Philippine Pre-need firms woes
In the most recent report, sales of our country's insurance companies, otherwise known as pre-need has been down as the sector continues to struggle and suffer from low sales and investors confidence due to the deterioration of several top pre-need firms of the country. Pre-need plans are contracts to provide for future monetary, financial or services at the time of actual need in which planholders pay for an installment basis of monthly, quarterly, semi-annual or annually. With controversies from top pre-need companies that has occurred in the past few years has really made Filipinos scared of buying any more pre-need plans, its just too depressing of having to pay for your child's educational plan monthly for five years only to have the pre-need company go under or declare bankruptcy.
So it is not surprising that according to the report. Educational plans suffered the biggest drop in sales as the number of plans sold plummeted. The slump in sales was also extended to life plans and pension plans. And it is also predicted that the industry will experience flat growth in the short term due to the adoption of new international accounting standards (IAS). The IAS will increase the liabilities of pre-need firms since premiums collected will be no longer booked as income but as liability. This will help us who are still choosing or deciding which or whether we are going to purchase pre-need from. However due to this new accounting standard, some pre-need firms with health cashflow may appear as bankrupt on paper and will scare off potential buyers. Buyers must also conduct their own research into the background of the company they are interested to buy pre-need from. Look into their financial statements and then decide whether or not to go ahead and purchase plans to suit their needs.