Financial IQ: Is Pacquiao insurable?

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Financial IQ Philippines Quick Hit(s):

Yes, Pacquiao is insurable.


Can Pacquiao be insured? Can an unmarried couple jointly buy property & life insurance?


My boyfriend is a big fan of Manny Pacquiao and I’m just curious if big firms like Insular Life insure athletes like Pacquiao who are into violent sports like boxing. I’ve read of boxers dying in other countries. Another question: My boyfriend and I plan to jointly buy a house with our savings plus some money from our parents, but we are not yet married. Can we legally buy and jointly own property, and can we also buy life insurance with each other as beneficiary though we are not yet married?


Karla B. Villagracia, 25 years old, housewife, General Santos City, South Cotabato


Answer 1


Athletes are generally acceptable for life insurance but are usually not allowed disability cover. Even athletes who are engaged in aggressive, violent sports involving physical contact like Manny Pacquiao, who is a professional boxer, may be covered for life insurance. However, premiums will be higher to reflect the higher mortality risks, not only during his professional career, but even in later years due to brain damage. 


Answer 2


Buying a property prior to your marriage from your respective savings may be legally done.  Your relationship under such an arrangement shall be governed by the provisions of our Civil Code on co-ownership.  With respect to life insurance, either of you may secure life insurance on your respective lives. Based on our Insurance Code, you as insured/owner may designate any beneficiaries to your life insurance policy, provided that they are not disqualified by law.  Those disqualified by law are those persons who are prohibited by law from receiving donations from the insured, as provided under Article 739 of the Civil Code of the Philippines.  However, such beneficiary designations may be subject to the internal rules and regulations of insurance companies in accordance with their respective underwriting policies.  It may also be worth considering that the designation of the beneficiary be initially made as “revocable” to provide the insured/owner with the necessary flexibility in adding or changing beneficiary/ies, just in case he/she deems it necessary or proper.  Anyway, the revocable designation can be made irrevocable in the future at the discretion of the insured/owner. The choice of revocable or irrevocable beneficiary designation is important in determining the estate tax implications of the insurance proceeds.  We suggest that a professional life insurance agent or financial advisor be consulted on this and other life insurance matters for proper guidance.

http://www.philstar.com/Article.aspx?articleId=642785&publicationSubCategoryId=82

Financial IQ: Philippine economy in 2011

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Financial IQ Philippines Quick Hit(s):

It seems like Philippine economy remains positive in 2011.


Forecast for Philippine economy in 2011


Since Insular Life is a financial giant with 100 years of solid history, can their big bosses please share their prognoses and expectations for 2011 for the Philippine economy? Any advice for small entrepreneurs and even for ordinary employees in 2011?


Ulysses Huang Lim, 42 years old, businessman, Makati City


Answer


Philippine economic fundamentals are expected to remain very positive in 2011. Some points worth noting are: the country’s Gross International Reserves at an all-time-high level (+$60B); this may lead to a very likely credit upgrade for the country, which may result in the further lowering of the government’s financing costs. This in turn may keep the current low-interest environment where it is at present. Entrepreneurs may want to use this opportunity to secure some financing for the purpose of expanding their businesses while ordinary employees can participate in the anticipated upbeat business prospects by buying into the shares of listed companies involved in consumer goods and services.

http://www.philstar.com/Article.aspx?articleId=642785&publicationSubCategoryId=82

Financial IQ: On investing stocks...

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Financial IQ Philippines Quick Hit(s):

Citeseconline provides free seminars on stocks.  Both equities and Mutual funds are good, as long as you are risk tolerant.


How to better invest in stocks? Are investment funds ok?


As a busy person who has no time to monitor the stock markets on a daily basis, is it better for an investor to just entrust our funds to an investment fund? Is this risky or less risky? After reading the answers of Insular Life to your readers’ questions, I researched their website and am curious about what I read in “Investment Funds of Insular Life Wealth Series.” Can you share more details, but more in laymen’s language instead of using stock market or finance jargon? Can ordinary people invest there and what minimum amounts are required?


Richard Toledo III, 38 years old, businessman, Cebu


Answer


Investing in the stock market is not as complicated as popular perception; you may want to look at buying shares as if you are going into business. For example, if I bought/invested in the shares of a successful neighborhood grocery, my investment returns would be a direct result of how the business performs from hereon. If it continues to do very well, then the value of my investment would grow just the same. The opposite happens if the business falls on hard times.


After you have decided to invest a portion of your funds in the stock market, your next decision point would be to decide whether you want to do this personally or just entrust the selection/management to an institution by way of investing in any of the investment funds being offered.

http://www.philstar.com/Article.aspx?articleId=642785&publicationSubCategoryId=82

Financial IQ: Too much life insurance?

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Financial IQ Philippines Quick Hit(s):

No, it is not.  Aside from protection, it also serves as wealth preservation.


