Growing the future for the growing family
It can be a little bewildering, keeping up with a young daughter. They grow up way too fast. One week, you’re singing Little Mermaid songs with them, and the next week they’ve developed esoteric tastes: High School Musical is passé, they’ll inform you; Camp Rock is where it’s at. And they seem to know all about these brothers named Jonas.
As my wife Therese and I celebrated our daughter Isobel’s sixth birthday recently, we felt several pangs of “future panic” — that odd sensation that your kid is simultaneously a kid and all grown up at the same time. It’s the kind of crystal ball feeling that makes you wonder if you’ve got all your ducks lined up, financially, to prepare for a child’s future. There’s the escalating tuition fees to contend with; musical lessons, maybe; then the epic seventh birthday to shell out for; and then high school, college, career…
This doesn’t scare us much, though. Instead, as parents, you start looking upon it as the most important, life-building challenge there is: making sure your nest is settled, with you and your family in it.
It’s one of those certainties of life, like death and taxes: you will have to prepare for your child’s education, among other things. And this means sensible planning, something a little more scientific than doubling up on your MegaLotto bets.
One company with a long history of life-building through financial management is Insular Life. Since 1910, it has been offering financial protection — even direction — to families looking for ways to build savings and security. According to Insular Life brand manager Johanna Coronado, it’s as natural as food, shelter and insurance that we humans look to build nest eggs as soon as our basic needs are met.
“You bring financial resources to your family so all of you can live and maintain your lifestyle,” notes Coronado. “That part of the income used for expenses has to be protected, i.e., when the breadwinner passes away, his financial contribution to the family must be replaced. Otherwise, your wife and child may not be able to sustain the kind of life they used to have.”
This is what life insurance is all about. For myself and my wife, owning a life insurance policy ensures us some financial backup. Because, as Coronado cryptically notes, “Nobody knows when you will pass away.” Yes, talking about insurance can be as bone-chilling as a conversation with Joe Black. But it’s there, and when you start a family, you suddenly find yourself thinking long-term, casting your financial net as wide as possible. At the very least, life insurance benefits can temporarily replace your income.
“Now suppose you’ve got yourself covered (with life insurance),” continues Coronado. “It’s time to think of savings. This is part of your income you can pull out in cases of emergency such as hospitalization, replacing a refrigerator that broke down or car repairs.”
So extra income can either be used to pay monthly bills, or it can buy that new Wii system that your family has been craving — or part of it, at least, can be set aside for something more long-range, like tuition.
“As a rule of thumb, you are supposed to keep six months’ worth of your expenses liquid,” Coronado continues. (This is where I pull out my calculator.) “That amount should be easily withdrawn when the need arises. By April or May next year, you will be enrolling your daughter in school. Let’s say her tuition is P50,000 for the year. November is six months away from April. Rather than pulling out P50,000 from your April budget (and running the risk of scrimping on other needs), you would find yourself more relaxed knowing that you have been saving P8,400 every month since November for your child’s tuition fee.”
That’s one way to keep ahead of tuition payments. Therese and I are natural savers, so putting aside enough in advance to pay for her kindergarten and upcoming grade school tuition has been manageable. But as we know, college is a whole other ballgame.
“If there is still excess income after savings, that’s already money for investment. You can now consider long-term financial instruments, i.e., financial vehicles that give benefits several years from now.” Here, Coronado lays out a scenario: an education plan for college schooling and a retirement plan for the parents. Not surprisingly, she says Insular Life has just such a plan in its briefcase: I-Excel.
“I-Excel is Insular Life’s savings vehicle for a child’s college education. There are two market needs I-Excel addresses: financial needs and the personal development of the child.
“As a parent, you are foremost concerned about the rising cost of education. Based on the past five years’ data, the average increase in tuition fee of Philippine schools is 12 percent per annum. On the other hand, an employee’s salary increases only by an average of eight percent.” My calculator tells me the bad news: if this situation persists, parents who rely simply on income can no longer afford to send their kids to school. The projected tuition 10 years from now for four years of college provided by I-Excel (in a section called “Reality Check”) offers a wake-up call: for state-run university UP, tuition will amount to an estimated P228,428; for high-end University of Asia and Pacific, P792,168; for Ateneo de Manila, it’s P575,168. This requires saving for most parents — starting now.
