PRE-NEED INSURANCE

INTRODUCTION

Pre-need insurance is a kind of coverage that guarantees the fulfillment of future obligations, the payment of money, or the provision of other benefits when the policy's agreed-upon maturity date approaches. It is a plan that covers schooling, life insurance, pensions, internment, and other policies, agreements, or contracts. Additionally, it is a way to pre-plan and pre-pay for end-of-life expenses, allowing individuals to make arrangements according to their personal preferences (Lincoln Heritage Life Insurance Company., 2022). The Insurance Commission oversees and controls pre-need businesses in the Philippines, and it is regulated by the government through the Pre- Need Code of the Philippines (Mag.Razon, 2022)

G.1 Educational Plan

Pre-need educational plans are a kind of contract that calls for future services to be rendered, money to be paid, or other advantages to be delivered as the need arises or the agreed maturity date of the contract. This type of plan helps the parent for educational purposes in the future, and which are intended to help pay for a child's education (Rizzlemay, 2022). Also, it is an education program that typically offers assured benefits upon maturity and calls for periodic payments over time. Basically, pre- need educational plans are made to assist parents in saving money and guarantee that there will be enough for their child's college expenses in the future.

Coverage of Educational Plan

Educational planning insurance in the Philippines is a crucial component of the country's efforts to ensure access to quality education for all. With the rising costs of education, it has become increasingly challenging for many families to afford the expenses associated with schooling (Educational Insurance Plan in the Philippines | InLife., 2022). Educational planning insurance serves as a safety net, providing financial assistance to students and families in times of need. Here are the ranges that can cover educational expenses.

● Education Endowment Plans: Education endowment plans are a type of insurance policy that combines insurance coverage with savings and investment

components. At maturity, or more specifically, when your child is prepared for college or university, these insurance pay out a lump payment.

● Child Education Plans: Child education plans are another effective way to secure your child's educational future. These plans typically provide a combination of life insurance coverage and systematic savings. You can take advantage of these plans' combined benefits of savings and protection, making sure that your child's education is unaffected even in the worst of situations.

● Tuition Refund Insurance: Tuition refund insurance is a type of insurance policy that provides a refund of tuition fees if a student is unable to complete a semester or academic year due to unforeseen circumstances such as illness, injury, or death.

● Study Abroad Insurance: Study abroad insurance is a type of insurance policy that provides coverage for students who are studying abroad. This coverage can include medical expenses, emergency medical evacuation, and repatriation of remains.

● Educational Institution Insurance: Educational institution insurance is a type of insurance policy that covers colleges, universities, and private K-12 schools. This coverage can include property, auto, and liability issues, as well as emerging risks like cybercrime.

● General Liability Primary and Excess Coverage (CGL and GLX): GL policies may include coverage for additional insureds, alcohol-related claims, athletics, boarding schools, fire, security guards, and sexual misconduct. GLX policies may include coverage for allied health professionals and counselors in campus infirmary.

Importance of Educational Plan

To make sure the parents have the funds to support a child’s education, it is important to invest through planning and savings for future education. According to Isla (2022), planning for education allows parents to:

● Set aside money for a child's education. Purchasing an educational plan requires you to budget a certain amount of money per month. You'll accumulate enough savings with every year to cover your child's schooling.

● Save money by avoiding high-interest loans. You will not have to rely on high- interest loans to cover tuition and other educational expenses because you already have an education plan in place.

● Choose the best education for a child. Once you and your children have an educational plan in place, you may select the ideal educational facility without being constrained by expense.

● Break barriers in child’s access to education. Financial limitations won't cause your child's education to be hindered or delayed with the help of education planning. This is so that the majority, if not all, of your child's educational costs will be covered by their plan.

G.2 Burial & Memorial Plan

One kind of pre-need plan that covers burial and funeral costs is a burial and memorial plan. It can ensure a planned service and provide several benefits, such as reducing debt for the family and honoring the deceased in the manner they want to be remembered. Due to the high cost of services in the Philippines, burial and memorial plans might be paid once a month. Also, it is regarded as a kind of life insurance policy, but because of its smaller scope, it provides a lower benefit amount than conventional term life insurance. Some burial insurance policies have the ability to pay benefits in as fast as 24 hours without a death certificate (Scott, 2022). This plan allows individuals to lock in the current cost of funeral and burial services, which means a person can avoid future increases in the cost of funeral and burial services. Burial and memorial planning insurance has become an essential aspect of financial planning for individuals and families of Filipino people. This type of insurance provides a means for individuals to prepare for the costs associated with funerals, burials, and memorial services.

