Can a girlfriend be a life insurance beneficiary? What about charities?
Never spend your money before you have it. — Thomas Jefferson
The safest way to double your money is to fold it over and put it in your pocket. — Kin Hubbard
If you know how to spend less than you get, you have the philosopher’s stone. — Benjamin Franklin
The saving man becomes the free man. — ancient Chinese proverb
This writer is glad US President Barack Obama and other officials are furious at the corporate leaders of near-bankrupt US financial and car firms, who either shamelessly pay themselves fat bonuses or still ride private jets while begging for government funds to bail them out. We need leadership by example. We hope our Philippine political and private-sector leaders will also lead by example in thrift, hard work and integrity.
By welcoming readers’ questions, we continue our advocacy for a culture of national savings in partnership with the Philippines’ largest, oldest and most profitable homegrown life insurance giant, Insular Life. Young actor Richard Gutierrez of GMA-7’s Zorro series told me he saves up to 50 percent of his income, while Gerald Anderson of ABS-CBN 2’s Tayong Dalawa series told me his network’s Johnny Manahan makes him do “forced savings” of 60 percent of all his earnings in a BDO bank account signed by him, his parents and Manahan. Apart from bank deposits and real estate, all of us need to buy life insurance for long-term forced savings and for the protection of our loved ones’ future.
Thanks to Chinese Commercial News publisher Solomon Yuyitung for e-mailing that they’d translate these columns. Thanks also to Philippine STAR readers in Atlantis Productions like director Bobby Garcia and Tracey Nieto for inviting us to be an extra on April 4 at 2 p.m. at the RCBC Theater in Makati for the 2005 Tony Award-winning musical comedy Spelling Bee. Keep on writing. Here are some more readers’ questions and the expert advice from top officers of Insular Life:
Question 1
I am a 22-year-old engineer here in Cebu City and I have a 17-year-old girlfriend whom I’m sure to someday marry because I love her so much. If I decide to buy life insurance because of your interesting and enlightening Philippine STAR series, can I designate her as my beneficiary even though we are not yet legally related and she is not yet 18? – Alfred
Answer
Congratulations, Alfred, for finding your life partner and for thinking about her financial protection and possibly that of your future family. Designating your future spouse or fiancée as a beneficiary in your life insurance policy can be done provided she is not disqualified by law. This means that anybody, even strangers, can be designated as a beneficiary in a life insurance policy for as long as they are not among those persons disqualified by Article 739, in relation to Article 2012 of the Civil Code of the Philippines, as follows:
Art. 2012, Civil Code - “Any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a life insurance policy by the person who cannot make any donation to him, according to said article.”
“Article 739 - The following donations will be void:
“(1) Those made between persons who were guilty of adultery or concubinage at the time of the donation;
“(2) Those made between persons found guilty of the same criminal offense, in consideration thereof;
“(3) Those made to a public officer or his wife, descendants and ascendants, by reason of his office.”
Apart from the above enumeration, anybody — of whatever age or gender — may be designated as a beneficiary of life insurance.
Atty. Renato S. De Jesus
Vice President & Head
Legal Affairs Office
Question 2
My name is Johnson Cheng. I’m a young Filipino-Chinese businessman who owns Philippine Straits Travel Agency, which specializes in bringing well-heeled Shanghai, Beijing, Guangzhou and other rich Chinese tourists here to the Philippines. Can Insular Life sell life insurance to foreigners like my tourists — are there any legal restrictions? My second question is how did Insular become — as you have described in your columns — “the largest, most profitable and oldest homegrown life insurance giant”? What strategies or principles made Insular stand out and excel, which we business people can learn from and apply to our own businesses?
Answer 1
Hello, Johnson, and thank you for your question. Many years ago I was on a business trip to Hong Kong and a Filipino agent working for a Hong Kong insurance company offered me life insurance. I applied and was accepted even if I was not a citizen or permanent resident of Hong Kong. My personal experience therefore tells me it is possible to insure foreigners who come to the Philippines, but that would be determined by both the insurance regulations of the country as well as the business policies of the companies concerned. Generally speaking, insurers usually cover only local citizens or permanent residents of the country because it is easier to appraise their background and personal circumstances as against trying to evaluate applicants who reside and work abroad. It will also depend on the kind of coverage being applied for and why. For example, if your clients who are tourists would like to seek insurance protection against accidents while they are in our country, I believe it would be possible to arrange for them to secure short-term travel accident insurance. However, buying a regular life insurance policy with premiums needing to be paid even after they are no longer here would not be practical for them as well as for the insurance company.
Jesus Alfonso G. Hofilena
Executive Vice President & Head
Sales & Marketing Group
Answer 2
Insular Life, just like other life insurance companies in the Philippines, is not prohibited from selling its products here even to nationals and/or residents of foreign countries who are in the country. However, as mentioned by Mr. Hofilena, such selling activities are governed by the internal underwriting policies of the company. Matters like the type of products to be purchased, the medical condition and lifestyle and risk exposure of the applicant, or the place of their residence or work, come into play when the application/is considered.
