Nurture your mind with great thoughts; to believe in the heroic makes heroes.—Benjamin Disraeli
The characteristic of genuine heroism is its persistency. All men have wandering impulses, fits and starts of generosity. But when you have resolved to be great, abide by yourself, and do not weakly try to reconcile yourself with the world. The heroic cannot be the common, nor the common the heroic. —Ralph Waldo Emerson
Today is the 146th birth anniversary of revolutionary Andres Bonifacio, the founder of the Katipunan secret society, leader of the revolution against colonial misrule and who, in 1897, became the tragic victim of one of the many unresolved bloody political crimes in Philippine history.
Government has institutionalized Bonifacio’s birth date as “National Heroes Day” and many of us are pinning our hopes on politicos for national salvation after the 2010 elections, but I believe what Philippine society today badly needs are economic heroes. Our biggest problems are mass poverty, unemployment, low industrial and agricultural productivity, a low national savings rate, budget deficits, low exports and other economic problems.
We need more men and women who will champion the cause of socio-economic development, such as risk-taking and innovative entrepreneurs, educators, farmers, conscientious professionals, workers, engineers, scientists, artists, and others.
One of the outstanding business leaders investing in the Philippine economy regardless of our politics and whom I consider a true economic hero is rags-to-riches realty taipan Andrew Tan of Megaworld.
Recently on an ordinary weekday, a few young businessmen friends and I visited his new, US$700-million Resorts World Manila casino complex with the Marriott Hotel across NAIA 3 airport to see what the buzz about the place was all about. My friends and I do not gamble; we just went there for midnight snacks (the Singaporean food we ordered in the first-floor casino area was so-so or passable). I’m very impressed by the huge, lively and expansive 24-hour facilities. Hopefully, world-class facilities like that can attract more tourists.
Thanks to The Philippine STAR and the country’s biggest and most profitable life insurer, Insular Life, for undertaking this ongoing question-and-answer series on life insurance and personal finance issues, with the goal of encouraging a national culture of savings. It is tragic that the Philippines has one of East Asia’s lowest savings rates, which includes life insurance, according to Insular Life executive vice president Jesus Alfonso G. Hofileña, in his response to question No. 3 below.
Please keep sending your questions, thanks! Here are some more readers’ questions and the responses by Insular Life executives and experts:
Question 1
Daniel L. K. Ching, president of Arizona Marketing Corp. and a father: Congratulations on your interesting columns, which my friends and I always follow. Why is the premium rate of life insurance in the Philippines more expensive than those offered to me by foreign firms, some of which I think are not covered by Philippine regulations but should be taken abroad?
Answer
It would be difficult to determine the reasons why the premium rates of one company are higher than those of another company. There are many factors that affect the pricing of a life insurance product, such as assumed mortality rates, investment rate of return, administration expenses, government taxes, and others.
We are willing to meet with you so we can more closely evaluate the information available and determine the possible reasons for premium rate differences.
Mona Lisa B. De la Cruz
Senior Vice President & Head
Administrative Operations Group
Question 2
Totel de Jesus, 36, married and father to a three-year-old daughter: Hi, Wilson, I am insured under Insular Life, semi-annual. Just want to ask what will happen if I miss one payment. Like this june, I am supposed to pay, but life’s been hard these past few months. I’ve been afraid to ask the customer service people but I don’t want to lose my account. My mother started paying for it in 1998. It’s been more than 10 years. Can I surrender the insurance and get a little amount for it? As I’ve said, life’s been hard and it would be harder for me to maintain it. Better to get something now. Since my mother passed away four years ago, naturally I took over. Should I continue or surrender?
(Writer’s comment: Hi, Totel, I will arrange for Insular Life executives to assist you. I recommend you don’t surrender because I believe you do not get the full benefits by surrendering, and I think they have flexibility in assisting clients like you as long as you inform them.)
Answer
In case you are unable to pay a premium when it is due, it is always better to keep your policy in force, especially if your policy has been in force since 1998. The premiums of your policy are a lot lower than if you were to buy one today, as you were younger when the policy was issued, and your health may have been better then than it is now. In addition, the cash values of your policy will continue to grow and your policy will continue to earn dividends for as long as it is in force.
There are several possible options available in case of premium default, depending on the type of policy you have and the premium class to which you belong. If your policy has available accumulated dividends and/or cash values and your elected premium default option is the Automatic Premium Payment (APP) option, then we shall apply your accumulated dividends deposit, if any, to pay your premiums. If the dividends are not sufficient, we shall apply your available cash value, if any, to pay your premiums. The amount applied as premium payment will be treated as a policy loan.
