PERSONAL FINANCE
THE 5 C'S OF CREDIT
1. Character - Summarizes a
borrower's
overall
trustworthiness, personality
and credibility
2. Capacity - Indicates a
borrower's ability to repay a
loan
based
on
their
available cash flow
3. Capital - Demonstrates the
borrower's
level
of
commitment
4. Conditions - The overall
health of the economy and
specifics of the loan
5. Collateral - A valuable asset
a borrower pledges to
secure a lender's interests
in the loan balance
CREDITWORTHINESS
is a lender's willingness to
trust you to pay your debts
a
borrower
deemed
creditworthy is one a lender
considers willing, able and
responsible
enough
to
make loan payments as
agreed until a loan is repaid
FACTORS TO
DETERMINE
CREDITWORTHINESS
1. INCOME AND
DEBT
2. CREDIT SCORES
3. CREDIT REPORTS
4. COLLATERAL
5. DOWNPAYMENT
SIZE
6. CO-SIGNERS / COBORROWERS /
GUARANTORS
Lesson 6: Creditworthiness
FACTORS TO DETERMINE CREDITWORTHINESS
INCOME AND DEBT
In order to repay your debt, you’ll
need enough money to make your
monthly payments on top of your
living expenses.
Lenders use your income and debt
to calculate your Debt-to-Income
(DTI) Ratio
DTI measures the percentage of
your monthly income that’s claimed
by your debt obligations; the lower
your DTI, the more creditworthy you
appear
DEBT-TO-INCOME (DTI) RATIO
To calculate DTI, figure out how much you pay each month toward debt payments
and divide that figure by your total gross monthly income
For example, if each month you pay P10,000 for your mortgage, P4,000 for your
student loan payment, P1,000 for credit card bills, and P5,000 for other miscellaneous
debt payments. Total Monthly Debt Obligation P20,000.
Then imagine your annual salary before tax is P600,000. Divide P600,000 by 12 to find
your gross monthly income, in this case P50,000
Total Monthly Debt Obligation P20,000
Total gross monthly income P50,000
Finally, divide your total monthly debt obligation (P20,000) by your gross monthly
income (P50,000) and then multiply the resulting figure by 100 to convert it to a
percentage.
DTI = P20,000 / P50,000 = 0.4 x 100 = 40%
DTI shows that 40% of gross monthly income is going toward debt payments each
month, and 60% is left over for other monthly costs
Gross or Net? A lot of people ask
why DTI uses gross income
instead of net income (the
amount you actually take home).
Lenders use the gross because
it's both com- parable and
stable: people may have different
payroll deductions, and those are
more likely to change during the
year than salary. For a truer
picture of your DTI, use your net
income in the calculation.
CREDIT SCORES
one of the most important factors
lenders use to determine your
creditworthiness.
a
higher
your
credit
score
represents
responsible
debt
management
skills
and
the
likeliness to meet your payment
obligations; lower scores pose a risk
to lenders.
5 METHODS TO RAISE YOUR CREDIT SCORE FAST
1. Start paying off your debts. - Your score is affected by the percentage of your total available
credit that you're actually using the higher your debts, the more you're using of your total,
and that's not good for your credit.
2. Keep your old credit card accounts open. - The average age of your accounts is important
factor used in calculating your score. Pay off the debt on those cards and don't use them
anymore.
3. If you don't have a credit card, go get one. - Having a variety of different types of credit is
good for your credit score, meaning that it's beneficial to have at least one credit card.
4. Dispute incorrect items on your credit report. - A vast majority of credit reports on file
contains some errors, and those errors rarely "self-correct" over time. Having such items
removed from your credit report will raise your credit score.
5. Pay all your bills on time. Late payments are very bad for your credit score, and the more late
payments you have within a short period of time, the worse that is for your score.
Uayan, 2023
PERSONAL FINANCE
LESSON 6: Creditworthiness
CREDIT SCORES
Landlords, who often run credit checks when deciding whether to rent you an
apartment and how large a security deposit you must put down
Auto insurers, which may check your credit score when setting your premiums
Utility companies, which often perform credit checks before letting you open an
account or borrow equipment
Prospective employers, which may check your credit as part of a pre-hiring
background check
HOW TO INCREASE
YOUR INCOME AND
LOWER YOUR DEBT?
