Many Filipinos are unaware of estate planning. Many would have vague ideas of what estate planning is, and to those who do, they would automatically associate estate planning with inheritance taxes.

For those who do some form of estate planning, we notice that many of them forget one estate-planning tool: life insurance.

I have asked my good friend, a legal expert on financial services, lawyer Carlo Carino, to help me write this article. Carlo is also a recent graduate of the Registered Financial Planner’s program and is one of the featured experts at www.income-tacts.com.

Let’s try to have a more powerful (and creative) introduction for today’s article (wink).

Thousands of years ago, and up to the relative present, man has always thirsted for immortality. This has been his greatest quest. The Egyptian pharaoh believed he can achieve it and, thus, prepared for his next life by bringing his riches, women and faithful servants with him into the grave. Hundreds are taken along with him, his riches and favorite earthly possessions delivered in his grandiose and mythical grave.

Chinese emperors, likewise, held this devotion.  The fountain of youth, however, was nowhere to be found, albeit Madonna, with her youthful looks and stunning dance repertoire, may have found it.

Now, immortality is achieved figuratively through halls of fame or burning a page in the annals of history. Some try to achieve immortality by writing songs, as Barry Manilow puts it. Some write poetry, poems, literature.

To thwart history and immortality, Xerxes of Persia threatened to erase the Spartan king Leonidas by burning every Spartan literature, cutting the tongue of every Greek and sentencing to death any person who spoke his name. That probably never happened because I just saw the movie on HBO.

I also remember a movie starred by Peter O’toole entitled The Wings of Fame. The movie is set in a limbo-like place where those who were famous remain in this limbo until the mortals forget their name. Once forgotten, he or she disappears, never to be seen again.

Fortunately, our law has brought forth a similar solution for man’s quest for immortality: succession.

Our law on succession helps a man achieve immortality through the passage of wealth from one generation to another. A person’s wealth is just like a hero in a movie. It is the same character, but the actors who portray it have been several…

Catch part 2

Insurance has been something people felt they do not need. The Philippines is one country that is severely under-insured in both Life and Non-Life (Property & Casualty).

Insurance is still the best tool for risk management by virtue of a risk transfer mechanism. For those who are wondering if their cars and properties are covered by insurances… yes, if they have the proper coverage such as Flood and AOG (Acts of God).

Loss of life and property is crippling, financially and insurance can really help — despite not being popular among us Pinoys. Maybe it’s time we look at insurance in a new view.

Insurance companies that do not ‘re-insure’ will be in trouble, that’s for sure!

Check out my old blogs about Motor Car Insurance

Part 1

Part 2

We must always be prepared… financially, and more importantly, spiritually. My 2 cents.

“For in the days before the flood, people were eating and drinking, marrying and giving in marriage, up to the day Noah entered the ark; and they knew nothing about what would happen until the flood came and took them all away.”

(Matthew 24:38-39, NIV)

Here’s the conclusion of my car insurance blog…

3) Acts of God (AOG) – Hmm, I really think insurers should start changing this terminology! Oh well, AOG is a protection against perils from the natural forces like storms, flooding, lightning, etc.  For example, there was a strong typhoon and a huge tree branch hit your windshield and shatters it… if your motorcar insurance has no AOG coverage, you can’t make any claim.  Loss where the proximate cause is a natural occurrence is usually not the kind of loss insured against.  Hence, if you are not covered against these kinds of peril (excepted perils), any losses due to force of nature will not be a compensable loss.

4) Passenger Personal Accident Insurance (Auto PA) – works like your regular PA but auto PA are given to unnamed passengers of the insured vehicle. Usually, auto PA gives compensation for loss of life, dismemberments and medical reimbursements due to accidents while riding the insured vehicle.
Now, do we need all of these?  Honestly, I think we do.  Accident is an occurrence that happens not in the usual course of things.  The chance of not getting in an accident is as likely as meeting one.  So why take the risk?  When you reduce your coverage, you expose yourself more to risk…and come to think of it, you do that just to save for a measly amount.  Personally, I would rather lose a guaranteed amount stated in the policy, certainly a small price to pay compared to paying for something you are exposing yourself to in case of figuring in a freak accident.

P100,000 is too small an amount for third partly liability… hospitalization cost escalates much more than P100,000.  What if the the victim will have to go through a delicate surgery? P100,000 will surely not suffice. Much of the properties that your vehicle can damage would be more than P100,000 — that’s for sure.
As for Acts of God coverage, the Philippines has its share of natural calamities.  It’s actually a tradition of Ms Philippines to meet natural typhoons, floods.  These are so common to us — don’t you think you should be covered against them as well? The premium costs for said coverages aren’t too much.  In fact, I often think it’s quite inexpensive for the benefits I could get and the protection it gives me. Unfortunately, many non-life agents don’t go through the notions of educating clients about the benefits of a comprehensive coverage – the product features probably unique to their respective companies.  This, of course, may be a symbiotic fault.  Clients chop premium amounts.  When you do that, you sacrifice your protection…to realize when it is already too late.

Do you remember Milenyo? I was driving home from Makati during Milenyo when a huge flying tree branch missed my windshield by a few inches!  Whether it hit me or not (thank God it didn’t) I am assured and protected against damage to my car, worst my person.

Tip to everyone… when shopping for motor car coverages, check out all the sections and the coverages before making comparisons.. a policy from Insurance Company A might be cheaper than Insurance Company B because they reduced VTPL, deleted AOG and Auto PA, or worse, reduced Fair Market Value (FMV) of the vehicle (it’s the basis of OD/Theft Coverage). Make sure that you compare them fairly and squarely before deciding where to get your insurance.  Further, make sure you are getting coverage from a reputable insurer.  Premium costs is not the make or break of getting a coverage.  Some insurance companies may require a more expensive premium but I’d rather pay a few extra pesos and be assured that when the time comes, my insurer is there to pay. There are just too many unscrupulous non-life insurers in the Philippines.  You should be more discerning with your choices.

Hmmmm… I’m sure motorcar insurances in other countries may operate differently. In the U.S. you pay a higher premium if you have a teenage kid, your premium increases when you have claims even if you moved to another insurer and all that but hey, ‘iba ang Pinas eh!’ There are many things that needs improvement here with regard to motor car insurances..for starters, it’s a bit expensive.  Why??  Claims experience in the Philippines is pretty high.  Worse, we’ve been hit by a lot of deceitful claims by syndicates (involving car shops, adjusters, and other parties), high carnapping rates, etc.  All of these affect premiums.  One way to reduce premiums is to charge people with bad claims experiences higher premiums.  While some insurers do that, clients just move to other insurers where they have no record and get their coverage there at the same premium rate. This practice is so rampant in the local industry and insurers have no recourse but to pass this cost to the consumers by way of higher premiums.. pretty much like illegal tapings at meralco.  This could be avoided if local insurers would cooperate with each other and share common databases. I was told that there was a move to do this, but, somewhere, somehow, the project was shelved or put on hiatus  Banks share credit history (CIBI), Life Insurance companies share medical results (Medical Impairment Bureau).. why not Non-Life Insurers? The top 10 Non-Life Insurers should and can start this.  Everyone else will follow.  Or probably, another law will have to be enacted!

Hope this helps the readers. It’s time to understand all these things that we spend our hard earned money on, right?