For Finals ୨୧

Personal Finance

✓ set by the lender and is the maximum

outstanding debt allowed on the credit
• Credere = to believe account
• Generally means to allow delayed payment
• Credit is used to purchase goods and services, to
finance living expenses, or to make payments open-ended account
more convenient by delaying them for a relatively • open-ended account at a financial institution
short time. that allows the holder to make purchases
• Nonbusiness debt used by consumers for almost anywhere.
expenditures other than home mortgages
Credit card
✓ Consumer credit is personal debt taken on to is a thin rectangular piece of plastic or metal
purchase goods and services. A credit card is issued by a bank or financial services company,
one form of consumer credit. that allows cardholders to borrow funds with which
to pay for goods and services with merchants that
✓ Usually used to describe unsecured debt that accept cards for payment
is taken on to buy everyday goods and
services.
✓ Extended by banks, retailers, and others to
enable consumers to purchase goods Common Credit Card Problems and
immediately and pay off the cost over time Solutions
with interest. You Can’t Afford Your Payments
Shopping Spree
Installment Credit • Don’t stop making your payments
• Typically issued by one vendor for a specific • cut back on your monthly expenses
purchase • live within your budget
• Payments are made until that amount is paid
for.
Credit Card Decline
• Popular for the purchase of consumer durables
• Risk of nonpayment Payments are made until Exhausted credit line Late payments Fraudulent
that amount is paid for. Transactions
• With Interest • get in touch with your card issuer

Revolving Credit You Have a High Annual Fee

• extends the ability to delay payment for too high of an annual fee
different items from different vendors up to a • Ask them if they’ll waive the annual fee
certain limit. • canceling your card
• Merchants worldwide accept credit cards as a • card with no annual fee
method of payment because the issuer (the
bank or finance company) has assumed the
default risk by guaranteeing the merchants’ Your Pay Day and Credit Card Due Date Are at Odds
payment.
• You can call your card issuer and ask if they
• Convenience and security.
can move the due date
 • Match due date with your payday ✓ Bring your trusted mechanic when buying a
car
He will give you valuable advice
You Let Someone Use Your Card, and They’re Not ✓ Think of its resale value
Paying the Balance Car value depreciates
Your credit card is in your name, and you run a risk
each time you let someone use it.
Cause of Owning a car
You will be stuck with the balance, not your friend or
family member. • Initial purchase price
• Financing costs and interest over the life of
the loan
You Have Late or Missing Payments • Registration and title costs
This will cause your credit score to fall • Emission inspection
• Insurance
• set up email and text alerts
• Scheduled maintenance
• set up electronic payments
• Storage or garage spaces
• As long as you have money in your account to
• Gasoline, oil and fluid
cover the bill, you won’t have to worry about
it • Parking and tolls
• Unexpected repairs and maintenance
• Tickets
CREDITWORTHINESS
Character: Are You Responsible? Housing – the Cost of Shelter
trustworthiness and reputation
Capital: Do You Have Sufficient Assets?
The Down Payment
Less likely to default on payments
• Most buyers finance a major part of the
Capacity: Can You Repay Your Debts? purchase price of the home, but they’re
ability to repay a loan with present required by lenders to invest money of their
income own, called equity.
Conditions: What Else Is Going On? Mortgage Payment/Loan
overall economic climate and external • Fixed-rate mortgage. - the traditional type of
environment. mortgage in which both the rate of interest
Collateral: Is the Debt Secured? and the monthly mortgage payment are fixed
over the full term of the loan.
property pledged to assure repayment of • Adjustable-Rate Mortgages (ARMs) - A
a loan mortgage on which the rate of interest, and
therefore the size of the monthly payment, is
adjusted based on market interest rate
Before Buying a Car movements.
✓ Choosing a car
Property Taxes and Insurance
Research!
✓ Affordability • Taxes levied by local governments on the
• Amount of down payment assessed value of real estate for the purpose
• Size of the monthly loan payment you of funding schools, law enforcement, and
can afford other local services.
• Review your budget!
 • Insurance that is required by mortgage roommates lowers individual costs even
lenders and covers the replacement value of a more.
home and its contents. + Fewer responsibilities
Renting usually relieves you of many of
Maintenance and operating Expenses the responsibilities of home ownership,
• Maintenance costs should be anticipated even such as costly repairs and maintenance.
on new homes. Painting, mechanical and + Amenities.
plumbing repairs, and lawn maintenance, for Many landlords provide a number of
example, are inescapable facts of amenities for their tenants.
homeownership. Such costs are likely to be + Convenience
greater for larger, older homes. Rental units are often located in close
proximity to major shopping areas, public
transportation, and area businesses.
Benefits of Owning a Home + Social Life
✓ Market Value Apartments offer the opportunity to
✓ Appraised value meet others and socialize informally,
- Real estate appraisers can prepare an especially where recreational facilities
appraised value by examining the are provided
structure, size, features, and quality as
compared to similar homes in the same Disadvantages of Renting
geographic area.
✓ Quality of Life - Noise
- Homeowners generally have more privacy Residents usually share common walls
and larger living and storage space than with neighbors above, below, and/ or
renters have. beside them. Consequently, music,
- Homeowners also have more personal conversations, and other activities of
freedom. In your own home, you are able neighbors can be overheard.
to redecorate or remodel to accommodate - Lack of privacy
your own needs and personal style. Because conversations and other
- Owning a home also provides a feeling of activities can be overheard through
security, stability, and independence. common walls, tenants often feel a lack
of privacy.
- Small living and storage space
Should you RENT? Unless you are renting a house, you will
have a smaller living space.
• Renting is the process of using another - Scarcity of parking
person’s property for a fee. Many rental properties do not provide
• Landlord is the owner, or owner’s garages or off street parking.
representative, of rental property.
-------------------------------------------------------
• A person who rents property is called a tenant
or renter