CRUSHING DEBT:
SNOWBALL
METHOD
AVALANCHE
METHOD
List your debts in
List your debts in
order from the
the order from
highest interest
lowest balance to rate to the lowest.
largest. Don't pay
Don't pay
attention to the
attention to the
interest rates here.
balance.
Maximize
Maximize payments payments to the
debt with the
on the smallest
debt. But do make highest interest
rate (while
the minimum
payments on your making minimum
payments on the
other debts!
others).
When you've paid
When you've paid it it off, move on to
off, move on to the the next-highest
next smallest until interest debt until
you've worked
you've worked
through your list.
through your list.
TWO METHODS FOR TACKLING DEBT
There are 2 common ways to
approach tackling debt:
SNOWBALL
(focuses on total
debt size as a
priority)
AVALANCHE
(focuses on
highest interest
as a a priority)
Make minimum
payments on each
debt monthly
Make minimum
payments on
each debt
monthly
Make extra
payments on the
smallest loan
Make extra
payments on the
highest interest
rate loan
When paid off,
move to the next
highest loan debt
When paid off,
move to the next
debt with the
highest interest
rate
Lenders often use credit scores to help decide
the interest rates they charge. On average, it
costs lenders more to manage missed payments
and unpaid loans among borrowers with lower
credit scores than it does to manage accounts
for less risky borrowers with high scores. Lenders,
therefore, typically charge higher interest rates
to borrowers with lower credit scores and offer
better borrowing terms to those with higher
scores.
CREDIT REPORTS
Your credit score is a number, but to calculate that number, the data comes from your
credit report.
Credit Bureaus generates a credit report with historical data about your current and
past debt obligations.
Lenders look at your credit report to review specific details about your debts
COLLATERAL
Lenders may consider savings, real estate holdings, investments and other financial
assets that show you have resources you can draw from to repay a loan.
Some lenders require collateral—something of value, like your car, or house that
secures the loan—to reduce the risk of default after lending you money. If you get a
loan that requires collateral and you fall behind on your payments, the lender can
repossess the item you pledged
Taking out a loan with collateral can sometimes increase your creditworthiness.
DOWNPAYMENT SIZE
A down payment is an up-front partial payment for a large purchase, like a house or
car.
The bigger the down payment you make on a loan, the more skin you have in the
game and the smaller the amount you’ll need to borrow.
Lenders may also reward large down payments with lower interest rates.
RCO-SIGNERS / CO-BORROWERS / GUARANTORS
Co-signers help make the loan less risky for the lender because co-signers agree to
repay the loan if you stop making payments.
The lender will also evaluate their creditworthiness, which can help you receive more
favorable terms.
If you choose to use a co-signer, it’s vital that you repay your debt obligations on time.
Any late payments you make will hurt both you and your co-signer’s credit.
HOW TO ESTABLISH CREDIT
1. You need a credit history to get credit, and you can't get credit without a credit history.
If no one will give you credit, how should you develop a history of responsibly paying
your debts?
THE TRICK TO ESTABLISHING GOOD CREDIT IS TO MAKE SURE YOU PAY EVERY BILL
AND MAKE EVERY PAYMENT ON TIME.
TIPS:
Don't go into debt to build your credit.
An "excellent" credit rating takes up to seven years to build. An "average" or "good"
rating can be built in one or two years.
A credit report details the past. A credit score predicts your future credit behavior.
Uayan, 2023
PERSONAL FINANCE
MAKING AUTOMOBILE
DECISIONS
Evaluate automobile needs and
determine what is affordable
and not
Implement a plan to research
and select a new or used
automobile
Decide between automobile
financing alternatives
Decide whether to buy or lease
a car
Be an informed automobile
consumer
WHY BUY AUTOMOBILE?
CONVENIENCE
HAVE YOUR OWN FREEDOM
CAN TAKE ROAD TRIPS
SAVES TIME
GREAT FOR FAMILIES
SHOWS RESPONSIBILITY
BUYING AN AUTOMOBILE
ASSESS YOUR NEEDS
SET YOUR BUDGET
RESEARCH THOROUGHLY
SELECT BASED ON NEEDS
DECIDE IF YOU WANT TO LEASE
OR BUY
NEGOTIATE PRICE
ARRANGE
FAVORABLE
FINANCING
UNDERSTAND TERMS OF SALE
BEFORE PURCHASE
MAINTAIN AND REPAIR AFTER
PURCHASE
TEST DRIVE
LESSON 6: Creditworthiness
ASSESS YOUR NEEDS
How many passengers do you need to carry?
