The Pre-Need Code of 2008

[pinoypower]

Here's a ray of hope for those who were victims of the pre-need companies that went bankrupt or have defaulted in the payments of the benefits.
The Senate has passed the bill which seek to regulate the pre-need industry and protect the people from being cheated by these companies.
Having lost over half a million pesos in CAP, I welcome this iniatiative of Sen. Mar Roxas to help parents secure the future of their children. Back in 2004 at the height of the CAP crisis, I approached many politicians who all promised to help. Nothing has happened since then and the CAP issue is almost forgotten by all of them but one. Sen. Mar Roxas made good his promise.
Although I'm not so optimistic that I will still recover my money, I'm still thankful for this bill not for myself but for all parents who will invest their hard earned money to secure the education of their children.:emoticon-5:

[Maria_maria]

I never had a CAP but my mom bought me a pre-need college plan for when I got to college (with another company). While I did get some money for my college education, it wasn't as much money as was promised her years ago when she bought it.

Still, I believe in pre-need plans and I intend to get plans for my future children. So I definitely welcome any move by the senate to protect us from fraudulent pre-need companies.

:COOL0020::COOL0020::COOL0020:

[patis]

Forgive my ignorance, my highly esteemed coffeers, but what are "pre-need companies"? I know I can google it, but I trust your opinions better. Thanks!

P.S.
Allo, pinoypower and Maria_maria! :D

[Maria_maria]

A pre-need plan is like an insurance policy in which you pay a premium (annually, quarterly, or monthly) so that you may claim a certain amount for future use. (As opposed to life insurance where you pay premium so that your beneficiaries may claim a certain insured amount when you pass away). An example of a pre-need policy is an educational plan.

Some time in the 90's a very big pre-need company, CAP (College Assurance Plans), suffered huge losses which caused them to default on the plans that they had issued. It was not so much CAP's fault, as the Philippine economy suffered a huge slump in the 90s and the company wasn't able to cope with dwindling bank rates. In short, their projected growth when they first sold the educational plans didn't happen. So a lot of parents who invested in a pre-need plan lost a lot of money!

[pinoypower]

Forgive my ignorance, my highly esteemed coffeers, but what are "pre-need companies"? I know I can google it, but I trust your opinions better. Thanks!

P.S.
Allo, pinoypower and Maria_maria! :D

When we say pre-need companies the first thing that comes into the minds of many people are educational plans but it also include memorial plans and others. The difference between an insurance policy and a pre-need plan is that an insurance covers a person for something unplanned, unforeseen or unexpected or to put it simply something risky. The endowment is fixed, e.g. 1 million pesos for death or total disability. The pre-need plan on the other hand covers a person for something definite or fixed like education or funeral services. The difference is that the endowment in the pre-need plans is open ended because the cost of tuition fees and funeral services continously go up with inflation.
This is the reason why many pre-need companies like CAP, Pacific and others landed into difficulties. The tuition fees dramatically increased when the educational sector was deregulated. The result was most of the companies went into financial difficulties. Many believed this including our politicians but a deeper investigation indicated that they were also liable for not being prudent in the investment of their trust funds. A valid point here is how come Prudential continued to meet their obligations when in fact all the pre-need companies are operating under the same economic conditions.

Back to the Pre-Need Code of 2008, it will protect the investors because pre-need plans are not classifed as insurance and is not covered by the Insurance Code. It's not also a bank deposit which is covered by PDIC. That's the loophole which the proposed law is trying to remedy. I hope the law will be enacted soon.