FPJ as a role model for savings; the benefits of a mutual firm like Insular Life

Rather to go to bed supperless than rise in debt. — Benjamin Franklin

Today is the fifth death anniversary of the late “King of Philippine Movies,” Fernando Poe Jr. He was a self-made entrepreneur whose father died young. FPJ is a role model for how to save money, not like some showbiz stars here or abroad such as the late Michael Jackson, who squandered his riches with too much debt and overspending. 

Kudos to Quezon City Councilor Winnie Castelo and wife, Precious Hipolito-Castelo, for filing a city ordinance renaming Del Monte Avenue (the location of FPJ Productions) FPJ Avenue. 

Let us emulate FPJ’s honesty, humility, and generosity to others, his professionalism, entrepreneurial spirit and discipline of saving. Buying life insurance from large, financially solid firms like Insular Life is ideal forced savings to secure our families’ future. 

Congratulations to the newly elected officers of the Philippine Chamber of Commerce & Industry (PCCI) led by UP cum laude industrial engineering graduate Ambassador Francis Chua, whose entrepreneurial wife is Betty Chua. When Francis Chua served as president of the Federation of Filipino-Chinese Chambers of Commerce & Industry, Inc. (FFCCCII), he led a movement espousing the buying of Philippine-made products. I suggest that Ambassador Chua enlist the help of 99-year-old Insular Life, schools, media and banks to push a nationwide tri-media campaign to promote savings as a national habit and discipline. 

This question-and-answer series on life insurance, money issues and the need to promote a national culture of savings is a public service project of The Philippine STAR and Insular Life. Thanks for your many queries. Here are the replies by Insular Life executives: 

Question 1

Esphie Lu-Chong, president of the Professional Insurance & Financial Advisors Association of the Philippines (PIFAAP) and former zone chairman of MDRT Philippines — My sons, husband and I always read your very excellent columns covering diverse topics. I’m a life insurance agent of Manulife. I congratulate you and The Philippine STAR for your series promoting life awareness and savings. Do you think it is possible for the government to lower taxes on life insurance, similar to lower taxes in Hong Kong and our other Asian neighbors? Does Insular Life have any plans to de-mutualize?

Answer 1

The Philippines has one of the lowest life insurance penetration rates in Asia due to the generally higher premium rates. One of the contributing factors to the higher premium rates is the premium tax and DST that is slapped on life insurance premiums. We are pleased to advise, however, that there is pending legislation that will eliminate or reduce the taxes on life insurance premiums, making it more affordable and enabling more Filipinos to be covered.  

Insular Life is a mutual life company, the only one, in fact, in the Philippines, which means the individual policyholders are also our shareholders. In simple terms, if you’re a policyholder you are also, in effect, the owner of the company. As a mutual life company, the interest of the policyholder and owner are perfectly aligned because they’re one and the same. In a stock company, you have various stakeholders in the customers, the creditors and the shareholders whose interests are often in conflict because each stakeholder group wants maximum returns. This does not exist in a mutual company like Insular Life. It should be mentioned that many of the leading life insurance companies in the United States and Japan are also mutual companies.

Mayo Jose B. Ongsingco

President & COO

Question 2

Narda of Mindanao — I’m married to a politician. Can Insular Life accept my husband as a client? Are there any conditions that will bar our family from enjoying full benefits or will the premiums be higher due to horror stories like the Maguindanao Massacre? My husband is running for public office next year, and we have three young kids.

Answer 2

During an election period, we do not accept applications for life insurance from candidates running for public office beginning six months before the election date. This is because of the higher risk for candidates during the said period. In general, we will resume acceptance of applications for insurance six months after the winning candidate is proclaimed. However, depending on the political risk, premiums may be higher than for ordinary risks.

Mona Lisa B. De La Cruz

Senior Vice President & Chief Actuary

 Question 3

Melissa C. Veloso, 28 years old, single, businesswoman, General Santos City — I want to be different this season and be a better Santa Claus to my godchildren, nephews and nieces. Instead of giving candies or toys, can I gift them with life insurance even though I’m not their parent, and how? What type of policies should I give? Can I pay a premium for the first year and their parents continue afterwards? Does Insular Life have life insurance products with educational benefits, too? By the way, what type of life insurance would you recommend for an aspiring Santa Claus like me? I enjoy reading your columns. 

