The Philippines is recording extraordinary economic expansion with fast-growing manufacturing and service industries.
With such a shift has come greater interest in financing and banking among Filipinos, yet the general public remains largely unaware of the benefits of insurance policies. Sun Life Financial Philippines, the nation’s second largest insurer, prioritizes education of the market on how to save and secure a financial future, creating greater awareness for the insurance industry and contributing to the country’s key objective of poverty alleviation.
“Insurance companies play a very vital role in terms of helping secure the financial future of the Filipino people,” explains Rizalina Mantaring, CEO and President of Sun Life in the Philippines. “There is no other product that if you pay a premium today and something happens to you tomorrow your family gets the full benefit of your policy.”
“All other financial products build value over time, but a lot of people don’t know this. This is why we embarked upon our financial literacy campaign in 2009. Studies were showing that if you ask people which investment offers the best returns over the long term, the number one answer was savings accounts. But in the Philippines, the interest rate on savings is only about 1%. It will not beat inflation; it is not an investment. We really need to build financial literacy. Very low insurance penetration can be traced back to that.”
At just 14%, insurance penetration levels remain extremely low in the Philippines, a market more risk averse than regional neighbors. Sun Life studies found that just 2% of the population is financially independent at retirement.
In the Philippines, Sun Life’s forte is life insurance, particularly in variable universal life (called investment-linked in Asia), accounting for 70% of sales, as well as a range of mutual funds, bonds, balance and equity funds, and savings products for education and pensions.
“Perhaps as a result of the economic downturn in the past couple of years there has been a desire for some form of guarantee, either a capital guarantee or minimum guaranteed return,” comments Ms. Mantaring.
“But if you are preparing for retirement, it’s worth investing regularly in something like a mutual fund, which is an investment that may be volatile in the short term but over time will probably give you far better returns than most of the fixed income instruments,” she says. “The average compounded return for a mutual fund including the downturn is probably around 17% annually. Over time, your retirement is protected.”
For overseas Filipino workers (OFWs) who plan to retire to their motherland eventually, Ms. Mantaring says there is value in getting an insurance plan or investment product from Sun Life Philippines: the money would then be available in pesos for the insured person’s family in the Philippines or for the insured upon their return. However, due to regulations in the Philippines, interested parties must buy and sign for policies while in the archipelago.
Fortunately, Sun Life Financial Group has a strong global presence in 24 countries to service OFWs and other Filipinos abroad. Originally established in Canada, Sun Life SLF Canada is the largest Canadian life insurer based on premiums and deposits serving individual customers through protection and wealth solutions and group clients through group benefits and retirement solutions. Likewise, in the U.S., Sun Life is a leading provider of annuities, life insurance and group benefits, too. Filipinos living overseas can expect the same level of quality in products and services if they buy from them, but for those who plan to come home it’s important also to invest in peso instruments.
Since 1895, Sun Life’s support of the community goes beyond insuring for the future; Sun Life Philippines also partnered with the Department of Education to renovate schools and committed over a million dollars over five years to build houses for families in a site with local schools, clinics and livelihood programs.
“We are woven into the fabric of the nation’s history. We’ve been here through two world wars and have families that have been with us for as much as seven generations. It is a bond of trust that has been built for many years and we are part of nation building and will continue to be partners in nation building,” observes Ms. Mantaring.