Advantages of Renting • Investment planning is the process of matching

your financial goals and objectives with your
+ Flexibility financial resources.
If you have a short-term or month-to- • It is also a process that begins when you are
month lease, you have the flexibility to clear on your financial goals and objectives. The
move if you need to once your lease is up. financial planning process is designed to help
+ Lower cost you get clear on how to match your financial
Renting is usually cheaper than the cost resources to your financial objectives
of buying a house. Sharing expenses with
Investment plan The specific services offered vary widely between
different types of financial institutions:
• A statement—preferably written—that specifies
how investment capital will be invested to
achieve a specified goal. 1. Commercial Banks
a type of financial institution that accepts deposits,
Investing offers checking account services, makes business,
personal, and mortgage loans, and offers basic
• The process of placing money in some medium financial products like certificates of deposit (CDs)
such as stocks or bonds in the expectation of and savings accounts to individuals and small
receiving some future benefit. businesses.
• Taking some of the money you are saving and
putting it to work so that it makes you even more
money. 2. Investment Banks
specialize in providing services designed to facilitate
business operations, such as capital expenditure
Are You Ready to Invest? financing and equity offerings, including initial public
here are signs you are ready to begin an investment offerings (IPOs).
program:
• You balance your budget 3. Insurance Companies
• You are able to save regularly
• You use credit wisely among the most familiar non-bank financial
institutions are insurance companies. Providing
• You carry adequate insurance
insurance, whether for individuals or corporations, is
one of the oldest financial services. Protection of
assets and protection against financial risk, secured
Financial Market
through insurance products, is an essential service
A market where buyers and sellers trade commodities, that facilitates individual and corporate investments
financial securities, foreign exchange, and other that fuel economic growth
freely exchangeable items (fungible items) and
derivatives of value at low transaction costs and at
prices that are determined by market forces. The 4. Brokerage Firms
money markets, where large-scale, short-term debts Investment companies and brokerages, such as
are arranged, and capital markets, where longer-term mutual fund and exchange-traded fund (ETF) provider
debts are traded, make up the financial market. Fidelity Investments, specialize in providing
investment services that include wealth management
and financial advisory services. They also provide
Financial Institution access to investment products that may range from
is a company engaged in the business of dealing with stocks and bonds all the way to lesser-known
financial and monetary transactions such as deposits, alternative investments, such as hedge funds and
loans, investments, and currency exchange. Financial private equity investments.
institutions encompass a broad range of business
operations within the financial services sector
including banks, trust companies, insurance Most frequent investment Objectives/
companies, brokerage firms, and investment dealers. Goals
✓ Enhance Current Income
The idea here is to put your money into
Types of Financial Institutions investments that will enable you to supplement
Financial institutions offer a wide range of products your income. In other words, it’s for people who
and services for individual and commercial clients. want to live off their investment income.
 Preferred Securities
✓ Save for Major Expenditures Issued as stock and, as such, represent an equity
People often put money aside, sometimes for position in a corporation. But unlike common stock,
years, to save up enough to make just one major preferreds have a stated (fixed) dividend rate that is
expenditure: paid before the dividends to holders of common stock
• The down payment on a home are paid.
• Money for a child’s college education
• Some capital for going into business
• An expensive (perhaps once-in-a-lifetime) Mutual Funds
vacation An organization that invests in and professionally
• The purchase of a special, expensive item manages a diversified portfolio of securities is called
• Funds for retirement (discussed in the next a mutual fund.
section)
A mutual fund sells shares to investors, who then
✓ Accumulate Funds for Retirement become part owners of the fund’s securities portfolio.
Accumulating funds for retirement is the single Most mutual funds issue and repurchase shares at a
most important reason for investing. Review the price that reflects the underlying value of the
amounts of income you can realistically expect portfolio at the time the transaction is made. Mutual
to receive from Social Security and your funds have become popular with individual investors
employee pension plan, and then decide, based because they offer not only a wide variety of
on your retirement goals, whether they’ll be investment opportunities but also a full array of
adequate to meet your needs. services that many investors find particularly
appealing

