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My wife asked if it's time to withdraw from our pre-need plan as a result of the recent barrage of news about the problems faced by pre-need companies. This is not the first time that pre-need companies are in the hot seat. Years back, the College Assurance Plan (CAP) and Pacific Plans, Inc. (PPI) suffered a financial problem which prompted them to seek shelter under the rules on corporate rehabilitation. Lately, member-companies of the Legacy Group (Legacy Consolidated Plans, Scholarship Plan Philippines, All Asia Plans) closed shop. First, let's define some concepts.
A " pre-need company" is any corporation registered with the Securities and Exchange Commission (SEC) and authorized/licensed to sell or offer for sale pre-need plans. " Pre-need plans," on the other hand, are contracts which provide for the performance of future service/s or payment of future monetary consideration at the time of actual need, payable either in cash or installment by planholders. It includes life, pension, education and interment plans. Pre-need companies are under the SEC (in contrast, insurance companies are under the Insurance Commission). According to GMA News: "Pre-need companies will need more time to raise money to pay for plan holders’ claims after suffering from falling asset prices as a result of the slowing global economy." The Federation of Pre-need Companies of the Philippines assured investors to prevent massive withdrawals (see BusinessWorld news and Inquirer news). SEC Chair Fe Barin, who is under fire lately, also expressed her hope for the pre-need industry to recover. Indeed, the recent developments no doubt affect the level of confidence of planholders and the public. This brings us to our poll -- what's your level of confidence in pre-need companies? Update: The poll ran from 6 February 2009 to 7 April 2009, with a total of 153 votes cast: High -- 11 votes (7.2%); Neutral -- 17 votes (11.1%); Very High -- 18 votes (11.8%); Low -- 38 votes (24.8%); Very Low -- 69 votes (45.1%).
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