I believe that among other plan holders, it would be fine not to get the interests of the money or reap the benefits the plans promised but in the end we would just want the money we had invested back or at least majority of it at this point.

magkaiba ba ang Philippine Prudential Life Insurance Co. Inc. at ang Prudentialife Plans, Inc.? sorry ah kung mejo newb na question pero kasi nalilito lang po ako and im curious because i have relatives na plan holders and xempre worried lang po ako sa kanila thankx…

Tama rin na di maganda ang mga palakad ng SEC sa mga pre-need companies. Sa mga nabasa ko at mga narinig ng kwento, sa SEC pwede magtatag ng kahit sino ng isang pre-need company basta registered ito as a corporation. Walang minimum requirement sa capital requirements man lang. Kaya nga nakalusot ang mga gaya ng Legacy group of companies.

Yang Legacy naman ni Celso delos Angeles, talagang tinatag para manloko ng mga tao sa mga pera nila, eh. Mantakin mo na pati pala yung mga nanlilinlang na Family First sa mga malls eh binili rin nya at nasa grupo na niya. Siya ang nagbigay ng masamang pangalan sa pre-need companies. Bahala na po ang Diyos sa kanya at kanyang pamilya at sana’y sapat na ang P14 BILLION na nakamkam nya na pambayad sa kaniyang kaluluwang nasusunog sa impyerno ngayon pa lang.

Ibang istorya naman ang sa CAP. Kasi naman, bakit naisipan nilang magbigay ng mga tinatawag na “open-ended plans” eh? Pag open-ended kasi, sabi nila pag bumili ka ng plan ngayon sa anak mo, pagtungtong nito ng kolehiyo, sagot nila kung magkano man ang tuition sa kahit anong paaralan mo ito nais paaralin. Di inasahan ng mga nakaisip nito na ang pagtaas ng tuition fees taon taon ay di aabutan ng kahit anong investment na papasukan nila. Saan ka makakita ng investment na ang interes ay more than 15% per year ang return? Sa mga schools kasi yan na ang nagiging pattern eh. Mababa na ang 10% increase sa tuition every year. Sa ganda ng plano, madami ang kumuha kaya ng madami na ang nagke-claim, talagang kapos na ang pondo ng CAP. Di nila inasahan ang bilis ng taas ng tuition. Wrong planning talaga ito.

Sa opinyon ko lang naman, kung sasabak ka sa investment, pumili ka na ng may pangalan at may track record. Sabi nga, tingnan mo rin kung kaya ibigay yung pinapangako ng plan. May mga nakinabang din naman sa Prudential, pero ako ang investment ko nasa Life Insurance. May mangyari man sa akin, sagot ang pamilya ko. At sa life insurance, pwede pang utangan dahil may “cash value” yung policy na lumalaki every year. Subok ko na ito dahil nautangan ko na rin… At pinakamaganda, hindi SEC and nagsusubaybay sa mga insurance companies kundi and Insurance Commission, na di hamak na mas maganda ang palakad sa SEC (Sori po kay Madam Fe Barin, pero yun po ang katotohanan.) Ano po ang pruweba? Eh, tanong nyo na lang po kung may Life Insurance company na naganib kahit ngayong may krisis. Yung Prudential nga po may Life Insurance and Pre-Need, pero sa katotohanan, nanganib man ang Pre-need ng Prudential, ang Life Insurance po nito ay matatag. Dahil nga po sa nabanggit din ni Anonymous na “trust funds” na naka-secure.

Pasensya na po sa sobrang haba ng aking “blog” pero naisip ko rin kasi na di makakatulong sa ating lahat ang panic at ang media na di po masyadong nakakainform pero (dahil na rin siguro sa ratings) lalo lang nagpapalago o mag-”sensationalize” sa mga issues. Paumanhin po, hindi po ako taga Prudential at nais magtanggol sa kanila (Katunayan po sa Philamlife Insurance po ako, na nasabak din sa mga intriga.) at sana’y makapagbigay ng opinyon sa issue na ito.

Now we all know that financial institutions, be it Citibank, HSBC, BDO, are all suffering from mark-to-market losses. In fact, in pre-need, the trust fund is managed by independent trustee banks. So in the case of Prudentialife, the fund is managed by ING, Deutsche Bank, BDO, among others. (And yes, as a banker I can say that it’s true that Prudentialife’s trust fund is intact because they cannot divert the funds to something else because it’s held in trust by the bank, not them… Unless of course they own the bank they put the fund in which is not the case for Prudentialife.)

So if the big guns lost a whole lot of money on their own investments, what more the trust funds they manage like that of Prudentialife, and other pre-need companies. The BSP even recognized this problem that’s why in 2008 they allowed the banks to reclassify some of their investments to “held to maturity” once so that they will not have to price the investments at current prices and take a loss in their books. Hey, in the US they even bailed out their banks just to help them ride out this crisis.

So if I was a planholder (and incidentally I am so I’ve given this much thought) I will just keep my plan because (1) I know that my money is in fact still there in the trust fund (only because the market is down, it didn’t earn as much as it used to do) (2) If I terminate before maturity I will get less than what I paid for (and well all of us planholders should know that because it’s in our plans… So if you didn’t know then well it was your responsibility to understand what you were getting into) and (3) the market will recover sooner or later (based on analysts estimates, in the next 2-3 years) so the trust fund deficiency will correct by itself in time. We just need to give them some time to ride out the financial crisis.

Now I know it seems a bit scary but in many ways any financial institution is facing the same problem in one way or another, it just so happens that the pre-need industry is in the limelight because of the Legacy issue that’s why it’s getting more flack than it should.

If it’s any help, I don’t think that the Prudentialife will close (and they are indeed open to service all of us planholders) because they still have their license to sell other non-pre need products and have a whole lot of other affiliate companies all doing well. So it’s very unlikely that they will runaway from us. (And according to my friends who decided to just take the loss and terminate their plans, Prudentialife will pay you in cash, not in memorial lots or LPG tanks…)

So for me, I’ll just keep my plan. In the end, it’s a matter of personal choice and tolerance for risk (mind you, you’ll probably lose more from the stock market) but I do hope my explanation (I tried my best to explain it in layman’s terms for the greater public to understand) will help some of you make the best decision for yourselves.