What type of driving do you do? Is it primarily highway, surface streets,
off-road?
Do you have a long commute and, because of that, is fuel economy
important to you?
Do you need all-wheel drive?
What are your must-have features? Think backup camera, leather seats,
Apple CarPlay, etc.
What safety features are important to you? Do you want blind-spot
monitoring, lane departure warning and automatic emergency braking,
for example?
What cargo capacity do you need?
Will you be using children's car seats?
Will you be doing any towing?
How much garage or parking space do you have?
RESEARCH THOROUGHLY
CHOOSING A CAR
AFFORDABILITY
OPERATING COSTS
GAS, DIESEL, OR HYBRID
NEW, USED, OR NEARLY
USED
WEIGH THE COST OF
OWNERSHIP
SIZE, BODY STYLE, AND
FEATURES
TRADING IN OR SELLING
PRESENT CAR
FUEL ECONOMY
SAFETY FEATURES
CONSIDER OTHER CARS IN
THE CLASS
FIND CARS FOR SALE
DECIDE IF YOU WANT TO LEASE
OR BUY
Leasing
You can drive a more expensive
car for less money.
You can drive a new car with
the latest technology every few
years.
Most repairs will be covered
under the factory warranty.
There are no trade-in hassles at
the end of the lease.
Lower monthly payments
Buying
You have more flexibility to sell
the car whenever you want.
You can modify the car to your
tastes.
There are no mileage penalties
if you drive a lot.
Your car expenses will be lower
in the long run provided you
pay off the car and keep it a
while.
TEST DRIVE
Leasing
You can drive a more expensive car for less money.
You can drive a new car with the latest technology every few years.
Most repairs will be covered under the factory warranty.
There are no trade-in hassles at the end of the lease.
Lower monthly payments
Buying
You have more flexibility to sell the car whenever you want.
You can modify the car to your tastes.
There are no mileage penalties if you drive a lot.
Your car expenses will be lower in the long run provided you pay off
the car and keep it a while.
Uayan, 2023
PERSONAL FINANCE
LESSON 6: Creditworthiness
MAKING HOUSING DECISIONS
Evaluate housing needs and
determine what is affordable
and not
Select a home that meets
personal needs and negotiate
an acceptable price
Choose
between
financing
options and know how to apply
for and qualify for a mortgage
Decide whether to buy or rent a
house
Be
an
informed
housing
consumer
HOUSING AS BASIC HUMAN
RIGHT
The United Nations identifies
adequate
housing
as
a
fundamental
human
right,
defining it as “the right to live
somewhere in security, peace and
dignity.” It further clarifies these
rights to include security of tenure,
adequate conditions, protection
against forced evictions and
access to affordable housing,
according
to
the
UN's
International
Covenant
on
Economic, Social and Cultural
Rights
Adequate housing is essential for
human survival with dignity.
Without a right to housing many
other
basic
rights
will
be
compromised including the right
to family life and privacy, the right
to freedom of movement, the right
to assembly and association, the
right to health and the right to
development
RENTING (LEASING)
1. When is the rent due?
2. Is there a grace period for rent
payments? (Rent may be due on
the 1st with a grace period until
the 5th, for example.)
3. How do you pay the rent (online,
automatic debits, by check)?
4. What is the fee for late rent
payments?
5. How long is the lease? (Most
people assume it will be twelve
months, but that's not always the
case.)
6. What utilities and other services
(like pest control or parking
spaces) are included in the rent?
7. How often can the rent be raised?
8. Will you be responsible for any
routine maintenance (like lawn
care)?
9. Who
should
you
call
for
maintenance issues (like a leaky
faucet)?
10. How much notice will you get
before the landlord enters your
apartment?
OWNING
PROS
CONS
STABILITY
Monthly payments on a fixed rate loan never
change.
REPAIRS & MAINTENANCE
You are responsible for the maintenance of your
home.
EQUITY
You benefit from positive moves in the market,
not your landlord.
LOCATION
You may not be able to afford a home in the
exact location you prefer.
TAXES
You may get tax benefits by deducting
mortgage interest or property taxes.