Coverage of Burial and Memorial Plan

Burial and memorial planning insurance is a critical component of financial planning that is often overlooked. In the Philippines, the cost of funerals and memorial services can be significant, and many families may struggle to cover these expenses without proper financial preparation. As such, burial and memorial planning insurance

provides individuals and families with the opportunity to alleviate the financial burden associated with end-of-life expenses (Isla, 2022).

This type of insurance is designed to provide financial assistance to the policyholder's beneficiaries in the event of the policyholder's death. By securing burial and memorial planning insurance, individuals can ensure that their loved ones are not burdened with the high costs of funeral arrangements and related services (Funds, 2023).

A typical burial plan in the Philippines covers the cost of funeral and burial expenses. The following are some of the inclusions of a typical burial plan in the Philippines:

● Casket - The burial plan covers the cost of a casket, which can range from a simple wooden box to an ornate metal or hardwood casket

● Transportation - The burial plan covers the cost of transporting the deceased from the funeral home to the cemetery or crematorium

● Funeral-related services - The burial plan covers the cost of funeral-related services such as embalming, dressing, and make-up

● Memorial lot - The burial plan may include the cost of a memorial lot, which is the final resting place of the deceased

● Burial plot - The burial plan covers the cost of a burial plot if the family chooses burial as the method of disposing of the deceased

● Urn - The burial plan covers the cost of an urn if the family chooses cremation as the method of disposing of the deceased

● Reception - The burial plan may include the cost of a reception or a meal after the funeral service

Importance of Burial and Memorial Plan

In the Philippines, the cultural and religious significance of funerals and memorial services is profound. These events are not only a means of honoring the deceased, but also serve as important gatherings for family and community members to pay their respects and offer support to the bereaved . As such, the financial aspect of planning for funerals and memorial services is a crucial consideration for many Filipino families. That is why burial and memorial plan are important for the following reasons (Prout, 2023):

● Covers all funeral expenses - Burial insurance covers all costs related to your funeral and burial or cremation. This means that your plan will help your family pay for the coffin, memorial, and other expenses related to your funeral.

● Eases financial burden - Funeral expenses can be expensive, and the cost of a funeral can quickly add up to thousands of dollars. Funeral insurance can assist in paying for these costs, relieving loved ones of an unplanned financial strain during an emotionally difficult period.

● Provides peace of mind - By purchasing funeral insurance, individuals can know that their loved ones will not have to worry about funeral expenses when they pass away. This can provide peace of mind and alleviate stress during a difficult time.

● Allows for customization - Burial insurance allows you to allocate funds toward your burial, funeral arrangements, and other expenses without being tied to specific providers, geographic areas, or plans. This means that you can customize your funeral arrangements according to your preferences.

● Covers other expenses - Funeral insurance can also cover other expenses such as medical bills, probate or legal fees, and other outstanding debts that aren’t covered by burial insurance or pre-need policies. This can help prevent the passing of any substantial debt to surviving family members.

By recognizing the significance of funerals and memorial services within the cultural and social context of the Philippines, it becomes evident that the financial preparation for these events is of utmost importance. Burial and memorial planning insurance plays a vital role in the overall financial planning of individuals and families in the Philippines. The decision to secure burial and memorial planning insurance requires careful consideration of various factors, including the specific needs and preferences of the policyholder and their family. It is essential for individuals to assess their financial capabilities and determine the appropriate coverage that will adequately address the costs associated with funerals, burials, and memorial services.

G.3 Personal Property Insurance

Personal property insurance covers individual personal things or property objects that you want to protect. This insurance is generally included as part of a homeowners or renters insurance policy and is intended to safeguard your belongings from a variety of risks such as theft, fire, vandalism, or natural disasters. Travelers' homeowners, condo, and renters policies include coverage for personal things damaged in a covered loss, such as furniture, clothing, and electronics. Your personal items can be covered by a personal property coverage regardless of where they are.

