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