FLEXIBILITY
If you wish to move, it's likely you'll have to sell
your home first.
PERSONALIZATION
You can improve, decorate & modify your home
to suit your lifestyle.
ADVANTAGE
Inflation hedge: Build wealth as home appreciates in value. However, Property values can
fall. That happened during the 2008 nationwide housing crisis, and more local conditions
can cause this, too. Your building will depreciate over time, especially if you don’t maintain it.
Sense of community, stability and security
Greater privacy: You own the property so you can renovate it to your liking, a benefit renters
don’t enjoy.
Home office: The work-at-home phenomenon may not vanish after the pandemic fades,
which means more of us will need a home office
DISADVANTAGE
High upfront costs: Closing costs on a mortgage can run from 2% to 5% of the purchase
price, including numerous fees, property taxes, mortgage insurance, home inspection, firstyear homeowner’s insurance premium, title search, title insurance, and points, which are
prepaid interest on the mortgage. It can take about five years to recover those costs.
Continuing costs: As you try to sell your home, you still have to keep making mortgage
payments and maintain it. If you’ve bought another house before selling yours, that means
paying for two homes.
RENTING
PROS
CONS
REPAIRS & MAINTENANCE
The Landlord handles all repairs &
maintenance.
STABILITY
Your rent can increase at the end of every lease
cycle.
LOCATION
You may be able to rent closer to your desired
neighborhood.
TAXES
There is no tax deduction for rental payments.
INSURANCE
Renter's insurance is less expensive than
homeowner's insurance.
EQUITY
You don't get any of the benefits of an
increasing market.
FLEXIBILITY
You can move at the end of your lease without
having to sell your home.
ADVANTAGE
Rent payments may be lower: This certainly can be true if you’re renting an apartment, and
it also may be the case when renting an identical house
Low upfront costs: There is no down payment. Except for a security deposit – often the cost
of a month’s rent – you don’t have to write a big check or finance the costs required to get a
mortgage
No HOA dues: Some homes are in developments with homeowner’s associations that
require monthly dues on top of all the other expenses, and they aren’t optional. Not so with
renting.
DISADVANTAGE
You can’t change the property: Would you like a deck for entertaining? Would you prefer a
fenced yard? Want to paint the bedroom a greyish blue? There’s nothing you can do about
any of that in a rental, except complain; see where that gets you.
You aren’t building value: When you leave your rental, all you take with you is yourself and
the furniture and dishes that belong to you. It’s the property owner’s equity that grows, not
yours.
No credit score improvement: While paying a mortgage on time improves your
creditworthiness, you don’t get the same benefit from rent.
Uayan, 2023
PERSONAL FINANCE
PERSONAL RISK
1. People are always at risk of
contracting
a
long-term
sickness, dying prematurely, or
outliving their resources.
2. An individual's assets may lose
value or give an inadequate
return in accordance to financial
demands and objectives.
3. To know the personal risk, one
must determine what they
consider as their 'assets'.
Human Capital
Human capital is the net
present value of an individual's
future projected labor income.
Financial Capita
Financial capital is conjured up
of assets that the individual
already owns, which might
include
a
bank
account,
individual stocks, pooled funds,
a retirement account, and a
house.
PERSONAL RISK
MANAGEMENT
According to International Risk
Management Institute, Inc. (n.d.),
Personal Risk Management (PRM)
is the practice of adapting risk
management principles to meet
the
demands
of
individual
customers. It is the process of
identifying, measuring, and treating
personal risk (including, but not
limited to, insurance), followed by
setting the treatment plan into
action and evaluating changes over
time.
INSURANCE POLICIES
Car insurance
Life insurance
Homeowners / Renter's
insurance
Health insurance
Long-term disability
Short-term disability
Umbrella policy
Misconception about
Homeowners Insurance
Homeowners insurance is that it
is a luxury
You can only have insurance if it
is your own.