What does Personal Property Insurance Cover?

Personal property insurance covers personal belongings and possession in your home, apartment, or rental property, such as furniture, clothing, and appliances. If your goods are damaged or stolen as a consequence of a covered risk, the insurance company will pay to repair or replace them up to the maximum specified in your policy. A deductible is typically included, which is the amount you pay for the loss before the insurance company pays. The specifics of what is covered and the degree of coverage may differ depending on the policy, however the following are some common characteristics of personal property insurance coverage:

● Fire and smoke damage

● Theft and vandalism

● Windstorms

● Lightning and electrical damage

● Water damage from burst pipes or a leaking roof

● Falling objects

● Explosion

● Riot or civil commotion

● Vehicle or aircraft damage

What doesn’t Personal Property Insurance Cover?

Personal Property Insurance does not cover your pets and autos. Personal Property Insurance also won't apply in certain circumstances, such as losses caused by flooding. Your borders, tenants belongings does not cover your personal property insurance. Jewelry, weapons, cameras, and laptop computers may only have a limited level of coverage under your homeowners policy. Other individual things may have special coverage limitations as well. If you want additional coverage for such products, you'll need to get scheduled personal property coverage.

Importance of Personal Property Insurance

Personal Property Insurance is essential protection for your most valuable assets, which is important to your way of living. Whether you live in a condo, a house, or an apartment, having the right personal property insurance to cover your needs might help you have more peace of mind. To summarize, personal property insurance is an important part of maintaining your financial well-being and providing security for your personal belongings. It provides peace of mind, lower financial risk, and allows you to navigate life’s uncertainties with greater assurance.

G.4 Health Maintenance Organization

What is HMO?

A Health Maintenance Organization (HMO) is a form of managed care health insurance plan that offers its members medical services through a network of healthcare providers. HMOs are intended to provide low-cost, comprehensive healthcare coverage. HMOs, or Health Maintenance Organizations, are healthcare delivery systems to which most employees have access as part of their employer-provided benefits. HMOs allow people to access a wide range of medical care and assistance at a fraction of the cost because it is financed by their employers.

HMO coverage often includes:

● Hospitalization (Inpatient/Outpatient Care)

● Emergency Services

● Laboratory Services

● Prescription Drugs

How does HMO work?

An HMO provides members with access to its network of healthcare providers such as doctors, dentists, hospitals, and clinics through prepaid health products for a monthly, quarterly, semi-annual, or annual fee, depending on the plan you choose. The benefit of HMOs is that you will have access to a large network of healthcare providers. You can go to hospitals or clinics in different places as long as they are part of the network. They provide programs that are usually comprehensive and customizable, but are only available for a limited time each year. The larger the annual allowance, the higher the premium paid by the business or person. You can include your dependents in your HMO plan for an additional cost.

If you have an HMO membership with PhilHealth, you can use it alongside with your PhilHealth plan. If you need to be confined, PhilHealth will partially cover your bills from anywhere to 15% and 30% if you’re a member. Your chosen HMO plan will then pay the outstanding balance.

Why is HMO important?

Employees who participate in an HMO plan through their companies can save much in the long run. The primary advantages are cost and quality of care. HMO programs provide lower premiums than traditional forms of health insurance. This enables insured parties to receive higher quality treatment from providers contracted with the organization. HMOs often have low or no deductibles and charge relatively cheap co- pays. HMO members also do not need referrals for specialty procedures.

How to choose HMO provider?

To date, the country has 16 HMOs, including MEDICard, Intellicare, MaxiCare, Philcare, Insularcare, Valucare, and Fortunecare, to mention a few. These HMOs normally cover both outpatient and inpatient operations for patients, as well as any emergency medical treatments that employees may require, provided that these

medical services are provided by recognized and authorized doctors, clinics, or hospitals.

Some key things to consider are:

● Cost of monthly premiums

● Out of pocket costs

● Choosing your own healthcare providers

● The current health of the people you want to cover

A health insurance plan can help pay for some of those unexpected costs, as well as give financial protection against high medical bills in the future. At the same time, it ensures one thing that can never be equated to significant savings.

