Thursday, May 28, 2015

The Importance of Being Insured

 It seems Filipinos have not yet lose their confidence on life insurance companies in the
Philippines. According to Insurance Commissioner (IC) Emmanuel Dooc, more or less 32 million Filipinos are now insured as of 2014, Manila Standard Today reports. This is due to the influx of micro-insurance plan holders that totaled to 28 million on the same year.

Who initiated such significant increase? Surprisingly, those in the low-income generating sector did it. The next question is: what is the reason behind this?

Typhoon Yolanda happened.

source: www.rappler.com
 We have this impression that insurance is only designed for the middle- and upper-class families. Getting an insurance policy is the last item on the list of life priority goals of Filipinos or none at all. We’d rather spend our hard-earned money on basic necessities such as food, clothing, and shelter. Considering it is hard to get by these days, why would someone put their money on expensive and time-bound life insurance plans?


On the other hand, some of us who can afford buying a policy or two consider it as an investment intended for future use. This is to mitigate risks followed by untimely death, accidents, and any forms of loss that may jeopardize us financially. It is like anticipating the bad scenarios before it happens and already placing a “trampoline” beneath it so we can easily bounce back. The “trampoline” here represents the insurance policy we want to avail based on our needs and specifications.

Without this so-called “trampoline”, some of the Yolanda survivors may not able to recover from the devastating loss they’ve experienced. At the time of their need, aside from turning to NGOs and the local government for financial assistance, they’ve turned to institutions offering micro-insurance products that fall under the non-life category.

As a refresher, there are two types of insurance, namely, life and non-life or general insurance. Investopedia defines life insurance “designed to protect the income of families… in the event of the head of household’s death (or the breadwinner of the family).” The latter refers to insurance policies related to property loss due to accident, natural calamity and also includes health insurance plans. Meanwhile, micro-insurance is a lighter version that can be availed by the low-income generating families.

After the onslaught of typhoon Yolanda, “over 140,000 households in the affected provinces in the Visayas were paid from their micro-insurance coverage,” says IC Emmanuel Dooc on Sun Star Cebu. Progressive Bank, a rural bank in Iloilo, is one of those which extended its hand by granting their clients a micro-insurance program called Akap, as reported on Microinsurancephil’s blog site. Through this bite-sized program, the survivors were able to cover up their expenses for burial and house repairs. They’ve also used some of it to start a small business.


This is the prudential aspect of being insured and it is best practiced during natural calamities such as what happened when typhoon Yolanda hit the Philippines which claimed many lives and destroyed many properties. 

Like this post? Visit http://www.philippineprudential.com/.