Different Ways to Invest

Real Estate
After establishing your investment objectives, you
Investments in real estate can take many forms,
can use a variety of investment vehicles to fulfill
ranging from raw land speculation to limited-
those goals.
partnership shares in commercial property, even real
estate mutual funds.
Common Stock The returns on real estate come from rents, capital
Common stocks are a form of equity—as an gains, and certain tax benefits.
investment, they represent an ownership interest in a
corporation. Each share of stock symbolizes a
fractional ownership position in a firm; for example, Finding Investment Information
one share of common stock in a corporation that has How to become an INFORMED INVESTOR?
10,000 shares outstanding would denote a 1/10,000
Some people know more about investing than others.
ownership interest in the firm.
As a result, they may use certain investment vehicles
or tactics that aren’t even in another investor’s
Bonds vocabulary.

In contrast to stocks, bonds are liabilities—they’re Never start an investment program, or buy an
IOUs of the issuer. Governments and corporations investment vehicle, unless you’re thoroughly familiar
issue bonds that pay a stated return, called interest. with what you’re getting into!
An individual who invests in a bond receives a
stipulated interest income, typically paid every 6
months, plus the return of the principal (face) value of 4 types of investment information that
the bond at maturity. you should follow on a regular basis:
 o Economic developments and current events: To It is important for the investor to invest indifferent
help you evaluate the underlying investment high-performing sectors. If the market volatility has a
environment positive impact on stocks, the investor will be able to
o Alternative investment vehicles: To keep you generate higher returns on them. If it has a positive
abreast of market developments impact on debt, the investor will be able to make the
o Current interest rates and price quotations: To most out of mutual funds.
monitor your investments and stay alert for
developing investment opportunities
o Personal investment strategies: To help you Helps avail of benefit of compounding of interest
hone your skills and stay alert for new It is important to keep in mind that if you are
techniques as they develop investing in two different funds, the fund holding for
both the schemes should be different; otherwise,
diversification does not make any sense.
The Rewards of Diversification
Diversification is a risk management strategy that
mixes a wide variety of investments within a portfolio. Helps keep the capital safe
A diversified portfolio contains a mix of distinct asset Diversification allows investors to achieve their
types and investment vehicles in an attempt at investment plans while maintaining the investment
limiting exposure to any single asset or risk. risk at a minimum. It is also a method of playing safe
It aims to maximize returns by investing in different in the volatile market.
areas that would each react differently to the same
event.
Lets you shuffle amongst investments
It allows investors to shuffle their investments and
Benefits of Diversification take advantage of the market movement.
Reduces the impact of market volatility It lets investors spread their investment across
A diversified portfolio minimizes the overall risk different asset classes and increase annual returns.
associated with the portfolio. Since investment is
made across different asset classes and sectors, the
Offers peace of mind
overall impact of market volatility comes down.
The biggest advantage of diversification is peace of
mind. When the total investment is divided amongst a
Reduces the time spent in monitoring the portfolio number of asset classes, an investor will not be
A diversified portfolio is more stable because not all stressed about the performance of the portfolio.
investments will perform badly at the same time.
With diversification, you will have to spend lesser time Basic Concepts of Investing
on the same and the portfolio will not require a lot of
maintenance. ✓ Investing in Stocks and Bonds
✓ Mutual Funds
✓ Other Investment Vehicles
Helps seek advantage of different investment
instruments
Investing for the Future
Diversification of the portfolio will balance the risk
and return associated with different funds. Even if • Investing is the use of long-term savings to earn
one fund does not perform well, the loss may be a financial return. It is a proven and powerful
compensated by the profits made from other funds. way to strengthen your financial position over
time.
• Investing is an essential part of providing for
Helps achieve long-term investment plans future needs. It provides a source of income in
 addition to a paycheck, allowing you to make Stages of Investing
money on money.