G.5 Regulations in Pre-Need Insurance (R.A. 9829) Pre-Need Plan RA 9829

Pre need plans are contracts, agreements, deeds or plants for the benefit of the plan holders which provide for the performance of future service/s, payment of monetary considerations or delivery of other benefits at the time of actual need or agreed maturity date, as specified therein, in exchange for cash or installment amounts with or without interest or insurance coverage and includes life, pension, education, interment and other plans, instruments, contracts or deeds as may in the future.

Pre-need company

Refers to any corporation registered with the Commission and authorized/ licensed to sell or offer to sell pre-need plans. It may also refer to schools, memorial chapels, banks, nonbank financial institutions and other entities which have also been authorized/ licensed to sell or offer to sell pre-need plans insofar as their pre-need activities or business are concerned.

Pre-Need Vs Insurance

Registration of Pre-need Plans

1. Registration Statement should be submitted within 45 days after the grant of license to do business or every pre-need plan which the pre-need company intends to offer for sale to the public.

2. Contract forms and advertising materials also require approval of IC.

3. Information brochure must be provided to prospective plan holders

The information shall contain an explanation of the principal features of the pre-need plan, a statement that the plan holder may avail of a default or reinstatement period within which to reinstate his lapsed plan, and the conditions of the same and the rates of return for scheduled benefit plans and illustrative yields for contingent benefit plans, and such other information that the Commission shall require by rule.

4. Registration may be denied on the ground of solvency or trust fund deficiencies, or paid-up capital impairment.

5. Cancellation of registration may be voluntary or involuntary.

Initial denial is on the basis of its latest audited financial statement, trust fund annual statements and reserves valuation report.

The commission shall cancel the registration of any pre-need plan by issuing an order to this effect, setting forth its findings in respect thereto, if, after due notice and hearing, it shall appear that the issuer:

i. Insolvent

ii. Has violated any of the provisions of the code, or the rules promulgated pursuant thereto, or any order of the commission of which the issuer has notice;

iii. Has been or is engaged or is about to engage in fraudulent transactions;

iv. Is in any other way dishonest or has made any fraudulent representations in any circular or other literature that has been distributed concerning the issuer or its pre-need plans; and

v. Does not conduct its business in accordance with law

A registration of a pre-need plan may be cancelled or a permit to sell may be suspended or cancelled by the commission upon petition for its suspension and/or cancellation, as the case may be, by the issuer as herein provided.

Licensing of Sales Counselors:

Qualifications:

1. Must be of good moral character and must not have been convicted of any crime involving moral turpitude.

2. Undergone a training program approved by the IC and such fact has been certified under oath by a duly authorized representative of a pre-need company.

3. Passed a written examination administered by the IC The License shall automatically expire every 30th day of June such date of every year as may be fixed by the Commission.

Grounds for denial, suspension, revocation:

i. Materially misrepresented statements in the application requirements;

ii. Obtained or attempted to obtain a license by fraud or misrepresentation;

iii. Materially misrepresented the terms and conditions of pre-need plan which he sold or offered to sell;

iv. Solicited, sold or attempted to solicit or sell a pre-need plan by means of false or misleading representation and other fraudulent means;

v. Terminated for case from another pre-need company;

vi. Similar grounds found in Section 11 of these rules;

vii. Willfully allowing the use of one’s license by a non-licensed or barred individual and

viii. Analogous circumstances

Licensing of Agents

Requirements

1. Submission of General Agency Agreement and other documentary requirements

- Must be registered corporation or partnership in the PH

- Agents soliciting or selling pre-need plans must possess the same qualifications as the sales counselors

- Must be authorized to received notices, summons and legal processes for and in behalf of the pre-need company concerned in connection with actions or legal proceedings against said pre-need company

The application of a general agent shall not be approved unless a salesman is qualified and licensed by the commission. The general agent shall cease solicitation and selling of pre-need plans when no natural person holds a valid license representing the general agent.

A license issued to a general agent shall authorize only the individual or individuals named in the license exercise.

What happens if you have a pre-need plan and you’re supposed to make payments of the premium, but you defaulted?

