Why Middle Class Puts Value (Or Not) To Insurance

Why Middle Class Puts Value (Or Not) To Insurance


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Regret is always after the fact. For middle class families, learning from regrets is a big no-no, particularly those that are financial-related. We are one medical tragedy away from financial bankruptcy. Savings built over many years, for example, could be easily wiped out by a heart transplant or kidney operation.

To allay worries, insurance protection serves as a lifeline for middle class families. Basic protection should include medical insurance, life insurance, and life plan.

Bad past

In the 1980s, educational plans became popular. My mother, along with her co-teachers in a public school, bought plans from the College Assurance Plan (CAP). A sales agent collected the monthly premium at our house in Tondo, Manila.

But after a year of paying monthly premiums, the sales agent vanished in thin air so the policy expired. My mother did not bother to reinstate the policy since she was busy in school. Her co-teachers completed their CAP payments.

So when the pre-need industry crashed about a decade ago, I witnessed the agony of my friends who were policy holders of CAP paid by their parents. Nearly a million Filipinos were affected by the downfall of the pre-need industry.

That unfulfilled promise of insurance companies left a void in the financial protection of middle class families. It took years before we mustered the courage again to invest our hard-earned money to insurance firms.

Better today but still wary

With the demise of educational plans, insurance marketing geniuses introduced plans that combine savings and life insurance. Premiums are allocated for both investments and life insurance protection of the policy-holder.

I call it “forced savings” because you have to pay it regularly. In my case, I decided to pay it monthly so it is easier on the budget. Paying period is five years then retention is another five. On the 11th year, I can opt to cash-in all my investments or leave it there to earn more.

The fund is actually for my oldest who plans to take up medicine. As a middle class family, we live on our monthly salaries so the only way to support a significant financial requirement in the future is to save years before it is needed. We tighten our belts or find part-time jobs to support our kids’ education which is a priority for every middle class family. We are on our last year of paying this policy.

About three weeks ago, I received an email that this policy expired because I failed to pay my premiums since the lockdown. Panic enveloped me. I thought all insurance premium payments, loans, credit card payments are under a moratorium given the community quarantine. My kids have life insurance policies with another company and I received this advisory through email, SMS and a personal call from my financial advisor.

I could not reach the insurance firm through email, phone, or social media so I visited the bank branch. In short, my policy was reactivated after I filled out a reinstatement application and paid all missed premiums. An expired insurance policy in the midst of a health crisis is worrisome for me as it is with other middle class families.

The next day, I ranted on social media about my experience. It turns out, I was not the only one who experienced the same insurance policy expiration during the lockdown. My post generated various comments, one was from the Deputy Commissioner of Insurance Commission who encouraged me to report the incident to the Insurance Commission.

On the same night, I received an email erratum and a private message from one of the executives of the insurance company who apologized for the incident.

With the Insurance Commission overseeing the financial viability of all insurance companies, I am more confident in investing our hard-earned money to insurance firms. Peace of mind for a middle class family is a result of transferring the risk to insurance companies, securing financial stability by allowing experts to build our investments, and providing complete protection for me and my family in case of emergencies.

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