Why Should You Invest?

Investing Is a Way to Beat Inflation
Inflation is a rise in the general level of prices.
Inflation reduces your purchasing power over time. As
prices rise, it takes more money to buy the same
goods and services. Investors seek investments that
will grow faster than the inflation rate.

Investing Increases Wealth

Financial success grows from the assets that you build
up over time. Investing helps you accumulate wealth
faster than if you simply saved your excess cash in a
savings account.

Investing Is Fun and Challenging

What Is Your Investment Philosophy?
Investors make choices and hope to pick winners.
Once you gain experience, you can have fun choosing • Investors have to take risks that are
investments, buying and selling when the time is appropriate to reach their financial goals. The
right, and using your knowledge to plan for your task is to find the right balance and make
financial security. choices accordingly. You must weigh the risks
of an investment with the likelihood of not
reaching your goal.
Stages of Investing • Your risk tolerance is your ability to weather
changes in the values of your investments. To
Stage 1: Put-and-Take Account be successful in investing, your tolerance for
Take money out as needed to pay your bills. This risk must be factored into your investment
money is your emergency fund, or your “put-and- philosophy.
take” account.
Experts recommend that you set aside three to six
Types of Risk Tolerance
months’ net pay in this fund.
Conservative
Stage 2: Initial Investing
you accept very little risk and are generally rewarded
Investing really begins when you have “excess”
with relatively low rates of return for seeking the twin
savings beyond what you need for daily expenses and
goals of a moderate amount of current income and
emergencies.
preservation of capital.
Your initial investing, which is your first amount set
aside for investment purposes only, should be
conservative with low risk. Moderate
Stage 3: Systematic Investing Seek capital gains through slow and steady growth in
the value of their investments along with some
Systematic investing involves making investments on
current income. They invite only a fair amount of risk
a regular and planned basis.
of capital loss.
Aggressive - Secured bond pledges specific assets as
collateral in the indenture or has the
If you choose to strive for a very high return by
principal and interest guaranteed by
accepting a high level of risk. Aggressive investors
another corporation or a government
primarily seek capital gains. Many such investors take
agency.
a short-term approach, remaining confident that they
- Unsecured bond (or debenture) does not
can profit substantially during major upswings in
name collateral as security for the debt
market prices.
and is backed only by the good faith
• Callable An issuer might desire to exercise a
Should You Take an Active or Passive call option when interest rates drop
substantially.
Investing Approach?
Active Investor Passive Investor
An investor who wishes Does not actively Types of Bonds
to manage her own engage in trading 1. Maturity-based bonds Bonds categorized based on
account by carefully securities or monitoring the length of time it will mature.
studying the economy, his or her investments;
• Treasury Bills (T-bills)
market trends, and seeks to match the
o Bonds that mature in less than 1 year
investment alternatives; market return via
(short term)
regularly monitoring mutual funds or other
o The most common tenors (length of
these factors; and managed investments in
maturity) for T-bills are 91 days, 181
buying and selling three the longer term.
days, and 364 days.
to four times a year,
o Sold at a discount from their face value
with or without the
but the investor will get the full amount
advice of a professional.
upon maturity, like a zero-coupon bond)
• Treasury Bonds (T-bonds)
o Bonds that have tenors of common
maturity lengths (e.g., 5-year, 10-year,
Stocks and Bonds 20-year, and 30-year).
• First, bonds are loans (debt) that must be repaid o Pays investor coupon interest at regular
at maturity. Stocks are shares of ownership intervals for the duration.
(equity) in the corporation, not loans.
• Second, corporations must make the semiannual 2. Issuer-based bonds These are bonds that are
interest payments on their bonds. Corporations are classified according to who issued it
not required to pay dividends on stocks.
• Government Bonds
o Bonds that are issued by various
Bonds government agencies
o Low(er) default risk
It’s a great way of raising an enormous amount of
• Municipal Bonds
capital without being tied to a singular lender. And
o long-term debts issued by local
this is why bonds are heavily-leveraged by the
governments (cities, states, and
government and big corporations.
various districts and political
Characteristics: subdivisions) and their agencies.
• Coupon Rate coupon rate/coupon/coupon o Their proceeds are used to finance
yield/ stated interest rate. public improvement projects, such as
The interest rate printed on the certificate roads, bridges, and parks, or to pay
when the bond is issued. ongoing expenses.
• Secured or Unsecured • Corporate Bonds
 o Bonds issued by public and private • Stocks represent potential income because the
companies investor own a piece of the future profits of the
o Potentially higher returns vs gov’t- company.
issued banks Highly liquid
o Multiple options
Preferred Stock