Grace period – 60 days after the default of the 1st installment (default) Reinstatement Period – not less than 2 years from end of grace period

Notice of cancellation – 30 days after lapse of grace period and 30 days before end of reinstatement period. Notice of termination is required from plan holder.

Any offer by the pre-need company to terminate the pre-need plan for consideration exceeding the termination value provided in the plan contract shall not require the prior approval of the Commission, provided that (i) the consideration shall be below the pre-need reserves for the specific plan, (ii) the offer is accepted by the pre- need plan holders, and (iii) the offer shall not prejudice the claim of plan holders who do not avail of such offer.

Claims Settlement

Claims Settlement

IC determines whether the payment of the claim of the plan holder has been unreasonably denied or withheld.

If found to have denied or withheld the claim, the pre-need company shall be liable to pay damages, consisting of actual damages, attorney’s fees and legal interest, to be computed from the date the claim is made until it is fully satisfied.

Other Claims Settlement

i. Knowingly misrepresenting to claimants pertinent facts or plan provisions relating to coverages at issue;

ii. Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its plan;

iii. Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under its plan;

iv. Failing to provide prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear; or

v. Compelling plan holders to institute suits or recover amounts due under its plan by offering, without justifiable reason, substantially

less than the amounts ultimately recovered in suits brought by them.

Trust Fund

Trust Fund. - To ensure the delivery of the guaranteed benefits and services provided under a pre-need plan contract, a trust fund per pre-need plan category shall be established. A portion of the installment payment collected shall be deposited by the pre-need company in the trust fund, the amount of which will be as determined by the actuary based on the viability study of the pre-need plan approved by the Commission. Assets in the trust fund shall at all times remain for the sole benefit of the planholders. At no time shall any part of the trust fund be used for or diverted to any purpose other than for the exclusive benefit of the planholders. In no case shall the trust fund assets be used to satisfy claims of other creditors of the pre-need company. The provision of any law to the contrary notwithstanding, in case of insolvency of the pre-need company, the general creditors shall not be entitled to the trust fund.

G.6 Determining the Cost of Pre-Need Insurance

a. Educational Plan

Paying tuition fees is the biggest financial responsibility for anyone who's in charge of a child's education. This is why it's better to save up ahead for a period. So how can an individual start saving for college education costs?

Every endeavor begins with a goal. Consider this: What is my desired school? How much will tuition there be? When you have certain answers, you will know how much to save for your little loved one's schooling.

● Choose a university wisely

Your choice of school will have a significant impact on both your finances and the well- being of your child. Consider it carefully—think long-term and be honest about how much you can spend now and in the future.

● Compute target amount for tuition fund

Once you've decided on a school, find out what the current tuition is. You'll know how much to save for school once you have the data, and you'll be able to determine the future cost of your child's college tuition. These considerations should be considered when calculating your intended tuition fund:

(1) The annual tuition increase (according to financial experts, tuition costs rise by 10% on average each year).

(2) The number of years until the child starts school.

(3) The current tuition fee for your chosen school.

● Choose a long-term investment

After computing the target amount of the tuition fund, you can start saving and invest money. Go for a long-term investment that allows you to save and grow your money for education. The best education investment for you will be determined by your requirements, ambitions, and risk appetite. You may consider the education plans.

Education Plans are pre-need plans specifically created for parents who desire to save for their children's education over a five to 18-year period. Most education programs need a minor initial expenditure, generally about PHP 20,000. In essence, two months of savings will allow you to begin developing the money.

Many firms that provide education plans also offer opportunities to build the money beyond the minimum required for your child to finish their degree. A life insurance policy or additional investment development choices are among these goods.

Table below summarizing the cost and benefits of some of the best options for educational plans in the Philippines.

The price varies on several factors, like the insurance provider, policy amount, payment period, and add-on coverages or riders. It will also depend on whether the educational plan has an investment component because it will require you to make top- ups aside from your regular premiums.

b. Burial and Memorial Plan

A funeral life plan is a sort of pre-planning that allows you to plan ahead of time for your deceased's funeral rites. It's a method to relieve your loved ones of the burden of having to make tough decisions during a time of loss and stress. Instead, they can focus on grieving and healing, knowing that their final wishes are being carried out as you wanted them to be.

