Rizal Philippines
March 8, 2017
We acquired a life plan company, which we bought for a premium of x amount. There are only 14 remaining pre need companies in the Philippines. The rest have been closed or under receivership. Most of them failed because they were engaged in educational plan. Cory A uncapping of the tuition fees signaled the demise of educ plans.
The leaders now are SPLP and Philplans. SPLP did it with massive sales force and with matching chapels to spread their presence and reduce their costs and their risks. SPLP is more conservative by buying assets and chapels of say Heritage (Rose Hill) to dominate the A market at MM and Makati.
1. Now there are two types of plans:
1. The trad which is pegged to the service and product to be bought, thus they are named after saints and flowers. The trad were the cause of many failures of plans SPLP has many such plans (traditional ) so they have many posts at their web sites with pictures of caskets. The brochures do not look nice because of monicker of being a life plan, this is really a death plan
2. The non trad which is a fixed peso value and the company only pays the amount promised. That works more like a financial instrument which can be even made to increase (no interest or dividends here please) So Philplans has increment of 4% yearly (not compounded beginning on the sixth year (they call this cash benefits) and after 40 years, in addition to the memorial benefit, they can give a new plan (that is 35 years x 5%) + 175% increments ( a pamana to a beneficiary)
That is like a life insurance with VL (variable life) linked to an equity or mutual fund
That is like a time deposit that yields higher than bank TD
2. Consultation with Actuarian
I consulted the actuarian and said that the product was feasible. We talk about this in April. The product looks like it is feasible, and would save me a lot of money with IC where one product registration is worth P50,000
The product would give me less risk and less hassle with mortuary, because the certificates can be used to buy services of any type and combination
3. Consultation with ex memorial plan senior officer
He said I would be needing only two variants x and y product which together can be used to buy a variety of products: ( on a catalouge)
1. Single product : funeral service, cremation, interment service
2, 2 in 1 : cremation and fs, interment service and funeral service
3. 3 in 1: cremation, fs and ash crypts, memorial plots, funeral and interment service
4. Consultation with :Pru life and other insurance counselors/consultants
5. The product plan:
1. We will have to change our name and go along with our branding:
Say Holy Gardens Life Plans (because this is well known) The current name is not known and even allegedly has record of paying only 50% on the peso
2. Two variants: two denominations
3. Features:
1. :Protection during the payment period
1. CGLI with waiver of amortization in case of natural death, beyond the incontestable period, and return of principal payments
2. With ADD double indemnity in case of accidental death as drowning, falls or vehicular accident; total and partial waiver of amortization in case of total or partial disability as the case may be.
2. Guaranteed memorial benefits with preferred customer service at 80% of the price for the mortuary with agreements
3. Liquidity and cashability
Plan holder can encash, withdraw his premiums paid under a generous CSV schedule (with increments included beginning on the 6th year if x% p.a.
We need to establish a processing center for this to attend to this need fast say 5 days at most;
For tis a liquidity fund of at least 5% shall be maintained ; an investment fund of 15% of total assets cash flow that is invested in memorial park plots (which can be bought discounted at 40 to 50/%, and having this sold straight line of at least 12% pa (for minimum ROI of 10%) to pay the 5% increments
4. Flexibility
Because of # 3, the plan is not tied down to a memorial, for the memorial too, the plan is not tied down to single product) or his investment is not stuck with the company without the chance for him to use the product investment except during death
The plan holder can encash his plan for a variety of purposes:
1. Emergency
2. Travel abroad or fees for ofw
3. Health care needs
4. DP for house and lot
Thus we are now competitive with Pru Life or other insurance, with the advantage of us having a much lower entry level of only x amount
5. New plan for the beneficiary
If the plan holder is still alive 40 years after the end of the paying period, a new plan is issued,
If the beneficary elects for a new plan, rather than the increments
THIS PRODUCT IS SUPERIOR TO A LIFE PLAN OR EVEN AN INSURANCE BECAUSE OF THE LOW ENTRY LEVEL. Since this registered with IC, the product is registered and bears the imprimatur of a prestigious govt agency (like the BSP)
Thsi product matches and perfectly matches my experience: that of being a banker, a student of insurance, and spending all ready 34 years in memorialization industry
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