Benefits of Investing in Bonds • Type of fixed-income ownership security in a

corporation that pays fixed dividends.
o Provides better returns on your money • Owners of a preferred stock receive a fixed
compared to banks dividend per share that corporations are
o Serves as another investment tool for required to distribute before any dividends are
diversifying your investments paid out to common stockholders.
o Lets you preserve your capital and earn • They receive no extra income from the stock
interest from it at the same time (especially other than their fixed dividend, even when the
short and medium-length bonds) firm is highly profitable.
o Bonds are tradeable (liquid)
o Bondholders receive some form of protection
• Sometimes a corporation decides not to pay
for their investment, when a company goes
dividends to preferred stockholders because it
bankrupt, the bondholders typically receive a
lacks profits or simply because it wants to retain
portion (if not the face value) of their
and reinvest all of its earnings.
investment
• When the board of directors votes to skip (pass)
o There are different types of bonds that you
making a cash dividend to preferred
can choose from
stockholders, holders of cumulative preferred
stock must be paid that dividend before any
future dividends are distributed to the common
Investing in Stocks
stockholders.
• When you buy a share of stock, you are
buying an ownership interest in a company.
• A public corporation is a company whose Convertible preferred stock
stock is traded openly on stock markets. A unique security occasionally sold by companies, can
• People who own shares of stock are called be exchanged at the option of the stockholder for a
stockholders, or shareholders, of the specified number of shares of common stock.
corporation.
Dividends are money paid to stockholders from the
corporation’s earnings (profits). Why Invest in Mutual Funds?
Example, if you owned 10,000 shares and a company • Diversification
declared a P1 dividend (per share), you would receive Diversification is a primary motive for
P10,000. investing in mutual funds. This ability to
diversify allows investors to sharply reduce
Capital Gains - an increase in the value of the stock their exposure to risk by indirectly investing
over time. in several types of securities and companies
Example, if you bought stock for P5 per share and the rather than just one or two.
corporation thrived, its stock price might go up to P10 • Professional Management
per share. While management is paid a fee for its
services, the contributions of a full-time
expert manager should be well worth the fee.
Common Stock • Liquidity
• The most basic form of ownership of a Mutual funds allow you to convert your
corporation. shares into cash at any time. However, there is
 some risk of loss if the fund’s price is low when for higher return over
you choose to sell. the long term.
• Convenience
Mutual funds make it easy to invest, and most
don’t require much capital to get started.
Opening a mutual fund account is about as
easy as opening a checking account. Just fill
in a few blank spaces, send in the minimum
amount of money, and you’re in business!

