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Life insurance can be one way to preserve inheritance. Irrevocable beneficiaries are 100% non-taxable.
As an inheritance, is life insurance better than realty assets?
I read your columns. I strongly support your advocacy with Philippine STAR and Insular Life to promote more public awareness on the importance of life insurance, because I have heard of kids whose parents died without life insurance and they had to transfer from private schools to public schools. Personally, do you also agree that passing on life insurance in terms of cash received by beneficiaries is a better inheritance than passing on real estate properties to kids and grandkids? Personally, I’ve encountered various headaches inheriting real estate, from possible squatters to legal headaches. Can life insurers in the Philippines also better educate their agents? Because one problem I see is that many agents never bother to tell clients that the dividends are not guaranteed. Lots of clients are angry when their payment periods are extended beyond what agents promised, due to changing dividends. Please explain the details of this.
J. Simoun Araneta Balboa, businessman
Answer
Most of us want to leave our worldly belongings to our families so they may continue enjoying the lifestyle they are accustomed to. My father, who is a lawyer, occasionally handled legal disputes involving inheritances. It is so tragic to see a family fighting over the disposition of real property and other similar assets because each heir wants to have the choicest picks. On the other hand, if the inheritance consisted solely of cash, its distribution would be so much simpler and less subject to disputes provided each heir gets a commensurate/equitable share. This is why there are those who acquire life insurance for this purpose, preferring to incorporate their other real properties so these can continue to be enjoyed by their families without their having to fight over who owns what. I can only tell you that I would favor this approach, but I cannot presume to speak for other people.
As for educating our agents better, we are certainly in agreement with you. However, even if we exert our best efforts to professionally train our salespeople, there could still be instances when some of them inadvertently or deliberately err. We would appreciate receiving feedback from clients on the conduct of our agents so we can correct or resolve whatever deficiency in learning there might still be.
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