MANILA, Philippines--Shortly after master rapper Francis Magalona lost his eight-month battle with cancer at 44 years old, his wife, Pia Magalona, was told she had a check waiting for her at life insurer Sun Life of Canada.
The mother of eight was overwhelmed.
Her late husband made big bucks from his show business career and was fortunately proactive in his financial affairs, covering Pia and their children in case of uncertainties.
Life insurance is a policy that protects against financial loss, when the insured person dies.
Insurance is paid to named beneficiaries in exchange for timely payment of premiums at regular intervals, or in lump sums.
Lost income
It thus helps replace lost income in the event of a person?s premature death, and can be used to create funds for a child?s education or pay final expenses, like funeral costs.
But Francis, who passed away last March, is one of the just 10 percent of Filipinos who bequeath something to their loved ones, according to research by financial giant Sun Life of Canada.
Pia admitted, however, that there was a time when she and Francis did not take good care of their finances.
In their first years together, the celebrity couple was very frivolous with their money ? they rented houses and bought cars, one after the other, because they believed their funds were bottomless.
?I have to admit, I?m not really financially knowledgeable. And here in the Philippines, everybody is in denial. There is the mentality that parents don?t want their children to have a hard time, so I was brought up thinking that I could just ask for anything ? I thought everything could be given to me," Pia told the Inquirer in an interview.
She carried this passive stance into her second marriage with Francis.
It was only when their landlord practically kicked them out of their last rental property, because a high-rise building was going to be put up there, that they decided to curb their impulsive spending, seek professional advice, and invest in life insurance.
According to Sun Life of Canada Philippines CEO Riza Mantaring, Filipinos don't understand as well as they should, the importance of preparing for their future, which is a reason for the low insurance penetration in the Philippines.
Low penetration rate
The penetration rate remains low even among the presumably financially savvy "AB" income segment (45 percent). The rate is even lower for the "C" market: 30 percent for the C1 segment (defined by Sun Life as a household with a combined monthly income of between P50,000 and P100,000) and 17 percent for C2 segment defined as having a combined household income of between P25,000 to P49,999.
Much like other Filipinos, Pia was very hesitant to enter into any life insurance policy.
She had a bad experience with a previous insurance company and so found it difficult to trust any other insurance agent.
?So when I met Yolanda ?Yogie? Legaspi, an insurance agent at Sun Life, I would listen to what she presented, but I wasn?t really interested. She came to me prepared the next time and gave me samples of payments that I would make, and documentation that represented something real,? Pia said.
There are different kinds of life insurance policies.
The traditional policies typically provide a lump sump payment in the event of a specified event while investment policies, also known as the variable unit-linked (VUL) insurance policies, facilitate the growth of capital by regular or single premiums.
VUL is actually a hybrid of a traditional life insurance and mutual funds.
After consulting her mother, Pia agreed to enter into an investment policy.
Life insurance agents identify the needs of the client, evaluate their options and advise clients to purchase appropriate insurance protection based on their financial capability and risk tolerance.
Pia began by stating her income. She was a "low" risk taker, so Yogie found a policy with a low premium rate and requested that Pia send her quarterly checks.
Yogie would follow up on Pia's payments every now and then, and present her with another proposal and upgrade.
It was a daunting process, but Pia said she had to start somewhere. "Even if it?s a conservative thing, because the minute you sign that, you?re free to walk around with that feeling that you are protected. I always have this thought in my head, if you sign it, then you step out and get hit by a bus. At Sun Life, you sign and give the first payment and that?s it ? you?re covered. You take home your policy in one day,? Pia said.
Pia found that policies were flexible and she molded them around her needs.
?I?ve had policies lapse on me- as my income is not the same all the time," she said. "So Yogie works it out for me. It?s as simple as writing a letter, asking for a way for them to make a new plan, and apply for something else. They adjust.?
She enjoys the ability to upgrade policies, as she owns a textile business and school, which changes her needs and insurance protection.
Having found her path to financial freedom has made it much easier for her to run her enterprises, making her truly "live for the day."
Her experience has made Pia the logical choice to be the human face of Sun Life?s "It?s Time" campaign, launched seven months ago to boost financial literacy in the Philippines and encourage more Filipinos to take out insurance.
It has been nearly a year since Francis?s death but Pia has found comfort in sharing her story of preparedness and long-term investment.
