Angel Aquino, Kris Aquino & single parents save money for a secure future

All you need is the plan, the road map, and the courage to press on to your destination.      —Earl Nightingale

By failing to prepare, you are preparing to fail.  —Benjamin Franklin

This writer re-cently saw actress Angel Aquino at the Power Plant mall of Rockwell Makati. She said she was on the way to the newly opened The Spa, and we chatted for a while about money topics. Admirably, this mature and wise single parent told me she’s the only one raising her kids, so she makes it a habit to save money and considers The Philippine STAR’s advocacy of promoting life insurance very good because she believes insurance prepares us for “life’s uncertainties.”

Let us follow the example of single parents like Angel Aquino and TV star Kris Aquino, who courageously raise their kids by themselves and even plan for uncertainties with savings and insurance. Whether you are separated, abandoned by irresponsible husbands or boyfriends, or widowed, do not lose hope but be strong and seek financial independence through savings.

This writer believes that in this era of low interest rates and many credit cards, it is okay to get loans and use the convenience of credit cards. However, don’t misuse loans or became addicted to excessive credit card expenses by paying only the minimum charges every month. I recommend that everybody save as much as they can. The minimum target is saving at least 12 months of your living expenses, which you can set aside as an emergency cash fund for any uncertainties, plus, of course, life insurance.

This Question and Answer series of personal finance and life insurance is sponsored by the country’s biggest homegrown life insurance giant, Insular Life.

Fortune Life Group founder and Sandari Batulao boss, Ambassador Antonio L. Cabangon Chua, cited his competitor Insular Life as “very well-managed and trusted for the past 100 years,” while BPI Family Bank president Jose Teodoro K. Limcaoco admires Insular Life along with BPI Philam Life as “excellent life insurers.” Both are Philippine STAR subscribers. Thanks for your positive feedback! Here are more readers’ questions and the expert advice from Insular Life executives:

Question 1: HOW DO YOU SAVE MONEY WITH THE HIGH COSTS OF LIVING?

Your columns on personal money questions are relevant and interesting, especially your advocacy for people to save money. I agree with you about saving money, but it is easier said than done in our society where the costs of living are so high like electricity, transportation, food costs, housing, education, medical and others. I think even life insurance is more costly here than in other countries, because my sister in New York told me that their life insurance there is cheaper. Why? How can we save?

Patricia J. Pastrana, 32 years old, businesswoman, Makati City

Answer 1

During one annual employee recognition program of my former company, I will never forget what one of our co-workers said when she spoke on behalf of the awardees.  She was receiving a salary just above minimum wage, but she told everyone that no matter how little one earns, one can still make ends meet.  I take inspiration from her words because while it is true that today’s higher living expenses pose an even greater challenge to saving money, we can still set aside part of what we earn if we are determined enough to do so. 

We can exercise our power of choice to decide on what we truly need to spend for.  Moreover, the other side of this higher-cost-of-living reality is that businesses compete more fiercely for a share of our income and this often results in their offering discounts and promos to lessen the cost of their products/services (like budget airfares, for example).  In order to save more effectively, make a paradigm shift. 

Most Filipinos spend first, then save what is left of their salary before the next payday.  This does not work most of the time.  What does work is to save first, then spend what is left.  For example, if you regularly deduct 10 percent  or more from your salary each time you are paid and immediately put it into your savings account, you will eventually develop the discipline of prioritizing your savings before any expense as well as adjust your spending habits to make the remaining 90 percent of your income fit your needs.  My wife does this for our house help, and you will be amazed at how much they have been able to save!

As for life insurance in the Philippines costing more than in other countries, if indeed it is so, it would be because (1) the more developed countries have a greater percentage of their population insured and can thus spread the cost of insurance to more people, (2) the tax treatment in other countries is much lighter for life insurance policies and this leads to lower premiums, (3) quality of life insofar as health services and overall safety standards is better, which then promotes longevity and lowers risk-management costs, and (4) stronger insurance penetration leads to a greater variety of insurance products available, which cater to a wide range of affordability.  As our country’s economy improves and more Filipinos are enlightened about insuring themselves, we are confident we can eventually achieve parity with these nations, but don’t let it stop you from insuring locally today.  

Jesus Alfonso G. Hofilena, Insular Life Executive Vice President & Head, Sales & Marketing Group.

Question 2: WHY SAVE MONEY INSTEAD OF ENJOYING LIFE?

Why should we save so much money? Isn’t it better that we enjoy our lives since life is short and let the future generations work for their own money? We have a saying: hindi mo madadala yung pera after death di ba? Life insurance is also good for emergencies or tragedies, but if a family has more than enough to tide them over, maybe life insurance is not a necessity for some families?

Daphne Figueroa, 23 years old, call center agent, Quezon City

Answer 2

Daphne, there are many views to life and one such view is “to eat, drink and be merry.”  I agree with you that life should be enjoyed and it is precisely for this reason why I believe you need to secure it with life insurance.  Life is full of uncertainties and we are exposed to real risks every day.  These risks come in the form of accidents that may leave debilitating effects on our lives; or the risk of dying too soon, well before we set our children off in life or maybe the risk of outliving our fortunes in our old age. 

If we do not neutralize these risks, we may not enjoy life at all.  Through life insurance, we can “transfer” these risks to financially sound institutions that, for a fraction of the cost, will be willing to mitigate a portion of the risk we may be exposed to.   This being said, it does not matter therefore if you are financially well off or not — we face the same uncertainties and risks.  In fact, when someone has more to protect, there is more reason to secure it with insurance.   

AMELITA F. TAMAYO, Insular Life First Vice President & Head,

Marketing & Agency Services Division

Question 3: HOW MUCH MONEY SHOULD A NEW CREDIT CARD USER SAVE?

Your columns about money issues are thought-provoking. I’m a new credit card user and it’s so much fun to be able to spend even before my salary comes. I often also just pay the minimum required plus the interest. In your columns, you keep advising that saving money should be promoted in the Philippines. Can you quantify that with specifics like how much savings we should aim for in order to be safe?

On life insurance, I am still very young. Who should be my beneficiary and can I change that to my future kids when I eventually get married?

Nathaniel K. Velasco, 27 years old, Dumaguete City

Answer 3

Thank you for your interest in insurance, Nathaniel.  Being young should not deter you from acquiring life insurance; in fact, it should be an advantage because of the much lower premiums for younger ages.  In my particular case, I realized the necessity and beauty of life insurance in my early 20s when I first started working.  At that time my income was not enough to acquire properties or other material assets, so I decided to prioritize savings and insurance coverage. 

Even if I wasn’t married then, my principal reasons for getting life insurance were (1) to preserve my financial independence (for example, if I get hospitalized I would have money to pay my medical costs and not have to rely on my parents to finance me), (2) to strengthen my desire to set aside money for the future — my bank savings account represented my liquidity savings while my insurance policies represented my forced savings, (3) to begin accumulating wealth by acquiring an asset I could afford — life insurance, and (4) in case something fatal would happen to me I could contribute to the future welfare of my parents or siblings. 

The last reason also answers your question — you can initially designate your parents or siblings as your revocable beneficiaries and later make a beneficiary change to your fiancée, wife or children, which life insurance companies allow, when the appropriate time comes.  

JESUS ALFONSO G. HOFILENA, Insular Life Executive Vice President & Head, Sales & Marketing Group.

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