The typical cost of getting a funeral plan in the Philippines is wide-ranging because of several factors. The factors that affect the cost can including the following:

1. Location: Prices for memorial plans and burial plans vary depending on where they are purchased from within the Philippines.

2. Service provider: Different providers offer different types and qualities of services, which can have an impact on their prices.

3. Package: Funeral plans often come in different packages, ranging from basic to comprehensive. The cost will depend on the services included, such as burial plot, casket type, transportation, embalming, viewing, and chapel services.

4. Pre-Arrangement or At-Need: Pre-need funeral plans, where arrangements are made in advance, may offer some cost savings compared to at-need arrangements.

5. Inflation: Inflationary pressures over time may also cause prices to increase gradually over time even without any changes in service offerings or locations involved.

In the Philippines, the average cost of a memorial plan is ranging from PHP 60,000, can be paid monthly, quarterly, semi-annual, or annual payable for 5 years. Some also offer discount if you settle your payment in cash.

c. Personal Property Insurance

Personal property includes items such as furniture, clothing, and electronics.

Personal property coverage is often included in insurance policies, whether you own a

home or rent an apartment. This form of coverage assists with the repair or replacement of your items following a covered loss, such as theft or fire.

Home and property insurance premiums are calculated based on different factors which rate your risk of claiming an insured loss. These factors include:

● Construction

Construction of the home is an extremely important rating factor. The more fire- resistant the home is, the lower the rate. Thus, wooden homes cost more to insure than brick homes. However, earthquake insurance costs are substantially less for wooden homes.

● Construction costs (price of home or property and cost to rebuild it)

Construction costs have a significant effect on rates. The costs of labor and materials vary widely. The higher the cost of repairing or rebuilding your home, the higher your premium is likely to be.

● Location

Location of the home is another important rating factor. For rating purposes, the loss experience of each rating territory is determined. Insureds who reside in territories with high losses from fires, storms, natural disasters, or crime must pay higher rates than insureds who reside in low-loss territories.

● Age and condition of home or property

The age of the home also affects the rate charged. Insurers charge less to insure newer homes than older homes. Older homes may be more susceptible to damage from fires and storms, have older wiring, and may have been constructed when the building code was less stringent.

● Credit history

Many insurers also use the applicant’s credit record for purposes of underwriting and rating. The applicant’s credit record is used to determine an insurance score. An insurance score is a credit-based score that is highly predictive of future claim costs.

Insurance scores predict the average claim behavior for a group of insureds with essentially the same credit history. Insureds as a group with poor credit records and low insurance scores generally file more homeowners claims than insureds with good credit and higher insurance scores.

● Deductible amount

The deductible amount has an important effect on cost. The higher the deductible, the lower the premium. The deductible can be increased with a reduction in premiums. The deductible does not apply to a fire department service charge, coverage for credit or ATM cards, scheduled property that is specifically insured, and the personal liability coverages.

● Claims history

For underwriting and rating purposes, insurers also use a loss history report that reveals the prior claim history of a home. The use of loss history reports is controversial. Critics claim that insurers are concerned about mold claims and water damage and do not wish to insure homes that have experienced such losses. Some homebuyers have found it difficult to obtain homeowners insurance because the loss history report indicated a history of previous claims on the home they would like to purchase.

Likewise, some homeowners selling their homes may not get the best price if the home has been rejected by several insurers because of previous claims. However, in rebuttal, insurers claim they can rate coverage more accurately by using loss history reports in their underwriting. Also, insurers can detect fraudulent claims more easily.

● Additional coverages

The cost of home insurance varies widely, but the bare minimum should be between Php700 and Php3,000. This might rise as a result of the aforementioned circumstances. Keep in mind that the maximum insurable value of your home or property is determined by the provider you choose. Most provide a maximum of Php10 million in protection, while some might go up to Php25 million.

d. Health Maintenance Organization (HMO)

HMO, or Health Maintenance Organization, is a healthcare delivery system that most employees are eligible to utilize as part of their employer-provided benefits. HMOs allow individuals to access a wide range of medical services at a fraction of the cost since they are financed by their employers. They can have access to a large network of healthcare providers through HMOs. Members can visit hospitals or clinics in various areas as long as they are members of the network. If they choose to see a healthcare practitioner outside of the network, their charges may not be paid. They can also add dependents to their HMO plan at an extra expense.

