insurance Commission if you are dealing with an insurance company of good standing. You want to be sure the insurance company is financially capable to giving you the future benefits that you are paying for now.
* Validate the credentials of the insurance agent with the insurance company. You want to be sure that the premiums you can paying are indeed being credited by the insurance company.
* Always read the fine print in the policy contract before signing to avoid future misunderstandings and expensive court suits.