Another premium default option is the Extended Term Insurance (ETI) option, under which your available accumulated dividends and/or cash values, if any, are used to purchase term insurance. This option generally allows you to maintain the original amount of insurance, but the protection period will be shorter than the original policy. The third option is the Reduced Paid-Up (RPU) option, under which your available accumulated dividends and/or cash values, if any, are used to purchase whole life insurance. This option generally allows you to maintain the original protection period, but the amount of insurance will be lower than the original policy. The last option is to surrender the policy for its available cash value, if any.
Kindly send us your full name and contact details, so we can assist you in evaluating the options available to you.
Question 3
Ernesto C. Santiago, 62, president of St. Peter Life Plan, Inc., Ateneo graduate-school professor: Like you, I believe in life insurance. Is it true that the penetration rate, or percentage of people with life insurance here, is as low as 15 percent compared to Japan, at 80 to 90 percent, and how much is it in South Korea, Singapore, Taiwan, China, etc.? I bought a P200,000 life-insurance policy in the 1980s and paid P1,000 per quarter as my forced savings. Now I have two policies fully paid. Is my age still insurable? I’m president of a pre-need memorial-plan firm, not a life-insurance firm despite the company name sounding like one. I urge you to encourage young people to buy life insurance, even if they start with small policies.
Answer
Mr. Santiago, thank you for being a believer in life insurance. Sadly, it is true that only a very low percentage of Filipinos are insured, and your estimate of 15 percent is more or less accurate. In terms of 2008 gross premiums, Japan leads all Asian countries at $473.2 billion, followed by China at $140.8 Billion, South Korea at $97 billion, Taiwan at $64.3 billion, India at $56.2 billion, Hong Kong at $24.1 billion, Singapore at $16.5 billion, Malaysia at $9.3 billion, Thailand at $9.1 billion, Indonesia at $6.9 billion, and the Philippines at $2.2 billion.
Why has the Philippines lagged so far behind? I believe it is primarily due to a lack of awareness and appreciation for life insurance as an indispensable tool for financial protection, assured savings, long-term investing and risk management. Even if you discount the roughly 30 percent of our population that constitute our poverty base, the rest of our fellow Filipinos should secure life-insurance coverage.
And you are certainly correct in advocating that young people should start their life insurance program early because they have the advantage of saving longer and paying less. As for your age, you would still be insurable, though there may be some specific products that you would no longer be eligible for. Please let us know how we can be of further assistance to you.
Jesus Alfonso G. Hofileña
Executive Vice President & Head
Sales & Marketing Group
Question 4
Joscephine Gomez, classical musician, cancer survivor, corporate sales and marketing coach: What insurance product or plan is best for classical singers/musicians? My question has to do with affordability and application to lifestyle.
Answer
Hi, Joscephine! Thank you for your question. I would have wanted to provide you a more concrete answer had you divulged your age and civil status, and if you had children/dependents who rely on you. You mentioned you are a cancer survivor, an important factor in assessing your health condition. It would have been helpful if you gave more details on this, too (what type of cancer, what medical treatment was given, how long have you been clear of cancer, etc).
I would not want to fall prey to the tendency to prescribe financial solutions without assessing your needs, so please pardon me if I will refrain from recommending any product at this point. I will, however, provide you a guide that will help you prioritize your needs and assess your requirements better:
1. What risks does anyone dependent on you face in the event of your loss? Will that individual continue to enjoy the quality of life you have provided them? If not, what have you done to mitigate said risk?
2. What are your short-term and long-term financial goals? Have you created a plan to meet these financial goals? If so, what courses of action have you taken (e.g., setting aside money every month in a savings account, etc.)?
3. What aspects of your financial goals are being addressed? What aspects still need to be addressed?
I would like to help you plot out an appropriate course of action for your financial needs. If you wish to discuss this matter further, you may send me an e-mail. Hope to hear from you soon.
Amelita F. Tamayo
Vice President & Head
Marketing & Agency Support
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For more inquiries, or if you want to schedule a Wealth Management Forum for your group, call Insular Life’s Brand Marketing Department at 582-1818 loc. 1850 and 5124 or e-mail brand@insular.com.ph or visit www.insularlife.com.ph.
E-mail questions to willsoonflourish@gmail.com or to my Facebook account, thanks so much!