Chances are, you?re worried about your insurance, pre-need plans and investments if you?re one of the millions of Filipinos who bought something from Philamlife, the local subsidiary of troubled American International Group.

That?s normal. With the 1997 crisis still fresh in everyone?s memory, it doesn?t take much for the man on the street to be rattled by news of corporate failures.

With the financial sector on the spotlight these days, it?s just right that we take a long, hard look at the kind of financial services and products that we buy. Many Filipinos buy insurance, pension and even investments blindly and trustingly, because a friend or family member is the one selling.

Here are things you need to know about your money and lessons that everyone?not just Philam clients?should learn from this white-knuckle ride in the financial markets:

1. Your insurance policies, pre-need plans, and investments with Philam are still in force. AIG is, strictly speaking, not your provider but its subsidiary here in the Philippines. The subsidiary, Philamlife, has paid up capital of P1.65 billion (versus P50 million minimum required by the government), P170 billion in consolidated assets, P23 billion in net worth, and P76.4 billion in reserves, based on audited figures. These funds are virtually walled off from the parent company based on local laws.

?Hold on to them. We are meeting our obligations. If you surrender them now, you will lose out. We have no trust fund deficiencies,? says Jose L. Cuisia, president and chief executive officer of Philamlife.

Vida Chiong, deputy commissioner at the Insurance Commission confirmed this, saying: ?The mother company can?t just get the assets of Philamlife and the company cannot be sold to anybody that is not approved by the local regulator. The Insurance Commission will make sure that every policy that is in force will be serviced.?

2. When there?s fear on the streets, people hardly believe companies and regulators and worry about the worst that can happen. In worst-case scenarios, any insurance or pre-need company that goes belly up will go through receivership and liquidation, and a third party assigned to service claims by policyholders. In Philippine history, there has been little news of life insurance companies going bankrupt. Sold, yes, but not liquidated. But even if liquidated, if the insurance company has ample assets, it is possible to get 100 percent of your policy, says Chiong.

For non-life policyholders, it?s different. Assets in the non-life business are mostly short-term in nature. Policyholders may get 100 percent or less than their claims, and delays like one or two years in getting their payments.

If you want to know if your insurance company is in good standing, check whether its name is on the IC?s list here. If it?s not in the list, surrender your policy and get protection from another company.

3. Industry analysts say Philam?s business, being a highly profitable company, will be a very attractive buy. In the event of a takeover, Chiong says policies will merely be serviced by the buyer, but investment types like variable unit linked-products may be riskier than traditional types.

Mark Yu, director of the Chartered Financial Analysts of the Philippines, says he doesn?t see a scenario where insurance policyholders will suffer a total loss. ?Look into the ability of the insurance company to improve their liquidity should they need to, two, see if there are reinsurers that diversify the risks, and three, contemplate about surrendering the policy and getting what they can out of it,? he says.

If you have policies with an investment portion, look at your cash value and decide whether you want to cash in now or ride it out.

?Cashing in now entails taking a hit on your previously invested capital. You have to look at it in the context of your total portfolio. If it?s just 5 percent of your portfolio, ask yourself, can I afford to lose 5%, take it out now and maybe get only 3% of its value? If you are going to take it out, where are you going to put it? In another insurance firm that might fold up too and not get the same support from the Fed as AIG?? says Yu.

4. For investors in Philam Asset Management Inc. (PAMI), the trust business of Philamlife, you are more likely to lose money if you take out your funds now, because the market is down. Says Alijeffty Gonzales, managing director of ACG Advisors, an independent financial advisory firm, the worst that investors can do now is to sell. After all, shareholders--that?s you--can terminate the contract of the fund manager (in this case PAMI) and hire a new one. This has been done before.

?The fund is owned by investors. The money is not AIG money?Shareholders can decide through a special meeting to appoint someone else. It is not a unique phenomenon,? says Fernando Jose Sison III, chairman of the Investment Company Association of the Philippines (ICAP).

Several persons familiar with the matter says PAMI has no exposure in subprime debt, the culprit in the Wall Street fiasco now happening.

?Those who are falling like a ton of bricks are the big boys because subprime debt is not something that just anybody can get into. The entry levels are very high that only big investment banks can get into them. PAMI?s size and the 10 percent restriction of the SEC (Securities and Exchange Commission) shows that it has no exposure to Fannie Mae, Lehman or even AIG securities,? says Gonzales.

5. In a bank run, the last man out usually gets less or none. Not so in the situation of mutual fund investments, pre-need and insurance. ?This is what you call residual risk. It?s an unfounded fear in these situations because it doesn?t really matter if you are the first or the last to file for claims. All of you get the same amount because reserves will be divided among investors,? explains Gonzales.

Acting on fear and panic, says experts, will only mean losses. If things work out eventually, and you have already surrendered your policy or your investments, it?s possible to suffer from real losses.

6. Diversify your holdings among different asset classes and country baskets to manage risks. ?The learning here really is to diversify your holdings. If you are in risky products, depending on your financial situation and sources of income, you might want to rebalance your portfolio, let?s say every six months to one year,? says CFAP?s Yu.

7. Bolster your emergency funds. Yu says higher personal and business reserves will protect every investor because of the cost of volatility. ?You don't know what's going to happen with your riskier investments, so you need higher reserves. Even if you are employed, the regularity of your income will be dependent on the industry where you are employed,? he says.

Philam has over 5,000 employees right now who are wondering what is going to happen to their company. These are times when emergency funds come in handy.

?Be patient with your existing investments and be safer with your new investments, taking into account the context of your portfolio. Some people will say it is the time to buy now because it is cheap. And it is cheap. But do you have enough reserves? If you do, buy now and just be patient and wait. If the going gets worse before it gets better, do you have the capability to ride it out?? says Yu.

8. Choose carefully the financial institutions where you put money. Size appears to be a plus factor, but more importantly the values of the management that handles your money. Most of all, know what you are getting into. Ignorance is often the source of fear.

?Look for institutions and instruments that are under regulation. Don't invest in something that is not regulated by the SEC or the BSP, because if you do and something goes wrong, you won't have any protection. Failures of big companies pose greater systemic risk and as such are prone to protection by regulatory bodies,? says Yu.

Fear and greed have always been the bane of financial markets since they were created. Johnny Noe Ravalo, managing director at the Bangko Sentral ng Pilipinas says it is crucial to act only on verifiable information and not on rumors.

?When all of us panic, this generates the panic that we are trying to avoid in the first place. That?s the certainty. Everything else is a choice,? Ravalo says.

?At the end of the day, this still is a question of perspective, and everybody has a role in creating that perspective. The companies for full and honest disclosure, the regulators to monitor and assess, the media in broadcasting the information and the individual investor in choosing what he must do,? he adds.

It is in the individual saver and investor?s interest to choose wisely. And not out of fear.

(Email the writer at lightdream@gmail.com. For more personal finance articles, visit MoneySmarts at http://blogs.inquirer.net/moneysmarts)