Is it bad to buy too much life insurance?

I am a widow. Do you think it’s a bad idea to buy too much life insurance for heirs who will not be poor anyway — is there such a thing as too much or excess life insurance? Warren Buffett seems to think that bequeathing too much money to heirs is not good. Do you agree with that? I don’t have problem kids, but can parents legally disown a disobedient kid from his inheritance under Philippine law?


Elaine Crisanto-Ramirez, businesswoman, Alabang, Muntinlupa


Answer 1


Life insurance is meant to indemnify loved ones, creditors or those with a financial interest in the insured for the economic loss they would incur when he passes away.  There is also a general principle in insurance risk management that a person cannot unduly or excessively benefit from the said loss.  Hence, it is possible to have cases of “over-insurance” when the amount of coverage is grossly disproportionate to the value of the actual financial loss.  It is also for this reason that insurance companies do financial underwriting; that is, they assess the reasonableness of the amount of insurance being applied for vis-à-vis the financial needs of the intended beneficiaries.  For example, if someone wants to buy life insurance in order to ensure a continuing monthly income for his family for a period of five years, assuming the current monthly expenses of that family are, say, P100,000 and adjusting for annual inflation of five percent, the amount of coverage needed would be approximately P6.6 million.  That amount would be understandable and reasonable, but if that person applies for P20 million for the same purpose, that would be considered excessive from a financial risk perspective.  Getting life insurance for one’s heirs ultimately depends on one’s purposes.  For instance, they may inherit properties that would make them wealthy, but they might still need some amount of inherited cash for their usual needs or to start a business so they could be financially independent.  I hope I have answered your questions with these examples 


Answer 2


I believe the amount of inheritance or the proportion of the estate one would want to give to his/her heirs depends on a lot of factors that the said owner of the estate considers to be important (e.g. support or education of the heir, philanthropic or charitable activities, etc.).  But of course, any estate owner would want that whatever he/she gives to his/her heirs would not be wasted but put to good use.  If the inheritance will only serve to spoil the heir, then it might not be a good idea to bequeath too much of it to this heir or grantee.


In relation to your next question about disinheritance, our law on succession gives parents the right to disinherit any of their children and descendants but based on grounds expressly stated by law and only in accordance with prescribed procedures.  Article 919 of the Civil Code of the Philippines enumerates the sufficient causes for the disinheritance of children and descendants, legitimate as well as illegitimate.  Examples of these are (1) “When a child is found guilty of an attempt on the life of the testator, his or her spouse, descendants, ascendants”; (2) “When the child or descendants has been found guilty of the adultery or concubinage with the spouse of the testator”; (3) “Maltreatment of the testator by word or deed, by the child or descendant”; (4) “When a child or descendant leads a dishonorable or disgraceful life”; etc. There are other provisions of the Civil Code that provide for the specific legal requisites for a valid disinheritance. These legal requirements on disinheritance are strict due to the fact that this is the only exception to the rule that compulsory heirs cannot be deprived of the legitime.  Thus, as in other legal matters, we suggest that a lawyer be consulted for the appropriate legal guidance. 

http://www.philstar.com/Article.aspx?articleId=642785&publicationSubCategoryId=82

Financial IQ: Lea Salonga on saving

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Financial IQ Philippines Quick Hit(s):

Good to hear Lea Salonga's money habits.


Multi-awarded international singer Lea Salonga agrees with our advocacy to promote savings as a national habit. She recently released a beautiful new album, “Lea Salonga… Your Songs” with Sony Music, and she shared with us her thoughts on money: “I save money. Even when I was a kid already earning, I tried to save; everything went to the bank. I’m really barat. I have clothes that are already 10 years in my closet and I still wear them. Yes, I encourage everyone to save money regularly for a better future. Don’t be too materialistic, don’t follow others. I also believe in life insurance, medical insurance, car insurance and travel insurance. I believe every person needs to have some kind of life insurance for protection.”

http://www.philstar.com/Article.aspx?articleId=642785&publicationSubCategoryId=82

Financial IQ: Tessie Sy Coson's tips for success

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Financial IQ Philippines Quick Hit(s):

Great advice from a tycoon's daughter.


BDO boss Teresita “Tessie” Sy-Coson — the eldest child of SM founder Henry Sy Sr. and widow of the late ethnic Chinese lumber tycoon Louie Coson — told me that she was 13 years old when her father trained her to work in the family business. When asked whether she worked during the Christmas and summer holidays, she said it included weekends the whole year. Does she have any success advice for this New Year? Philippine STAR reader Sy-Coson said: “Just be optimistic, energetic and be ready for opportunities that one should grab when they come. For entrepreneurs, think of an innovative idea that’s relevant and beneficial to the consumers.”

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

Financial IQ: Life insurance as inheritance?

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Financial IQ Philippines Quick Hit(s):

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. 

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

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