WILSON LEE FLORES: QUESTIONS AND ANSWERS ABOUT LIFE INSURANCE
MANILA, JULY 20, 2009 (STAR) BULL MARKET, BULL SHEET By Wilson Lee Flores - (A bargain ain’t a bargain unless it’s something you need. — Sidney Carroll)
(We can tell our values by looking at our checkbook stubs. — Gloria Steinem)
(The waste of money cures itself, for soon there is no more to waste. — M.W. Harrison)
(My old father used to have a saying: If you make a bad bargain, hug it all the tighter. — Abraham Lincoln)
Today, July 20, is the birth anniversary of one of the greatest leaders in human history, the Macedonian/Greek political and military hero Alexander the Great. He was born on this date in the year 356 BC. Alexander brilliantly conquered his known world at only age 32 and died at 33. More than two centuries later, the also-great Roman conqueror Julius Caesar wept in Spain upon seeing Alexander’s statue; and when asked to see other great military leaders, Caesar said Alexander was the only great one.
Alexander the Great once said: “There is nothing impossible to him who will try.” Whatever our vocation, he is our ideal role model for excellence, guts and leadership.
We continue our advocacy of promoting a national culture of savings with Philippine STAR’s partnership with the country’s largest and most profitable homegrown life insurance giant Insular Life, with these readers’ questions and the expert advice of Insular Life officials:
Question 1: Is it difficult to claim your life insurance benefits?
When I was a kid in Borongan, Eastern Samar, my parents saved money from their salaries in order to faithfully pay life insurance premiums, but when our father died, I couldn’t forget the frustrating experience of accompanying our public school teacher mother to Manila to claim the life insurance benefits from a company (not Insular Life), but it took so long and it was so difficult. We were lucky we had a Chinese uncle in Manila who helped pay for our hotel and fare. Are insurance benefits very difficult to claim? I now prefer to self-save for my future needs.
— Boy Abunda, TV host, talent manager, Philippine STAR columnist and producer of indie film Astig in the ongoing Cinemalaya Festival at CCP
It is truly regrettable that you had an unfavorable experience with your mother’s life insurance claim. Insurance benefits are not difficult to process and release as long as all the necessary documents are in order. What happened in your father’s case is surely not the norm; otherwise all insurance companies would have been discredited a long time ago. I trust this will not lead you or any of our readers to generalize because it would not be fair for those companies that do a proper and expeditious job in settling their obligations. As for your preference to self-save, you are quite fortunate to have the means to set money aside and you should also be congratulated for having the discipline to save. Buying life insurance is also a way to diversify your savings practices, and the more ways you employ to save for the future, the more effective your savings program should be. As long as divine providence blesses you with enough time to complete your wealth accumulation objectives, you should do all right. However, this is precisely why I believe life insurance is indispensable to one’s financial welfare — in case time runs out before one is able to complete his financial objectives. If others are dependent on you for their needs, life insurance is a vital income-continuation instrument for them. We invite you to give Insular Life an opportunity to help you in your personal financial management.
Jesus Alfonso G. Hofileña
Executive Vice President & Head
Sales & Marketing Group
Question 2: What happens to the premium payer if he or she suffers an accident?
What happens to a person who is paying life insurance premiums if he or she get into an accident?
— Aljur Abrenica, 19-year-old actor/singer of GMA-7 and co-star with
Kris Bernal in I’ll Be Waiting
For You by Regal Films
Life insurance policies may include what we term as “riders.” This is supplemental coverage which a policyholder may opt to include in his life insurance policy to address other needs which are not covered by the base policy. One such rider is the “waiver of premium for disabilities.” This rider provides that should the policyholder meet an accident and become disabled as a result, premiums for his policy are waived. This means that the policyholder may continue to enjoy the benefits of the policy without having to pay any more premiums.
Amelita F. Tamayo
Vice President & Head
Marketing & Agency Services Division
Question 3: Is it true death by accident pays double life insurance benefits? Why?
I never miss your Sunday and Monday columns, because you tackle all kinds of topics in a refreshing and fearless way. Is it true that when an insured person dies in an accident, his loved ones receive double the benefits? If yes, why?
— Barny Chiong, age 33, owner of East Rock shoes and World Balance
rubber shoes, Quezon City
Thanks for the opportunity to clarify this often-asked question. In case an insured dies through accident, the basic life insurance coverage will pay the beneficiaries the death benefit. If his policy has an accident rider, then the death benefit that would be paid to the beneficiaries would be twice the face amount of the policy. It is therefore advisable to include an accident rider to one’s basic policy for two reasons: first, it will automatically double the death benefit in case of death caused by an accident; and second, the additional premium will only be a fraction of the cost, in other words, it will cost so little to increase one’s accident coverage. In the case of Insular Life, this benefit is provided for by the Special Accident Rider (SAR). Not all insurance policy provisions are the same so we recommend that policyholders review their policies upon issuance and regularly review their protection needs at least once a year.
Amelita F. Tamayo
Yes, it is possible that the beneficiaries of a life insurance policy could receive more than the basic life insurance benefits provided under the policy in case the insured dies in an accident. This is when the plan itself provides for additional benefits on account of such event or when an accidental death benefit rider or its equivalent is attached to the insurance policy. Usually, this accidental death benefit is equal to the amount of the sum insured under the basic life policy. Payment of such benefit is subject to the terms and conditions of the policy and the rider.
Atty. Renato S. De Jesus
Vice President & Head
Legal Affairs Coordinating Office
Question 4: Is disability insurance different from life insurance? Is it important?
Thank you for your interesting columns. Is life insurance different from disability insurance, and do we still need to buy disability insurance separately? Is this important?
— Anabelle Marquez-Cruzado, 28, housewife, Albay
Life insurance provides financial protection and indemnity against loss of life, whether through natural causes, accident or illness. Disability insurance usually provides financial support only in the event the insured becomes temporarily or permanently disabled. Disability coverage is important because when a person becomes disabled it may be an even harder financial situation for the family considering that the disabled person may not be able to earn a living anymore yet the family needs more income to pay for his care and treatment. This is why in our profession we refer to the three hazards of life that justify needing life insurance as 1) dying too soon, 2) living too long (i.e., referring to loss of income due to retirement), and 3) becoming disabled. Usually you can have disability insurance coverage as a rider or additional benefit to your main life insurance policy. I don’t think you have to buy it separately. What is important is that you recognize the value of full protection against life’s unexpected perils and take the proper steps to protect your family’s welfare through insurance.
Jesus Alfonso G. Hofileña
Question 5: Isn’t group life insurance cheaper and better than individual policies?
I’m 57, and I read the Philippine STAR. I’ve always believed that when it comes to life insurance, it’s always better to get a group life policy because you lower the risk and also lower the premiums. Is this view correct?
— David Balangue,
chairman of the SGV Group
Mr. Balangue, you are correct in pointing out that the premiums for group life insurance are generally lower and thus more affordable to an individual. However, this type of insurance can only be offered to groups of people with common characteristics such as employees in a company. From the insurer’s perspective, mortality risk is not lowered; it is merely spread out through the defined group based on their collective risk appraisal. Hence the pricing can be likened to a wholesale purchase, and this is what influences the premium rate. Moreover, group life insurance would have limitations in terms of the maximum amount of coverage an insured person could have under the master policy. In other words, it may not be sufficient to completely protect your family financially in the event of death or disability. This is why you should still go through a process of determining the amount of insurance protection you need based on your personal circumstances and chosen lifestyle. We would be most happy to have an Insular Life financial planner help you out on this.
Jesus Alfonso G. Hofileña
Chief News Editor: Sol Jose Vanzi
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