Employers often handle health-care payments for their employees through dedicated corporate accounts. However, if you want to start getting a health card, you need plan ahead of time. HMO has a variety of payment alternatives. The monthly fee is determined on the plan you select.

● Quarterly – paid every 3 months

● Semi-annual – paid every 6 months

● Annual – yearly payment

The rate per month can range between PHP 500 to PHP 2,500 or more.

Some HMO companies have a dedicated online calculator where you can check how much the premium is. However, it will depend on the terms and the type of protection that you need.

● Monthly Rates – usually more expensive but it would be more convenient to those with limited budget.

● Quarterly Rates – priced decently but you can pay your premium every 3 months.

● Semi Annual – have better rates if divided into 6 months consideration. More savings for the member.

● Annual – provide the most savings since you must shell out a larger amount in return.

❖ Payment of fixed premiums and cost-sharing provisions. HMO members typically pay a fixed prepaid fee (usually paid monthly) for the medical care provided. However, many HMOs also have cost-sharing provisions. In previous years, HMOs did not emphasize deductibles or coinsurance to any great extent. In recent years, however, employers have been faced with sizable premium increases. To hold down costs, many HMOs now require enrollees to meet an annual deductible. Some HMOs impose an inpatient deductible or copayment charge for a hospital stay. Employees also have copayments for certain services, such as an office visit or for a generic drug.

❖ Heavy emphasis on controlling cost. HMOs place heavy emphasis on controlling costs. There are different methods for compensating physicians, hospitals, and other healthcare providers to control cost.

o First, a common method used to pay network physicians is called a modified fee-for-service method. HMOs typically enter into contracts with physicians, hospitals, and other health-care providers to provide covered medical services based on negotiated fees, which typically are discounted fees. Providers are free to set their own fees. However, the maximum amount paid for a covered procedure is based on a negotiated fee schedule, which lists the maximum amount paid for each covered service. Hospitals in the network generally are paid a

negotiated fee for each day a plan member is hospitalized regardless of the hospital’s actual cost.

o Second, some HMOs reimburse physicians or medical groups based on a capitation fee, which is a fixed annual amount for each plan member regardless of the number of medical services provided.

o Third, some employers, especially smaller employers, have banded together to form purchasing cooperatives to obtain more favorable prices from health-care providers.

o Finally, HMOs typically emphasize preventive care and healthy lifestyles, which also hold down costs in the long run. Other techniques for holding down costs include (1) pre-certification and approval for non-emergency admission into a hospital as an inpatient; (2) certain types of surgery are performed on an outpatient basis; and (3) many HMOs require patients to obtain the approval of a gatekeeper physician to see a specialist. A gatekeeper physician is a primary care physician who determines whether medical care from a specialist is necessary.

G.7 Contents of a Pre-Need Insurance Policy

- The Philippines is home to many insurance companies, all of which provide worldwide terms, benefits, and agreements. Pre-need companies, however, pre- need plans are only established locally in our nation.

1. Pre-need plans fall under two general classifications: Contingent Benefit Plans and Scheduled Benefit Plans.

a. Contingent Benefit Plans - refers to plans where the payment of benefits is dependent upon the occurrence of an unexpected event, like the death of the planholder, or a decision of the planholder to utilize the benefits under the

plan for another person of his choice upon the occurrence of the contingent event of death to that person. Examples are funeral plans, memorial plans, mortuary plans, interment plans, cremation plans, etc.

b. Scheduled Benefit Plans - are those in which the date of entitlement to the benefit specified at the start. These include pension plans, education plans, travel plans, and other similar plans.

