Financial IQ: T-Bills/Bonds as Investments?

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Financial IQ Philippines Quick Hit(s):

Risks are inherent on these investment instruments, not just stocks or Equity Mutual Funds.  Treasury bills (T-bills) and Bonds are backed and with guaranteed interest.  Contrary to majority, risks are still present on these instruments when bank interest goes up... demand for T-bills and bonds would go down.


How are t-bills, stocks, bonds & managed funds for investments?


Your columns are interesting. I’m in marketing work with a pharmaceutical firm. I appreciate your informative series on life insurance and savings, but since you said we readers could ask personal finance questions, could you ask Insular Life if they also sell bonds or have mutual funds? Is it a good time for people to invest their income in Philippine stocks now? What about T-bills? Kindly explain these options and help assess them.


Sonny Go, Jr., 31 years old, single, Pfizer


Answer


As somebody involved in the pharmaceutical industry, I am sure you are aware of the medical profession’s ethical code of not prescribing any medication/treatment without the proper diagnosis. The practice of financial advisory also adheres to the same standard; to answer your question as to where would be the best investment option today, it would be essential to first articulate your financial goals in terms of 1) how much is required to fulfill it and 2) when these goals would happen. Your answer to these two questions would provide you with a general guideline as to which option is most appropriate in helping you achieve your financial goals. 


For goals that are five years or less, your best option would still be the bank products that we are all very familiar with like time deposits and special savings. For financial goals that are at least five years into the future but less than 10 years, you may want to consider a managed fund that invests in T-bills/bonds (Insular Life’s peso or dollar Fixed Income Fund). For 10 to 15-year goals a balanced fund may be your best choice (Insular Life’s Balanced Fund). And for financial goals that are at least 15 years into the future, an equity fund (Insular Life’s Equity Fund) should be the most appropriate.


Is it a good time to invest in the stock market? My answer: Every day is a great day to invest for as long as you are investing to fund an articulated financial goal.

http://www.philstar.com/Article.aspx?articleId=640798&publicationSubCategoryId=82

Related articles

• Mutual Funds Vs Individual Stocks (debtsettlementevents.wordpress.com)
• Investors bailed out of bonds in November, mostly municipals (usatoday.com)

Financial IQ: Insurance for children?

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Insurance is used as protection of loss of income.  Hence, it makes more sense to insure adults than children/students.


How to buy insurance for preschool teachers & students?


I admire your columns. I would like to ask if you have any ideas on the rules and regulations for opening a head-start/toddler school. Who/where can we get info on opening such a school? Is it advisable also to get insurance for such a business since it deals with small kids?


Andy Ong, 41 years old, bakery owner, married with two kids, Aurora Boulevard, San Juan


Answer


In line with your plans of opening a toddler school, we know that you would want the best for your future students and faculty members.  Aside from their educational and moral development, the protection of their well-being would be topmost among your concerns. 


We are pleased to announce the availability of our Students and Teachers Plan. This plan is designed to provide students and teachers the utmost protection from life’s contingencies. 


The Students and Teachers Prototype Plan is designed to give them 24-hour medical coverage for a Life and Accidental Death and Dismemberment (AD&D) Rider and medical benefits for accidental injuries.  All DECS-accredited private schools, colleges, and universities are qualified.  To give an overview on the general provisions of the plan:


Eligibility


• All bona-fide students officially enrolled from 2 to 40 years old; coverage shall automatically terminate at age 41.


• Full-time teachers/faculty members and administrative staff with permanent status who are at least 18 to 59 years old; coverage shall automatically terminate at age 60 or upon resignation/retirement, whichever comes first. Participation


• 100 percent of the number of eligible students but not less than 50 students for schools and universities


• All eligible teachers/faculty members and administrative staff.

http://www.philstar.com/Article.aspx?articleId=640798&publicationSubCategoryId=82

Financial IQ: Is a diabetic insurable?

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Diabetics can be insured.  Insurance premiums may be higher to compensate for the higher risk due to ailment.


Can diabetics be insured? what other medical conditions are uninsurable?


Is it true that a person with a serious diabetes ailment can no longer get life insurance? My father has diabetes and I’m thinking of encouraging him and my mother to buy life insurance similar to my own case and that of my husband. Can you ask Insular Life what are other medical cases or problems make a person uninsurable? Can a sick person still be insured as long as he or she is willing to pay higher premium costs?  


Monica B. Gutierrez, 29 years old, housewife, bank officer, Cebu


Answer


A person with diabetes may be insured if the blood sugar is well controlled, and there are no additional significant complicating risk factors from the resulting accelerated vascular disease of diabetes, such as heart disease, stroke or renal impairment. A diabetic, if insurable, will have to pay a higher premium commensurate to the additional risks. On the other hand, if a diabetic’s application for insurance is not acceptable for medically-underwritten types of insurance products, he may opt to apply for insurance products that cover applicants without need for screening or medical evaluation.

Multiple medical impairments, marked obesity, malignancies that are not in remission, autoimmune diseases that are active, and Alzheimer’s disease are some of the illnesses that are not acceptable for coverage. For children, those with pervasive developmental disorders, or congenital diseases that complicate other organ systems and have not been corrected or repaired, may not be acceptable.

http://www.philstar.com/Article.aspx?articleId=640798&publicationSubCategoryId=82

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• Diabetes Is Not Necessarily A Decline For Health Insurance (theinsurancebarn.wordpress.com)

Financial IQ: What is Tithing?