How do you earn in Mutual Funds?

• Your earnings depend on what’s called the
NAVPS (Net asset value per share)
• NAVPS an expression for net asset value that THE RISKS AND REWARDS OF INVESTING
represents the value per share of a mutual Most rational investors are motivated to buy or sell a
fund. security based on its expected (or anticipated)
return: buy if the return looks good, sell if it doesn’t.

The Risks of Investing

• Business Risk
The possibility that the firm will fail to
maintain sales and profits or even to stay in
Types of Mutual Funds? business The degree of uncertainty
Money Market Funds I just want to leave my surrounding the firm’s cash flows and
invest in short-term cash for a short period subsequent ability to meet operating
debt instruments like of time and earn from it, expenses on time
time deposits. too. • Financial Risk
Concerns the amount of debt used to finance
the firm as well as the possibility that the firm
Bond Funds invest in I want my money to will not have sufficient cash flows to meet
long-term debt earn but my investment these obligations on time.
instruments of should be kept relatively • Market Risk
governments or stable. Results from the behavior of investors in the
corporations. securities markets that can lead to swings in
security prices
Balanced Funds I want my money to • Purchasing Power Risk
typically contain a earn more and I can In periods of rising prices (inflation), the
component of stocks afford to lose some of purchasing power of Peso declines.
and bonds. Typically, my investment for • Liquidity Risk
balanced funds stick to higher return. The risk of not being able to liquidate (to sell)
a fixed asset allocation an investment conveniently and at a
of stocks and bonds, reasonable price
such as 70% stocks and • Event Risk
30% bonds. Occurs when something substantial happens
Equity Funds invest I want to maximize the to a company and that event, in itself, has a
primarily in shares of potential of my money sudden impact on the company’s financial
stock. condition.
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 interchangeably used
with Life Assured.
Sometimes referred to as
the coverage. It is the
Insurance Policy
amount that the insurer
• Is a contract between you (the insured) and an agrees to pay on death
insurance company (the insurer) under which the of the insured person or
insurance company agrees to reimburse you for occurrence of any other
any losses you suffer according to specified insured event.
terms.
Sum assured Beneficiary The person
• You pay a relatively small certain amount (the
who receives the
insurance premium) in exchange for a promise
benefits of an insurance
from the insurance company that they’ll reimburse
policy upon its maturity
you if you suffer a loss covered by the insurance
policy. Policy tenure The ‘policy tenure’ is the
duration for which the
policy provides life
R.A. 10607 insurance coverage.
As defined under Republic Act no. 10607, AN ACT Premium The consideration given
STRENGTHENING THE INSURANCE INDUSTRY, FURTHER by the insured in
AMENDING PRESIDENTIAL DECREE NO. 612, OTHERWISE exchange for the
KNOWN AS “THE INSURANCE CODE”, promise of the insurer to
pay a stipulated sum on
the event of a loss
SEC. 181. covered under the
Every contract or undertaking for the payment of insurance contract.
annuities including contracts for the payment of lump Riders An additional paid-up
sums under a retirement program where a life feature to widen up the
insurance company manages or acts as a trustee for scope of the base life
such retirement program shall be considered a life insurance policy. Riders
insurance contract for purposes of this Code are bought at the time
of purchase or on policy
anniversary
Basic Terms Used in a Life Insurance
Death Benefit What life insurance
Policy company pays to the
Insurance Policy The written contract of nominee in case the life
insurance assured dies during the
policy tenure.