Answer 3

Before anything else, I wish to commend you for your foresight and interest in securing the financial future of your godchildren, nephews and nieces. Truly, we tend to shower children with toys, candies and clothes during the Christmas season, perpetuating our already materialistic culture. Godparents like you who think about going beyond the usual gift-giving into actually securing the financial future of their inaanaks should multiply and thrive!  

Now to answer your question: You mentioned you are single and very young at 28. If you have not yet secured a life insurance policy that will protect those financially dependent on you from economic loss in the event of your demise, I suggest you get started on a whole life insurance policy. Now is the best time to get it since the premiums will be cheaper (because of your young age) and the long-term protection it will provide you (given that you have many expected years ahead).  

As for your godchildren, nephews and nieces, if their parents have not started saving for a college education plan, I suggest you get them this as a gift.  You may take the role of payor with the parents as policy owners and the children as insured-beneficiaries. The Insular Life I-Excel Education Plan may be payable in five or 10 years. You may decide to pay for the full term or a fraction thereof, depending on your agreement with the parent. I recommend that in securing an education plan for the child, you work with the parents because in the end, they will be directly benefited by the advance planning for their child’s college education.  

If you wish to get details on the education insurance offered by Insular Life, log on to www.insularlife.com.ph. Our website contains the description of the product and the benefits it offers. Should you need an agent to explain it to you further, just contact our office at the second floor of the Insular Life Bldg., Pioneer Avenue, General Santos City, or call (083) 301-6625.

Amelita F. Tamayo

Vice President & Head Marketing & Agency Services Division

Question 4

Miguel B. Varela, 67 years old, chairman, Philippine Chamber of Commerce & Industry (PCCI) and Employers Confederation of the Philippines (ECOP) — I always read your interesting columns and subscribe to The Philippine STAR at home. Your encouragement of savings is a good advocacy. My question is, life insurers seem to be competing with banks, while it seems life insurance offers better benefits to the public. I believe benefits can only be enjoyed by your kids or loved ones, while banks seem to offer both savings and the possibility of enjoying your money while you are alive. Another question: How can life insurance firms like the respected Insular Life be able to work for lower premiums for us here in the Philippines? I believe the public should buy from life insurance firms with proven stability, financial resources and a good reputation, and I hope life insurers release claims fast, if not immediately.

Answer 4

Thank you, Mr. Varela, for your questions and for complimenting Insular Life as a respected institution. Life insurance’s principal purpose is to provide financial protection against risks of loss. As such it is a unique instrument that does not conflict with other financial products; rather, it should complement them. For example, people deposit a principal sum in bank accounts in order to earn interest. For life insurance, premiums can be likened to giving interest in order to earn the principal (i.e., the coverage or face amount of the policy). However, life insurance is also utilized today to generate long-term savings or investment funds — meaning money that is intended to be used well into the future such as for one’s retirement or for the children’s college education. Bank accounts are normally for much shorter time periods rarely exceeding five years because funds left with the bank can be withdrawn by the depositor on demand.  

Your perspective about taking life insurance in order for its benefits to be enjoyed by your children and loved ones is quite valid, laudable and an excellent distinction to make in differentiating it from other money instruments. At the same time, however, many life insurance products today likewise provide living benefits that can be enjoyed while the insured is still alive, such as anticipated endowments for important life stages, medical reimbursement, and so on.  

As to your other question, aside from seeking lesser or no taxes on long-term savings, the best way we can realize lower insurance premiums eventually is to work harder for more Filipinos to be insured. As more and more of our countrymen get life insurance, the cost of spreading the risk becomes less. This is why in more developed and progressive countries with a large percentage of their population insured, the unit cost of insurance protection goes down. Contrast this with the Philippines where only 10 to 15 percent of our people are insured, making the Philippines one of the lowest in Asia when it comes to insurance penetration.  

Finally, we do strive to release insurance claims expeditiously. For as long as all necessary documents are submitted, there should be no delays.   

Jesus Alfonso G. Hofileña

Executive Vice President &

Head Sales & Marketing Group

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Comments are welcome at willsoonflourish@gmail.com or at my Facebook account.