Financial IQ: CEB marks lucky 10/10/10 with P10 all domestic and P1010 all international seat sale

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Financial IQ Philippines Quick Hit(s):

Awesome deal!  Take advantage of the cheap fare if your flight schedule coincides with the sales promotion.

Your low fare leader Cebu Pacific (CEB) puts up 101,010 seats on sale to mark the special day of October 10, 2010, considered lucky by many. The seat sale as low as P10 is only available on October 10, 2010 or until seats last, for travel this January 1-March 31, 2011.

For the ‘Go Lite’ seat sale fare of P10, you can travel to any of CEB’s 33 domestic destinations. This includes Boracay (Caticlan), Legazpi, Bacolod, Coron (Busuanga), Cagayan de Oro, Calbayog, Catarman, Cebu, Davao, Iloilo, Kalibo, Naga, Ozamiz, Puerto Princesa, San Jose, Surigao, Tacloban, Tagbilaran, Tuguegarao and Zamboanga.

Guests can also avail of P1,010 ‘Go Lite’ seats to any of CEB’s 16 international destinations, such as Beijing, Brunei, Osaka, Seoul (Incheon), Jakarta, Kota Kinabalu, Bangkok, Macau, Singapore and Hong Kong.

Because this date only comes once in a lifetime, we're offering seats as low as P10 to give you more opportunity to visit different destinations in the country and in Asia. So hurry, visit www.cebupacificair.com for your bookings now!

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Financial IQ: 6 Habits That Will Make You Broke

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Financial IQ Philippines Quick Hit(s):

This is an interesting article about money habits.  I do agree, though, that it takes discipline to instil good money management in each of us.

It's still a week until payday, but your checking account is almost empty already. Where did all your money go? We all have our black holes, those money pits that seem to magically make our cash disappear. Here are six bad habits that will make you broke, and how to break them:

1. Window Shopping

2. Carrying Lots of Cash 

3. Saving Your Info With Vendors 

4. Clipping Unneeded Coupons 

5. Shopping With Your Emotions 

6. Not Planning Ahead 

The Bottom Line

It takes some discipline to break these bad habits. With some planning, discipline and avoiding tempting situations, you can break these habits -- and maybe even find you'll have a little extra cash at the end of the month.

http://finance.yahoo.com/banking-budgeting/article/110940/habits-that-will-make-you-broke?mod=bb-budgeting

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Financial IQ: Smart Double Deal

Financial IQ Philippines Quick Hit(s):

Seems like a potentially good deal as you can acquire a 2-year installment plan for mobile phone and laptop for Plan 1800 (Samsung Champ + Samsung Notebook), Plan 2500 (Samsung Corby WIFI + Samsung Notebook), and Plan 3500 (Blackberry Curve 8520 + Samsung Notebook).  

Of course, a lot depends on the Samsung laptop model and how much it cost.  Anyone knows?

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Financial IQ: Insurance for those with GSIS

Financial IQ Philippines Quick Hit(s):

In my opinion, ensuring that the insurance coverage is enough is the most important priority.  It is so much better to be over-insured than under-insured.


How to improve insurance for people already with gsis?


I studied at the University of the Philippines (UP), Harvard and AIM, and am the youngest of 11 candidates for president of UP, who will be elected first week of November. I want to ask Insular Life officials for their suggestions or advice on how we can further improve the retirement and life insurance benefits of all UP employees, faculty and even their dependents nationwide. Right now, UP faculty and staff are covered by GSIS insurance. Life insurance does not exceed P1 million in benefits.


Dr. Patrick T. Azanza, 42 years old, CEO of WinSource Business Solutions & candidate for president of UP, Mandaluyong City


Answer


Thank you, Dr. Azanza, for thinking about the welfare of the faculty and staff of the University of the Philippines. Retirement should be the most rewarding of our life stages and should be a period when one can truly enjoy the fruits of a lifetime of devoted work by being financially secure. This can readily be achieved if one prepares early and well enough for it. It is worth setting aside a reasonable portion of one’s income for this purpose. While we are provided pension benefits from either the SSS or the GSIS, these can only constitute a minimal portion of our retirement income and thus cannot cover all our expenses. They need to be supplemented by our own savings and additional insurance for retirement security.


For employee groups, Insular Life offers a Comprehensive Group Program (CGP) consisting of group life insurance with a side fund that invests a generous portion of the premiums in order to create and augment needed retirement funds. We would be most happy to present this to you for your consideration.


Additionally you may also want to consider the health security of your coworkers. What many don’t realize or take for granted is the fact that when an employee reaches the normal age of retirement, he/she will no longer be eligible for medical insurance or health care. Yet it is during one’s elderly years when health maintenance expenses increase significantly. Once again this can be prepared for financially and we can present certain options for this concern.

http://www.philstar.com/Article.aspx?articleId=617629&publicationSubCategoryId=82

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Financial IQ: Life insurance for kids?

Financial IQ Philippines Quick Hit(s):

It is better to invest in equities or mutual funds for kids, than life insurance.


Do you advise life insurance for kids as young as two?


My wife and I got insurance already. My two kids likewise have educational plans. Do you advise that kids as young as two years old have life insurance?       


Andy Ong


Answer


The essence of life insurance is being able to compensate for the income lost as a result of one’s demise. Proceeds of the life insurance is intended for the beneficiaries’ use so that they will be able to sustain their needs until a more permanent means of replacing the deceased’s lost income is found. Given this line of thought, availing of life insurance for a young child may not be a priority. 


