The death of memorial plans

Whatever happened to all the investigations made by legislators and regulators on pre-need companies that have defrauded planholders? It’s been almost 10 years since the pre-need industry first plunged into a crisis in the early 2000s, reaching catastrophic proportions with the collapse of Pacific Plans, College Assurance Plans, Platinum Plans and others with many having since been placed under receivership.

Despite all the fraud and shenanigans that happened with the pre-need industry, people still believe in educational, pension and memorial plans although sales have declined over the years. In 2009, a firestorm erupted with the closure of the Legacy Group, charged with engaging in a legacy of scams — syndicated estafa to be exact — with majority of victims mostly from the lower sector left holding the “empty bag.”

Congress reacted by passing Republic Act 9829 or the Pre-Need Code of the Philippines to regulate the industry and protect planholders from unscrupulous, poorly managed firms that fudge their financial reports and squander the investments of planholders. Consequently, supervision was transferred from the Securities and Exchange Commission to the Insurance Commission (IC) with the hope that the latter would be more effective in regulating the ailing pre-need industry.

There are three main reasons for getting a plan: to provide a college education for one’s children; save up for eventual retirement; and take away the burden of coping with death in the family. Many planholders are ordinary individuals who entrust hard-earned money to companies who entice and convince with heart-tugging, “promising” advertisements with slick, fast-talking salesmen.

One of the companies that advertised heavily in the past was Prudentialife Plans Inc. (PPI) whose liquidation has now been ordered by the IC following the failure of interested groups to present convincing rehabilitation proposals. Owned by the Alba family, PPI incurred a trust deficiency of almost P12 billion as of last year — making it unable to service claims and give the promised returns to planholders. 

But what fueled the ire of many, aside from the false sense of security they got due to assurances that PPI had enough money to service existing plans, was the temerity of the company to tell claimants to go to their office with deadlines — only to give them the usual runaround, telling them to come back next week and worse, asking them to pay P1,500 to be able to reconstruct missing records.

In the past, a lot of focus was given to the plight of college education planholders whose dreams of providing a decent future for their children through education were shattered with the collapse of CAP, The Professional Group, Platinum and most recently, PPI. However, there are as many untold stories of people who are reeling with grief over the death of their loved ones — aggravated by the discovery that the memorial plan they paid for have been virtually burnt to ashes because the pre-need company (like PPI for instance) has gone under.

Pardon the pun, but during this time of remembering our dead, the living are the ones who suffer the costs of putting their dearly departed to eternal rest. In fact, there was a couple who recently wanted to cremate the remains of their father, expecting to utilize the memorial plan that they had religiously paid for several years.  Imagine their mortification at being stuck with the body and having to pay almost through the nose for the service, the coffin, the urn and all other expenses that they should have been spared — simply because the pre-need company could not deliver.

This is just one more instance of a double whammy — in the case of the couple (who until now are still paying for the coffin) the death of their father and the death of their memorial plan. You can’t really blame the living for having become deathly afraid of dying, because they know that dying (especially if sudden) can become so expensive, having to pay a premium for the service, the casket, the cemetery plot or the cremation and the urn.

Burial plots can cost from P500,000 to a million, a mahogany coffin can cost as much as P350,000 to P500,000 while “powder fine” cremation is pegged at P150,000 to P200,000 depending on the package. Even the so-called “poor man’s casket” can cost P10,000 and if the funeral parlor is kind, it can provide a five-day service at a discount. Even well-known funeral companies are offering “rent-a-coffin” packages for those who want to view their dead first before cremation. Nowadays, there are “rent-a-plot” options renewable every five years.

Some people are desperately thinking of just having their bodies rolled up in a mat and thrown into the sea to spare the cost and the worry that goes with getting buried. Levity aside, dying — and giving a decent burial for the dead — is a serious matter, which is why it is infuriating to know that pre-need company owners live a life of luxury at planholders’ expense.

After all the investigations, defrauded planholders have yet to get the justice they crave. Morbid as this may sound, Legacy Group owner Celso de los Angeles would have been a good example but to the end, he “cheated” planholders of getting justice. He escaped serving a certain prison term by dying of cancer.

In making the decision to invest in a pre-need product, one needs to check the company’s reputation, affiliations and finances, and understand the coverage of the package to spare oneself of the misery of finding out too late that your memorial plan is actually dead.

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