Insurance returns higher than banks’ savings accounts

Life insurance in the Philippines is still not as widely accepted as in Japan and in other Southeast Asian countries. In Japan, for example, the assurance rate is 100 percent; in the Philippines, it is less than 4 percent.

“People often say life insurance is costly. Yet they have money to splurge in the malls. When an emergency comes, that is when they realize the importance of life insurance,” said Rizalina Mantaring, chief operating officer of Sun Life Financial-Philippines (SLFP).

Mantaring speaks from experience. Her father-in-law’s education and that of his siblings was financed by the earnings from life policies and other investments of his father, who died in the war building roads as an engineer.

“Would you believe that my own father had been paying for premiums way after his plan had become fully paid and long after I finished college? I told him to convert his policies. Whatever extra payments he made continued to earn dividends every year, however,” said Mantaring.

To a large extent, higher yields have been made possible through variable universal life (VUL) products, where part of the premiums of policyholders is invested in financial instruments that earn more than the one-percent interest rate per year offered by the savings deposit accounts of commercial banks.

“Since introducing VUL products three years ago, these products now account for almost 90 percent of our sales,” said Mantaring.

SLFP is one of the country’s oldest and largest insurance companies, generating revenues of close to P14 billion in 2006 from its core products of life insurance, pre-need and mutual funds. Life insurance plans remain the company’s top sellers, while its pre-need plans also continue to sell well, with 71 percent in pension plans and 14 percent in education.

In an effort to grow its customer base, SLFP has been educating its existing clients to not just avail of life insurance packages but to also look into mutual fund placements to make their money grow faster than inflation. Sun Life mutual funds are prudently managed, with equity holdings comprised only of blue-chip companies. The company has also been pushing more affordable products aimed at students and families.

“We have been growing by an average of four branches a year. Right now, we have 40 branches in urban centers. In the next three to five years, we will expand by eight to 10 branches annually. We have also forged more partnerships with service providers like 7-Eleven stores and SM Bayad centers so that our clients will be able to pay their contributions anywhere and anytime,” said Mantaring.

Perhaps the best come-on for existing clients is SLFP’s quick settlement of claims.

“We pay uncontested claims worth P1 million or less within three hours after the presentation of the death certificate and the claimant’s statement. No financial institution in the country can do it this fast,” Mantaring said.