Understanding your Insurance Policy

Choosing the right insurance agency and well as the right policy is very important and must be tailored to suit your needs since each of us have different needs that must be catered to. But equally as important is understanding the policy that we have bought that requires a through reading of the policy and if necessary tell your insurance broker to guide you through the entire documents since it might contain jargon that a typical Filipino insurance buyer would not likely to understand. The health insurance you have bought at a certain insurance company may not cover all types of medical conditions or conditions that may arise to to an accident so its very important for prospective buyers to read the fine print.

Filipinos don't typically read a document before signing it especially if its a couple of pages long and contains numerous fine prints weather we are applying for insurance or the latest landline/DSL promo. Take for example when we are opening a savings account at a bank. The bank clerk usually checks all the necessary places where we need to sign to open an account. But how many of us do actually take the time to read through the whole document before signing the signature cards? We just want to sign them so we can get our passbook or ATM and go on our merry way not knowing that what we have signed we are agreeing to the banks term and conditions as well as any future bank policy that they may implement that we may not agree to upon account opening if we have known. Just like an insurance policy. If we know that we bought a health insurance policy we just feel secured that we are covered but does not take the extra step to understand or read the fine print that perhaps buried in the numerous subsections of the policy might contain clauses not covering some medical conditions which the insurance company have every legal right to not pay for the treatment even if you have been paying your policy for years.

Philippine Business Insurance

The often mistake Philippine business owners make is not getting an insurance for their business thinking of business insurance as an unnecessary expense, rather than a business essential especially since the overall business climate today is not exactly that great due to low sales, high rental cost and operating expenses. But the Filipino business owner should first and foremost realize that it doesn’t take much to lose an entire business to fire, theft, accidents, dishonest employees, or other unforeseen events.

Convincing one to get a business insurance is doubly hard compared to traditional types of insurance like life insurance or health insurance which is already difficult to sell to begin with since when you hear about insurance the first thing that pops up your mind is pushy insurance agents trying to close a sale and the attitude of most Filipinos towards thinking about their future can be summed up into two words which is also a popular Filipino saying, "bahala na" which means what ever tomorrow brings makes for low and slow adaptation of insurance for the typical Filipino.

Business insurance cannot be applied to all business. Micro or small businesses like sari-sari stores or a carinderia makes it impractical to get an insurance in which monthly payments for the insurance will greatly affect business profitability. Medium to large scale business will greatly benefit from getting a business insurance particularly factories and the manufacturing sector. Factories who produce products that are susceptible to fire like paper or textile should definitely get insured. Running a business is like waging a war campaign in which you should be well prepared and covered at all fronts for any eventuality.

Taking Advantage Of The PDIC Insurance

The Philippine Deposit Insurance Corporation or PDIC guarantees every bank depositor that their deposit is insured if and whenever a bank goes under up to a deposit of P250,000 or its equivalent in dollars. How do we take advantage of this? By investing in rural banks and thrift banks that offer interest rates far beyond what our current and more well know commercial and savings banks are offering.

In our present business environment, loan rates have taken a big dive down which means those looking to take out a loan whether be it housing, car, equity or personal loans are at an advantage in our current situation. But since loan rates have gone down, deposit rates have also taken a big nose dive. Top commercial banks have already taken steps to reduce a normal savings account rate from the previous 1% p.a to 0.75% p.a and time deposit rates are at an all time low. Even savings banks have adopted this trend of lowering rates. Bad news for retirees and people who rely on time deposit interest to pay for their monthly expenses such as food, utilities and other expenses.

This is where investing in rural banks and thrift banks becomes very attractive. Some offering as high as 16% p.a or double your money in 6 years in which monthly interest rates are credited to a savings account which can be withdrawn anytime. But before you go rushing out and placing your entire life savings in these banks be warned. Most of these banks have names you probably have never heard before like rural bank and thrift bank of so and so, usually a name of a city or province in the Philippines. And these banks have a high risk of going under. This is where the PDIC insurance of P250,000 comes in handy.

