Craft accessible life cover — BSP

Private entities, especially insurance companies must create affordable products that further ensure financial security among Filipinos. ‘There is a need for financial health instruments, a plan for the future’

The Bangko Sentral ng Pilipinas, or BSP, is urging financial firms to design affordable, combined life insurance and retirement packages as an investment option which can provide Filipino families a comfortable future.

BSP Governor Eli Remolona Jr. said this is one of his learnings from the talks he attended at the World Economic Forum in Davos, Switzerland.

“There is a need for financial health instruments, a plan for the future,” Remolona said last Saturday during BSP’s learning sessions for the media.

Dying too soon, living too long

“When it comes to life insurance, it’s about the risk of dying too soon. Pensions are about the risk of living too long. You see that these are offsetting risks,” he continued.

Remolona believes that private entities, especially insurance companies must create affordable and comprehensive products that further ensure financial security among Filipinos.

“In the Philippines, these are provided by very different institutions, so they don’t take advantage of those offsetting conditions. Life insurance is quite expensive. I think what they should do is to bundle those risks together,” he said.

Remolona said the bundled product should encourage Filipinos to secure stable jobs but also reduce their worries about saving for the future when they change jobs.

“Our pensions are limited to government pensions [from Social Security System or SSS and Government Service Insurance System or GSIS]. SSS, GSIS are not portable when you change your job. If you don’t have formal jobs, your pension is your children,” he said.

Investment options

Remolona said, ultimately, the bundled products introduce Filipinos to a range of investment options which can help them build wealth to sustain themselves in their old age.

“It’s about educating the public about investment instruments,” he said.

Based on a BSP’s consumer confidence survey about the economy, Filipino households with savings decreased to 29.1 percent of all respondents in the third quarter last year from 32.8 percent in the previous quarter amid high inflation rates.

Similarly, insurance penetration in the country declined to 1.68 percent from 1.75 percent during that period, according to the Insurance Commission.

As part of their investment journey, Remolona advised Filipinos to approach companies that have the fund managers who can study full time and place their funds into investment options, such as emerging market funds which can provide substantial returns after five years.