Policy Holder The policyholder is the
one who proposes the
purchase of the life
insurance policy and
pays the premium. The Economic Uses of Life Insurance
policyholder is the
• Life insurance makes the family financially secure
owner of the policy and
after the untimely death of the breadwinner
s/he may or may not be
the life assured • Life insurance is also a savings instrument
• Life insurance helps in meeting responsibilities of
Insured The party to be people even after death like higher education of
indemnified in case of a children, their marriages, etc.
loss. It is
• Life insurance also provides old age benefits, which cover. The reasons could be many, including high
can be had in the form of annuities or a lump sum premiums, applicability of too many conditions
after retirement. and a host of exclusions. Health insurance can be
• Partners of a partnership firm can get the lives of seen as a weapon of social and economic
the partners insured in order to repay the share of empowerment of the poor.
the dead partner to the heirs.
• A firm can get the life of its key man insured
• Group insurance policies can also be taken as a Types of Health Insurances
welfare measure on the lives of the employees as a Disability income One of the oldest
whole, improving and boosting the morale of the insurance coverages offered by
employees resulting in improved productivity. health insurers.
Disability income
insurance provides
Life Insurance Riders compensation to the
Riders are additional benefits that can be bought and insured when he is
added to a basic life insurance policy. They allow you unable to perform his
to customize a policy and can provide several kinds of regular duties due to
protection if you meet their conditions. sickness or due to
injuries arising out of an
accident. It provides
• Accidental Death Rider - An accidental death security against loss of
rider pays out an additional amount of death income.
benefit if the insured dies as the result of an Medical expense Coverage is extended
accident insurance only when the insured is
• Critical illness - Under this rider, you pay an hospitalized for the
extra amount to get yourself covered in case treatment of the insured
you are being diagnosed with any of the for injuries or sickness.
critical ailments mentioned in the policy
Insurers directly pay
document.
the actual medical
• Accelerated Total and Permanent Disability - expenses to the
A cash benefit deducted from the base plan concerned hospital
and paid in advance in case of sickness or where the insured took
injury. treatment.
Major medical insurance Covers major medical
Insuring Your Health policy expenses incurred by
the insured person
• Health insurance is a contingent claim contract
on the insured incurring additional expenses or The insurer pays a part
losing income because of incapacity or loss of of medical expenses and
good health. the remaining has to be
• The risk of poor health includes both the payment borne by the insured.
of catastrophic medical bills and the loss of
earned income. Unless human beings have
adequate health insurance, or private savings or Protecting Your Property
financial assets, or other sources of income to Property Insurance Insurance coverage that
meet these expenditures, they will otherwise feel protects real and
insecure. personal property from
• Health insurance rightly provides timely and catastrophic losses
affordable medical help. But unfortunately, not all caused by a variety of
those who need are able to take this insurance perils, such as fire, theft,
 vandalism, and In summary, the motor car insurance shall cover the
windstorms. following:
Liability Insurance Insurance that protects • Bodily injury or death of a third party.
against the financial • Property damage to third parties
consequences that may • Loss of or Damage to the insured vehicle
arise from the insured’s
responsibility for
property loss or injuries Comprehensive Car Insurance
to others.
“compre”