Atty. Renato S. De Jesus
Vice President & Head
Legal Affairs Office
Answer 3
On your second question, I believe the answer to that is already contained in our chairman, Vicente R. Ayllon’s, reply to Sen. Francis Pangilinan in last week’s column. However, permit me to add that one of the major reasons for our company’s longevity is that we know and live our company’s purpose. At the core of Insular Life’s philosophy is our company’s reason for being, and that is for the good of our policyholders. Everything emanates from there. And this is supported by our corporate values of commitment to excellence, integrity in work, respect for the individual, and the upliftment of the Filipino. We take our value system seriously because this is the heart and soul of the company. Our business strategies and plans change over time, but we are always guided by these corporate values. And we believe we have been making some good strides because next year, 2010, Insular Life will be marking its 100th anniversary.
Mayo Jose B. Ongsingco
President & Chief Operating Officer
Question 3
I am Jane Lopez, senior manager of the Powerbooks chain. My question is, considering that a lot of pre-need insurance companies are going bankrupt nowadays, is it still wise to invest in insurance? Can life insurance products cover or provide for the needs of pre-need clients such as education, medical, funeral and other necessities in the future?
Answer 1
A life insurance policy responds to a broad set of financial needs (i.e. financial protection, savings, etc.). Its flexible structure allows value-added benefits (such as estate creation, wealth management, dividends, cash values), depending on the premiums paid and how long the policy will be in force. Unlike a pre-need plan, life insurance policies offer a fixed-value plan that provides cash guarantees stipulated in the policyholder’s contract.
Life insurance companies are governed by the insurance code, which is patterned after the best industry practices (mostly patterned after the life insurance regulations abroad). Insurance companies adhere to a set of stringent rules covering investment and asset-risk valuation standards as well as a code of ethics. They are also mandated to adhere to long-term solvency and liquidity standards to protect the interest of the policyholders. Insurance agents are licensed to sell insurance policies by passing the IC examinations for agent licensing and are required to adhere to Market Conduct Guidelines that monitor their selling practices.
Thus, as an answer to the first question — if it is still wise to invest in insurance given the bankruptcy of some pre-need companies — the answer is yes! The strict regulations and compliance requirements imposed by the Insurance Commission on the life insurance industry has preserved the interests of life insurance policyholders for years. In choosing which life insurance company to trust, we recommend the following tips:
• Choose a reputable company with a long history of meeting its commitments and obligations to policyholders.
• Assess the financial stability of the company — you can determine this by checking how much their asset has grown throughout the years as well as their financial performance on a year-on-year basis (is it consistently growing? or is it erratic?).
• Check through the regulator, the Insurance Commission, for the financial standing of the company.
As for the second question, life insurance also covers the needs of Filipinos for education, medical, funeral and other necessities To know more about our products, we invite you to visit the Insular Life website at www.insularlife.com.ph. We can also send you one of our financial advisers, who can walk you through your financial needs and recommend appropriate products to meet them.
Amelita F. Tamayo
Vice President & Head
Marketing & Agency Services Division
Answer 2
Jane, thank you for giving us the opportunity to again emphasize that insurance companies and pre-need companies are not one and the same. Life insurance policies are designed under close scrutiny of the Insurance Commission in order to ensure that only prudent pricing and investment assumptions are observed so that none of our products will have unlimited liabilities and whatever benefits are promised are viable as well as reasonable. Life insurance policies provide financial risk protection against premature death, permanent disability, and other significant circumstances that can drain a family’s resources. Life insurance is also used to build up forced savings and long-term investment opportunities. There are many life insurance policies that are specifically designed to provide funding for future necessities. For example, Insular Life’s I-Excel is an endowment product that is programmed to pay specific amounts of cash during the four years of a child’s college education as well as added benefits thereafter. It is especially meant for education funding. We would be very happy to give you more information on our various life insurance products.
Jesus Alfonso G. Hofilena
Executive Vice President & Head
Sales & Marketing Group
Question 4
I am 45 years old, a businessman and devoted father, but I really do not believe in leaving too much wealth to my kids because I have already set aside estate-planning contingencies plus sufficient life insurance to cover their needs when I’m gone. A persistent life insurance agent keeps selling me life insurance, despite my showing him I’m already sufficiently covered, but he tells me I can bequeath life insurance to my favorite charity. Is this true? Which charities are okay and which cannot be my beneficiaries? Can I donate to my church and also to my former high school for a scholarship program?
Answer
Life insurance can be bequeathed to a charitable institution. This is done by some individuals who want to perpetuate their good work or support for causes they strongly believe in. The purposes you specified are all possible for as long as they are properly explained and justified in your life insurance application. The insurance company must also be convinced that there is no unwarranted additional risk or threat on your life that may be prompting you to designate that institution as your beneficiary.
jesus alfonso g. hofilena
Executive Vice President & Head
Sales & Marketing Group
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For inquiries regarding financial management or details on the products mentioned in this column, you may visit the Insular Life website at www.insular.com.ph or e-mail brand@mx.insular.com.ph. You may also call Insular Life’s Brand Marketing at 771-1818 loc 1310 and 1311.
Questions or comments welcome at willsoonflourish@gmail.com or add me in Facebook to send questions; all will be answered. Thanks for all your messages!
