Saturday, November 5, 2016

Health Plan and Life Insurance in the Philippines

Another profound afternoon with Finance and Investment Coach Aya Laraya wherein he impart health and life insurance and why do we actually need to learn about these 2 topics which has a big impact in our financial management. The session helped us on the conception, immunization and being clear on the topics of health and death.

In our culture, we're not really comfortable discussing about insurance and in the session we were able to learn about the following reasons why:

- It's depressing, which is real and it is felt in the session as well while we are discussing the topic

- Don't know who to ask, most of us just probably do not have enough connections that can really help us out in this topic without having the agenda of being sold into

- Too little or wrong information, simply just where or what or who to ask because not everybody can afford a financial consultant

- Lack of trust, for some reason this has been one of the concerns especially with what fly by night companies showing up all over the news

Aside from the above facts, Coach Aya also relayed some stats based on Sun Life's data about what were the top financial concerns of Filipinos:

 - 21% Personal Ilness
 - 18% Bread winner's death
 - 17% Family Illness
 - 12% Retirement/Old Age

In relation to the above stats, points were shared as well as to what Filipinos starting from Education(1), Health(2), Personal Celebration(3), Retirement(4) and Business(5).

Noticably, Health comes second to education and there are some realizations that were given to us in terms of health care. This is something that should also be taken seriously, because as we know "Health is wealth" and I don't think anyone would like to get sick or having a serious ailment.

I haven't really had major sickness but in the session it made me think of possibilities in the future. How will I pay for health care when I get older? Will I really have enough? What should I do now to take care of my health and how secure will my old self be?

Coach Aya layed down some of the data in relation to the current situation in our countries health care, like how much will the total cost be for every major sickness that our future self may have. Diabetes, Heart operation, etc. I wasn't able to get the exact figures that were presented to us and I think that it will also vary from what hospital and treatment you're going to get but what I'm sure of is it is not cheap. Can cost to more than a million or two or may be even higher. In the process Coach Aya also gave some points on how filipinos plan to pay for it versus how people can actually pay.

How people plan to pay:

20%    Spouse Income
14%    Children
10%    Philhealth
5%      Own savings
2%      Own Health Insurance
2%      Own Investment

How people actually pay:

20%    Spouse Income
16%    Relatives
11%    Children
7%      Own Savings
4%      Money Lenders
4%      Own HMO

The above data is really strickingly true, may not be exactly the same figures but all the factors are true, only a small percent of the community can really afford to health care and serious medication. Same is true for the following amounts on medical expenses:

= For P50,000, 5 out of 10 people finds it difficult to shoulder as medical expense
= P100,000 - P500,000, 7 out of 10 people find it difficult
= Over P500,000, 9 out of 10 find it difficult

In summary, only a small percent of the population can really afford to be sick.

As we know, prevention is always better than cure, in other words, preventing sickness will be a big help on our life. It wise to have a health plan because our health should always be taken into consideration in our financial management.

How do we choose a health plan:

Step 1     - Know your medical history, and I mean family history and what were the cause  of relatives death. Because there is a possibility that you might also get the same disease
        - We should have a check up that is something that is not covered by the company, sort of an executive check up in relation to what kind of ailment you can get in reference to your family history. ex. diabetes, high cholesterol, etc
Step 2    - Know what you need. This differs if you're single and if you have kids
Step 3    - What is your budget
Step 4    - Time to shop
Step 5    - Know the conditions, read the fine print and don't just take the agent's word for it.
Step 6    - Time to buy

The above steps was shared to our group and you can definitely use it for choosing a good health plan that will work for you.

Now lets talk about Life Insurance. What do we expect in life insurance? It can help us take care of our family, provide cash, replace income and help out in our child's education.

Why do we need to learn about this? Well, there is such a word that is called inheritance tax. It's really quite important to know this, especially for the future of your family. Like here in the Philippines, it is really serious because inheritance tax based from the stories shared by my friends and the attendees in the session, this is one of the biggest hurdle in the inheritance process.

Again in our culture this is not something that is commonly an open topic or something that we are comfortable talking about with. Reasons we do not talk about it is because its depressing, we don't have money, the topic taboo and we have bad money habits.

So what is the current process of inheritance in our country:

1. Assets frozen
2. Pay taxes
3. Transfer

The above process is pretty much direct to the point, before the person/s can inherit the assets they should pay taxes first.

And what are taxable?

1. Cash
2. House
3. Land
4. Investment(stocks, mutual funds)
5. Car
6. Jewerly
7. Artworks(paintings)
8. Livestock

In other words, everything is taxable.

So what is the actual process on paying inheritance tax:

1. Get BIR Form 1801
2. Prepare necessary documents (death certificate, court orders, titles, etc)
3  Pay

Now how do we choose a good life plan:

Step 1 - Shop
Step 2 - Know how much
Step 3 - Budget
Determine if you'd like to invest it in health or life insurance
Step 4 - Shop
Step 5 - Read the terms
Step 6 - Monitor

Almost the same as choosing a health plan.

My article may be a little long and it may not be arranged logically but what I learned that afternoon is a reality that I will eventually face sooner or later so I should already be planning ahead of time, being open about the above topics and sharing it to other so that they can avoid future headaches.

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