Most property insurance contracts define the

property covered and name the perils—the causes of • It’s not mandatory, but it is highly recommended
loss—for which the insured will be compensated in to buy one, especially if you use your vehicle every
case of a claim against their policy. day.
• a comprehensive insurance protects you, your car,
as well as your passengers from an extended list of
PROPERTY INSURANCE road-related risks and hazards
As a homeowner, you need an insurance that provides
property coverage for potential losses to both the Reasons for a Comprehensive Car
structure of the house and its contents. Included are
Insurance
damages resulting from:
• CTPL insurance is not enough because
• Fire and Lightning
someone a good driver
• Earthquake Fire & Earthquake Shock
• comprehensive insurance provides financial
• Typhoon & Flood protection to you and your car by covering
• Riots, Strikes and Malicious Damage car repairs and insuring you against damage,
• Bursting or Overflowing of Water Tanks, Pipes liabilities caused by collision, car theft,
& Fittings floods, and landslides, among many road
• Sprinkler Leakage mishaps.
• Volcanic Eruption • Unlike CTPL insurance, there are no fixed rates
• Extended Coverage (Smoke Damage, Explosion, when it comes to comprehensive car insurance
Vehicular Impact & Falling Aircraft) in the Philippines. Every comprehensive policy
coverage differs by price as they depend on
the current state of your vehicle.
MOTOR/vehicle INSURANCE • Factors that may affect policy rate are:
• It is a contract whereby one (1) party
promises for a consideration to indemnify the Model Usage Fair Market Value
other for direct loss or damage of the insured
Make Accessories Depreciation
vehicle and to pay any claim for death of or
bodily injury to and property damage of any Year Safety Features
Third Party caused by or arising from the
ownership or operation of the vehicle.
• Car insurance is first of all required by law Planning for Retirement
• Your car insurance is for your financial • Retirement planning is the process of determining
protection when you have damages to your retirement income goals, and the actions and
car or cause damage to another vehicle decisions necessary to achieve those goals.
Retirement planning includes identifying sources
of income, sizing up expenses, implementing a
savings program, and managing assets and risk.
• Future cash flows are estimated to gauge whether returns are completely
the retirement income goal will be achieved. tax-free.
• Retirement planning is ideally a life-long process. Insurance Plans Another way to invest
You can start at any time, but it works best if you for your retirement is
factor it into your financial planning from the through insurance
beginning. plans, wherein
contributions lead to
compensations. Aside
The Three Biggest Pitfalls to Sound from the financial
Retirement Planning protection it can
Because when it comes to retirement planning, people provide your family
tend to make three big mistakes: after upon your death,
insurance plans can
- They start too late. serve as your income
- They put away too little. source upon retirement.
- They invest too conservatively. Financial Funds Banks, insurance
companies, and other
institutions offer a
5 of the best retirement fund methods variety of funds
in the Philippines already invested in a
diverse set of
Pension Plans Provide you with industries. Bonds,
monthly allowances or stocks, and other
a whole lump sum investments can be
amounting to your quite complicated.
total contributions. One These institutions
of the most accessible manage your money for
pension plans in the you and enable you to
Philippines is facilitated participate in these
by the Social Security kinds of investments,
System (SSS). without giving you any
PERA Personal Equity PERA is a type of stress.
Retirement Account retirement investment Real Estate The value of your house
plan that can only be or condominium unit
availed through banks, appreciates as the years
insurance companies, or go by, especially if you
any other administrator have chosen a good
accredited by the location. In addition,
Bangko Sentral ng owning property that
Pilipinas (BSP), the can eventually be
Insurance Commission, rented out can give you
and the Securities and a source of income once
Exchange Commission. you have retired.

PERA is a voluntary
retirement contribution
Preserving Your Estate
plan that gives you the
freedom to save and • Estate planning is the preparation of tasks that
invest up to ₱100,000 serve to manage an individual’s asset base in the
annually. Also, the event of their incapacitation or death.
 The planning includes the bequest of assets to amount in taxes before
heirs and the settlement of estate taxes. Most they can receive their
estate plans are set up with the help of an inheritance. Through
attorney experienced in estate law. estate planning, this cost
can be minimized
significantly.
• The process of developing a plan to administer and
You eliminate family Naming beneficiaries and
distribute your assets after death in a manner
disputes specifying their
consistent with your wishes and the needs of your
inheritance can minimize
survivors, while minimizing taxes.
disagreements between
family and relatives.
• This process helps people accumulate enough
capital to meet college education costs and other You enjoy peace of mind Having a plan in place
special needs, provide financial security for family means you can sleep at
members after the death of the head of household, night knowing the future
take care of themselves and their family during a of your loved ones is safe
long-term disability, and provide for a comfortable and secure.
retirement.

It also includes plans to manage your affairs if you

become disabled and a statement of your personal
wishes for medical care should you become unable
to make them clear yourself.

Will - A written and legally enforceable document

expressing how a person’s property should be
distributed on his or her death.

Intestacy - The situation that exists when a person

dies without a valid will. “draw the will the decedent
failed to make”

5 Reasons Why Estate Planning is

Important
Your estate will never go Naming your beneficiaries
to unintended ensures that they will be
beneficiaries the only ones who will
enjoy what you leave
behind.
You ensure your family’s Estate planning, through
way of life investments and insurance,
provides a financial buffer
so your family can
continue living as
intended.
You minimize taxes for By law, your beneficiaries
beneficiaries must pay a considerable