However, we do recognize that life insurance products have evolved to fit financial needs other than risk protection. Current life insurance policies serve as viable long-term savings and investment products. It is also general knowledge that premiums for life insurance policies generally are lower for younger ones; hence, if you see the need to set aside funds for your children’s future needs, like birthday celebrations or educational trips abroad, you may as well consider getting these plans at a more affordable rate by identifying your children as the insured party.  


As added advice, though, put in a rider that will waive future premiums should the policy’s payer become totally and permanently disabled or pass away so that in case this eventuality happens, the policy will remain in force and the kid will still be able to use the policy’s benefits. Assign a guardian as well so that this person can transact business with the insurance company if the child is still a minor when this particular scenario happens.

http://www.philstar.com/Article.aspx?articleId=617629&publicationSubCategoryId=82

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Financial IQ: On Prenuptial agreement

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Financial IQ Philippines Quick Hit(s):

Prenuptial agreement is gaining popularity on foreign countries.  Personally, I believe it is a good tool as both parties start planning ahead.


Do you recommend prenuptial agreements?


Are prenuptial agreements before marriage already accepted here in our society, or is this just for movie stars and the super-rich? Can a very large life insurance policy bought before marriage be covered by a prenuptial agreement also? Like in the case of a separation, can insurance be used to pay off a spouse? Do you advise couples with lots of properties or assets to sign prenuptial agreements, or will this sour a relationship? 


Lawrence V. Del Mundo, 33 years old, single, businessman, Makati City


Answer


Marriage settlements or prenuptial agreements that would govern the property relations of the married couple during their marriage are provided in our law on family relations under the Family Code. The parties may choose among absolute community, conjugal partnership of gains, complete separation of property, or any other regime. We do not have statistics to help us determine the extent of its practice, but most of the married couples we know do not have marriage settlements. We may have heard about such prenuptial agreements among certain personalities only mainly because they are well-publicized. Under the Family Code, in the absence of a marriage settlement, the law provides that the system of absolute community of property under the code shall govern.


Entering prenuptial agreements is dictated primarily by the need of the parties and not merely by the size of the assets. It could be made for the purpose of preserving one’s family properties, or for providing for the needs of family members from an earlier marriage, or for simply defining the property relations between spouses during the marriage.   However, since discussions on property relations could be emotional, it is best that the parties are already mentally and emotionally prepared before they enter into prenuptial agreements; otherwise, as you mentioned, it may contribute to the souring of their relationship at that point when they are already preparing to get married. 


A life insurance policy, just like any property, can be the subject of a prenuptial agreement. As such, it could properly be covered by the agreed upon property relations between spouses. However, I do not think there is life insurance that will pay benefits in case of separation of spouses (legal separation or annulment) to “pay off” a spouse. As we know, in life insurance, the contingent event that triggers the payment of the basic benefit is the loss of life of the insured.

http://www.philstar.com/Article.aspx?articleId=617629&publicationSubCategoryId=82

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Financial IQ: Taxes on life insurance policies

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Financial IQ Philippines Quick Hit(s):

Irrevocable insurance is 100% tax exempted.  Revocable insurance is suject to estate tax.


Taxes on life insurance policies?


My husband and I have several ordinary life insurance policies, all with Insular Life, except for one. We are now senior citizens with adult and economically independent children. We now want to make sure that the proceeds of our policies will not be subjected to any kind of tax so it will be sufficient to cover our respective estate taxes. My parents did not have any life insurance coverage and it was difficult for me to come up with my share of the estate taxes then, especially since it was during the Asian financial crisis. We want to provide our children with enough insurance money to cover whatever estate taxes they will incur in the future.


Justice and Eric Mondragon, Loyola Grand Villas, Quezon City


Answer


Thank you for insuring with Insular Life. You have made the right decision as your insurance policies will surely take care of your estate planning concerns. As to your query, please allow us to respond here in a general way for the benefit of the other readers. However, we shall provide you with specific answers to your questions through your private e-mail.


On your questions about life insurance taxation, two possible taxes come to mind: one is the income tax on the part of the beneficiary of the policy, and the other is the estate tax.


Under Section 32 (B) (1) of our National Internal Revenue Code (NIRC), “the proceeds of life insurance policies paid to the heirs or beneficiaries upon the death of the insured…” are not included in the gross income and therefore exempt from income tax. However, if the proceeds are left with the insurer to earn interest, such interest payments shall be included in the gross income of the beneficiary subject to income tax.


On the other hand, life insurance proceeds may be subject to estate tax under certain conditions. Section 85 (E) of the NIRC states that even if the proceeds are payable to the beneficiary upon the insured’s death, such amount shall be considered as part of the deceased-insured’s estate subject to estate tax when such beneficiary was designated as “revocable.” This means that the insured-policyholder still has complete “control” over the policy, such that he can make any policy transaction all by himself (without the consent or approval of the beneficiary), especially for the change, addition or removal of the beneficiary. Other transactions could be the securing of a policy loan or policy surrender to get cash values. If there is no beneficiary designation, it shall be presumed that the designation is “revocable.”


The proceeds shall likewise be subject to estate tax if these are payable to the executor or administrator of the insured’s estate and, of course, if proceeds are payable to his estate, even if the designation was irrevocable. If no beneficiary was named, most insurance policies state that the proceeds shall be paid to the insured-policyholder’s estate, and therefore subject to estate tax as discussed above.


It is when the beneficiary designation is “irrevocable” that the insurance benefit will not be subject to the estate tax. The irrevocable beneficiary designation removes from the insured-policyholder “control” over the policy so that all policy transactions affecting the interest of the irrevocably designated beneficiary would require the latter’s approval. With this, the proceeds are not considered part of the deceased-Insured’s estate, and therefore not subject to the estate tax.

http://www.philstar.com/Article.aspx?articleId=617629&publicationSubCategoryId=82

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