“I-Excel addresses this need by allowing parents to start saving for their child’s college education early, from newborns up to 11 years old,” Coronado assures. “It gives guaranteed cash benefits twice a year, every semester, which may be used to supplement the child’s tuition. This benefit increases in amount by 15 percent annually to cover for the annual tuition fee hike and inflation.”
But in uncertain financial times, which may yet hit Asia, can a savings instrument like I-Excel remain solid and guaranteed? Yes, says Coronado: “I-Excel is a traditional type of insurance product, its benefits guaranteed, regardless of any economic situation.
“More importantly, the safety of I-Excel and all the other products of Insular Life lies in the stability of Insular Life as an institution. Since it was established in 1910, the company has leaned towards prudence in making financial decisions. The company’s investments are placed in risk-free Philippine government bonds, term loans to prime corporations, choice real estate, and listed equities of top corporations, all of which are in the Philippines.” By investing in the country, Insular Life may well have resisted the “perfect storms” created by toppling foreign financial institutions. “This practice and investment principle is the guiding rule by which Insular Life is being run,” Coronado adds. “For 98 years now, Insular Life has met its policyholder obligations and commitments and it intends to remain as is, in the next centuries to come.”
But I-Excel does more than just set aside a safe college egg nest, Coronado points out. “In case of the parent’s untimely demise, I-Excel ensures that the child is still able to reach college. Hence, the plan provides additional cash benefits given every year prior to college, to supplement the child’s elementary and/or high school tuition. And should the parent fail to complete paying for the plan due to death or disability, the balance will be waived and the education benefits will be paid as they fall due.”
Another Insular Life innovation is the consideration of the multiple intelligence concept, introduced by Howard Gardner in 1983 into its education plan product. Realizing that each child has different inclinations and abilities and that schools should offer an “individual-centered education” curriculum, I-Excel provides a protection cash benefit when the child graduates. Think of it as a graduation present, but one that furthers your child’s career. The amount may serve as funds to start off her career, further harness the child’s inclination or put up her own small business. For the academically gifted, the plan provides an additional cash incentive if she graduates with top honors or lands first in the board exam. So Insular Life looks closely at each family’s growth, including the success of its children.
“I-Excel has established partnerships with institutions that can help develop the child’s other intelligences,” explains Coronado. “These include Toddler’s Unlimited, a preschool south of Manila, Yamaha School of Music for those who want to develop their musical intelligence, Repertory Philippines for theater, music and the arts; World of Fun in all SM branches and major provincial malls for the physical and creative development of the child; and Paradizoo in Trece Martires, Cavite, Zoobic in Subic and Resident’s Inn in Tagaytay, for the naturalistic facet of the child’s personality.” Discounts and privileges await the family of I-Excel children under Insular Life’s Extra Special Policyholders program, so even before Isobel goes to college, our family can already experience the benefits of the plan.
This is part of Insular’s policy of addressing client needs over a lifetime. “Insular Life Financial Advisers are trained to revisit the financial needs of policyholders regularly,” notes Coronado. “They’re not merely selling plans, but providing an opportunity for a better and more financially secured future for the Filipino family.”
The benefits of I-Excel are clear, in good times or bad. It encourages families to save on a regular basis (a habit Filipinos, who never met a sale they didn’t like, are famously averse to). Moreover, instead of giving families a “lump sum” payment when kids graduate, it pays on a semi-annual basis (in April and September) to make budgeting more manageable. And most importantly, I-Excel factors in that 12-15 percent annual tuition hike, offering a hedge against inflation or market fluctuations.
For our daughter Isobel, who’s just beginning to explore a myriad of interests that may be costly (she recently requested a chemistry set; next week — who knows? — it might be flamenco lessons), I-Excel seems like a good fit for developing her natural talents and inclinations, whatever they may be, and rewarding her for succeeding.
Thinking about insurance may seem daunting and challenging, But it’s a lot easier to think about life’s challenges for your family if you have insurance, rather than if you don’t.
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For more information about Insular Life, its products and services, visit www.insular-life.com.ph or call 771-1818 local 1317.