Having experienced getting my money from PDIC, from banks that have closed before. I'm in the position to say that the trouble is worth the returns you are getting. I got my money from a closed bank in about 2 weeks from PDIC. Just make sure your total deposit at any given time in a thrift or rural bank does not exceed 250k. If you have lots of money don't forget to diversify them in different thrift and rural banks, each not exceeding the PDIC limit. And make sure that the banks you are depositing into are really PDIC insured which can be verified by a quick phone call or by visiting the PDIC website. Lastly, read lots of news papers or browse the website of the PDIC to keep yourself up to date on what is the current state of the banks you have your money deposited in.

Bank Deposit Insurance Coverage

Nightmare scenario. Your entire life savings was deposited into a bank that has a bank run and has declared bankruptcy and is no longer allowing withdrawals or simply does not have the resources to do so. What do you do? In the first place remain calm and do not panic, chances are your bank is covered by an insurance agency as well as your deposits there up to a certain degree.

Almost all banks in different countries are covered by insurance. In our case, it is covered by the Philippine Deposit Insurance Corporation (PDIC). PDIC is a government owned and controlled corporation (GOCC) created in 1963 by virtue of Republic Act 3591 for the purpose of insuring bank deposits up to P250,000 per depositor, up from P100,000 prior to the latest amendments to RA 3591 are contained in RA 9302 enacted on July 27, 2004.

But remember, the P250,000 insurance is per depositor not per account. If you have one million pesos, dividing that amount into four accounts with P250,000 each will only get you P250,000 insurance in case the bank goes under. A way around this is opening four joint accounts with different people. For example, first account is in your name, second account is your name and/or you wife, third account is your name and/or your son and finally fourth account your name and/or your daughter.

For deposits that are over and above the P250,000 amount insured, if the closed bank is not rehabilitated or taken over by another bank, amount in excess of the P250,000 coverage can still be claimed upon the final liquidation of the remaining assets of the closed bank, but it will take sometime. The claim may be filed with the Liquidator assets of the closed bank. However, if the closed bank is rehabilitated, the excess deposits are usually assumed by the rehabilitator. The claim for insured deposit should be settled within six months from the date of filing but the claim must be filed within twenty four months after bank closure. The six month period shall not apply if the documents of the claimant are incomplete or if the validity of the claim requires the resolution of issues of facts and law by another office, body or agency, idependently or in coordination with PDIC.

Philippine Pre-need firms woes

Pre-need

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.

Picture: www.sunlife.com.ph

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Car Insurance

Car Insurance

While I do agree that if we can afford it, we should get insured in preparation for incase something 'bad' or 'unexpexted' occurs. However, not all things are worth getting insured for.

Take for example car insurance. Its an absolute must to get a car insurance when buying a brand new car or a luxury vehicle in case of theft or serious damage.

But if you're getting a second hand car worth less than 300k pesos I dont think that paying for that unit's insurance is worth it.

Normally when an accident happens to your car. You take it to the 'talyer' to be fixed and to estimate the cost of repairs.

Depending on your chosen car insurance provider. Most car insurance company will only cover the amount in excess of 5k to 10k pesos.

For example, if your car insurance policy cover's only damage in excess of 10k pesos. And if the cost to have your car fixed is below 10k, you dont get paid by the
insurance agency. If it cost you 12k pesos to fix, the insurance agency will only pay you the 2k pesos. You shoulder the 10k pesos aside from the yearly premiums that you pay.

Ofcourse there are exceptions to this. If you're livelihhod depends on your car like privately owned taxis, school and shuttle services or delivery vans for your pick up trucks like the popular mitsubishi L300 and the kia ceres. Getting an insurance will probably give you the peace of mind incase of theft. But the value of the vehicle should be taken into consideration before getting the insurance you think you might need.

Picture: www.bonaportinsurance.co.uk

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