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Financial IQ Philippines Quick Hit(s):

Tithing is donation to church and charities.  Kudos to everyone who practices tithing.


Dawn Zulueta-Lagmadeo, who incidentally traces her maternal ancestral roots to Bethlehem in Israel, told this writer that she agrees with our advocacy to encourage saving money as a national habit in the Philippines. Dawn said that even while she was starting out as a model and, later, a young actress, she had learned to always save money in bank deposits, treasury, as well as later investing in realty properties and also jewelry.


Dawn added: “I believe in the importance of life insurance. It’s like stashing away money and forgetting about it until — God forbid — something happens and it will help our loved ones. I am so segurista. I encourage people to buy life insurance and to choose only reputable big companies. It is also good for those who live too long and if we’re old and not always productive … I usually also set aside 10 percent of my income for charities and for doing God’s work.”


This practice of Dawn’s and other Christians setting aside 10 percent of their income to donate to the church and charities is called tithing, and is based on Bible principles. 

http://www.philstar.com/Article.aspx?articleId=640798&publicationSubCategoryId=82

Financial IQ: Life insurance for businesswomen and businessmen?

Financial IQ Philippines Quick Hit(s):

Whole life insurance is good.  You may also want to get additional 10-year or 20-year term (to save on premium cost) and invest the difference to an Equity mutual fund.


What is the best life insurance for businesspeople with kids?


My husband and I are fans of your column in The Philippine STAR; we also support your advocacy to promote savings as a national habit. Do you think bank interest rates will go down this New Year? Should a medium-sized business take more loans or still be conservative? What is the best life insurance product for a businesswoman and my businessman husband with two young kids, should the size of our policies cover also the size of our existing business loan?


Dina de Mesa, 36 years old, businesswoman, Iloilo


Answer


Thank you, Dina, for your question.  In answering, it’s most ideal that I be given additional information on your existing financial plan.  In the absence of this information, however, I will make a few suggestions that are generally applicable to most people in your situation.  As a couple with two young kids, your family is susceptible to the risk of losing one or both breadwinners.  Your children are fully dependent on you. As such, their interests are best served if both you and your husband have individual life insurance policies to make sure they are provided for in any unforeseen event.  If you have already secured such protection, you will be best advised to secure an insurance endowment plan, which can provide your children the funds for their college education. 


As for your question about if the size of your policies should also cover your business loans, it depends on the terms of the loan you applied for.  Normally, banks will offer term insurance that matches your business loan repayment period.  This temporary cover expires when you have fully paid up your loan, enabling you to get just the right amount of insurance for the limited period you need it.  There are a number of insurance products in the market today that will suit your individual requirements.  

http://www.philstar.com/Article.aspx?articleId=638619&publicationSubCategoryId=82

Related articles

• Life insurance: Price vs quality (confused.com)
• Types of Life Insurance Products (termlifeinsurance.org)

Financial IQ: Insurance for Stewardesses

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There is a possibility that insurance premium may be slightly higher.


What is the best policy for airline stewardesses who often fly overseas?


What do you recommend as the best life insurance for an airline stewardess who often flies abroad? Are the costs higher because of the nature of a person’s work, or are life insurance costs the same based on the age bracket? The Philippine Star and Insular Life should be congratulated for helping promote financial education of the public through your column’s Question & Answer series.


Josie Martinez, 26 years old, Santa Rosa, Laguna


Answer


An insurance agent will be able to help her determine the best coverage for her depending on her present needs and purpose. Just like any regular employee, a stewardess can apply for insurance at standard rates. However, if she is based in a country that is considered high-risk, premium will be higher. For accident or disability cover, additional premiums will also be applicable. 

http://www.philstar.com/Article.aspx?articleId=638619&publicationSubCategoryId=82

Financial IQ: Can god parents buy life insurance?

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Anyone can purchase life insurance for anyone (including god children, etc).


Is it okay to give life insurance as Christmas gifts to godchildren? My husband and I have many godchildren, and since I read your Question & Answer series on savings and life insurance, I’m curious to ask if godparents can buy and give life insurance as gifts but pay only the premium for the first year and then their parents pay the following years? Is this unusual, allowed or not?


Irene Ong-Cheng, 47 years old, businesswoman, Zamboanga


Answer


Yes, godparents can surely pay for the initial premiums of an insurance policy as a gift to his/her god child.  The god child may be the person insured under an insurance policy that provides for benefits during his/her lifetime such as periodic monetary benefits (which are usually called “living benefits” that may be used for the child’s particular needs such as education).  His/her parents may be the designated beneficiary/ies in the policy.  Alternatively, the child can be the beneficiary in a life insurance policy on the life of either of his/her parent.  In either case, since the succeeding premiums are to be paid by the parent upon his/her approval, then the said parent shall be the Applicant-Owner of the insurance policy who shall be entitled to specific rights including, among others, the right to receive “living benefits.”


You may also consider securing a One-Pay Life Insurance Policy which requires only a single premium payment.

http://www.philstar.com/Article.aspx?articleId=636460&publicationSubCategoryId=82