2. Pre-need plans can either be Fixed Value Plans or Actual Cost Plans.

a. Fixed Value Plans - A fixed-value plan offers to pay the planholder a defined amount of compensation in the future in return for payments based on the guaranteed amount's present value. In this setup, the planholder is responsible for covering the increased costs in the event of rising inflation rates and other future shocks.

b. Actual Cost Plans or Traditional Plans - A traditional plan is a pre-need plan in which the benefits are guaranteed regardless of the plan's cost at the time of benefit consumption. In this instance, it is the pre-need company's obligation to cover increased expenditures caused by rising inflation rates and other future shocks. The Insurance Commission (IC) no longer issues licenses to offer open-ended insurance. However, no law or regulation expressly forbids the selling of these policies. (Remo, 2013)

3. The three (3) parties to a pre-need plan are the pre-need company, the planholder, and the beneficiary.

● Pre-need company - Any corporation registered with the Commission and authorized/licensed to market or propose to sell pre-need policies is referred to as a pre-need company. This includes schools, memorial chapels, banks, nonbank financial institutions, and other businesses authorized/licensed to offer pre-need plans in connection with their pre-need operations or business.

● Planholder - Any natural or legal person who purchases pre-need plans from a pre-need company and for whom the benefits of the plan are to be delivered, as

specified and guaranteed by the pre-need company, is referred to as a planholder. This includes the planholder's assignee, transferee, and any successor-in-interest.

● Beneficiary - A beneficiary is an individual identified by the planholder as the receiver of the pre-need benefits.

Sales Counselor- A sales counselor is a natural person who sells, offers to sell or counsels potential planholders for the purpose of selling pre-need plans, whether or not on a commission basis, under the authority of the pre-need company. (Section 4, RA 9829, 2009)

4. Pre-need plans can also be classified in terms of their objects of cover as follows: (Pu- Baladad, 2014)

a. Life or memorial plan that guarantees financial protection from sudden expenses (memorial/burial services) in the untimely event of the death of the plan holder;

- A pre-need plan, as the name implies, is a funeral service established and paid for in advance. Individuals can pre-pay the casket, identify ceremony details, and cover other funeral-related fees using this choice.

b. Pension plan wherein the planholder is guaranteed pension benefits which may be received in a lump sum or monthly pension or a combination of both, at the time of their retirement.

c. Educational plan wherein the planholder, or in this case, the sponsor, pays an amount, in a lump sum or in installment, to cover the future education of the planholder's designated scholar.

G.8 Pre-Need Insurance in the Philippines

A uniquely Filipino product, pre-need insurance was created in the 1970s. Plans are tailored to meet specific needs. Furthermore, certain benefits (like college education or retirement) are only available for a limited period of time or in certain situations (like illness, death, or disability).

You might be wondering why certain pre-need businesses offer what are known as "open-ended plans," which guarantee tuition payments regardless of how much schooling will ultimately cost. Even after tuition costs skyrocketed in 1992 as a result of deregulation, these plans were still offered. A few pre-need companies failed for a variety of reasons, including the nation's economic downturn and the prevalence of open-ended plans. Some pre-need companies consequently forfeited benefits they had promised to their policyholders.

Types of Pre-Need Plans - In the Philippines, Pre-need insurance companies offer various types of pre-need plans, including educational plans, memorial (funeral) plans, and pension plans. Each plan is designed to provide specific benefits at a future date.

Regulatory Oversight - The Insurance Commission (IC) oversees the pre-need industry in the Philippines. It ensures that pre-need companies comply with the Pre- Need Code, which sets the rules and guidelines for the industry. This regulatory body is responsible for safeguarding the interests of planholders and ensuring that pre-need companies are financially stable.

Trust Fund Requirement - Pre-need insurance companies are required to establish and maintain trust funds. These trust funds are intended to ensure that the company has the financial resources to fulfill its obligations to planholders in the future. These funds are subject to specific regulations to ensure their adequacy.

Consumer Protections - The Pre-Need Code includes provisions to protect consumers, such as disclosure requirements, mandatory disclosures in contracts, and other measures to ensure transparency and accountability. For example, pre-need companies must provide planholders with clear information about the terms and conditions of their plans, including the benefits, coverage, and payment schedules.

Payment Options - Pre-need plans typically offer different payment options, allowing planholders to make regular contributions over time to fund their plans. These contributions can be made through monthly, quarterly, semi-annual, or annual installments.

Plan Benefits - The specific benefits of a pre-need plan will depend on the type of plan and the terms and conditions set by the pre-need company. Educational plans guarantee financial assistance for the planholder's child's education, memorial plans cover funeral and burial expenses, and pension plans provide financial security during retirement.