Lesson 7: Protecting Household Wealth
IDENTIFYING THE RISKS
RISKS COMES IN DIFFERENT FACES AND THEY CAN BE CLASSIFIED AS FOLLOWS (YADNYA
INVESTMENT ACADEMY, 2022):
INCOME RISK
Death
Disability
Health Risk
Unemployment Risk
Career Risk
Aging
EXPENSE RISK
Living beyond means •
Insufficient Income
Emergencies •
Unforeseeable
Circumstances
ASSET / INVESTMENT RISK
Not saving enough or investing wisely
enough to achieve financial objectives •
Incorrect investment mix for the goal
you want to achieve ·
Investing money and losing it (principal)
Inflation
Purchase Risk
Investing portfolio that is under or
undiversified
Return on investment (ROI) that isn't up
to par
Stolen or destroyed belongings
Depreciation ·
Information Security Risk
CREDIT RISK
Excessive amount of
debt
Accumulation of Bad
Debt
Overspending
on
debt-related costs •
Credit problems
TREATING THE RISKS
RISK MANAGEMENT METHODS
The basic methods for risk managementavoidance, retention, sharing,
transferring, and loss prevention and
reduction—can apply to all facets of an
individual's life and can pay off in the
long run (Yu, 2021).
Avoidance
Avoidance is a method for mitigating risk
by not participating in activities that may
incur injury, sickness, or death.
Retention
Retention
is
the
acknowledgment
and
acceptance of a risk as a given. Accepting risks
has the advantage of incurring no expenditures
and freeing up your resources for higher
priority, more severe threats.
Risk Sharing
Risk Sharing - also known as "risk distribution,"
means that the premiums and losses of each
member of a group of policyholders are
allocated within the group based on a
predetermined formula.
Reduction
The reduction strategy tries to lessen the
chances of the danger occurring or to
minimize the damage if it does occur.
Risk Transfer
Risk transfer is a risk management
approach that involves transferring risk to a
third party. In other words, risk transfer
entails one party taking on the obligations
of another.
HOW INSURANCE WORKS
Insurance
A
contract
between
oneself,
the
policyholder, and the insurance company
Policy limit
the maximum amount that the insurer will pay
Insurance policy
the contract between the policyholder and
the insurance company
Deductible
the amount the policyholder must pay before
the insurance company begins paying towards
covered expenses.
Insurance premium
the actual cost of the insurance plan that is
divided monthly
Beneficiaries
the people policyholders nominate to receive
the insurance benefit
The insurance company arranges an insurance policy that will protect the holder in case a
risk occurs in exchange for a premium.
The insurance company pools together the resources of a large number of people who have
similar risks to make sure that the few people who experience loss are protected.
If their property is accidentally lost, stolen, damaged, or destroyed, and the policyholder has
an insurance policy that covers the property for those risks, he can make a claim and draw
on that pool of money to help pay for repairs or replacements costs.
Insurance companies base their charges on the actuarial calculations of the risk they
insure.
Consequently, an individual who has a pre- existing sickness or works in a high-risk job may
be charged more premium than another individual who's healthy or working a normal job.
Uayan, 2023
PERSONAL FINANCE
Home Insurance
WHAT IS HOME INSURANCE?
Home insurance is a type of
property
protection
covering
damages and losses to a person's
house including the assets inside it.
THINGS TO CONSIDER WHEN
BUYING HOME INSURANCE
Structure of your Home
The size of your house and materials
used
in
construction
are
considerations when choosing your
insurance
policy.
These
factors
including the land it sits on contribute
to the overall rebuild cost which your
insurance should cover.
Contents of the Home
More often than not, the home
insurance won't pay for the complete
loss of your valuables inside. It would
be fair to create a just and realistic
estimate of everything inside your
house.
Coverage
The types of coverage in a home
insurance policy depend on the
package.
Legal
and
Alternative
Accommodation
Alternative
accommodation
is
temporary shelter provided by the
insurer in case your home is
uninhabitable or damaged.
Location
Home insurance is greatly affected by
crime rates in your area and proximity
to natural hazards.
HOW MUCH IS
COMPREHENSIVE CAR
INSURANCE?
FACTORS THAT MAY AFFECT YOUR
POLICY RATE ARE:
Model - the fancier the vehicle, the
more expensive the policy •
Make - luxury and foreign makes
are more expensive to insure
Year- older cars are cheaper to
insure
Usage - how worn out is the car?
Accessories - the number of
accessories can also increase the
rate
Safety Features - the safer the car
is, the cheaper it is to insure •
Fair Market Value - how expensive
is your car? ·
Depreciation - how new/old is your
car?
Lesson 7: Protecting Household Wealth
COMPANIES THAT OFFER HOME INSURANCE IN THE PHILIPPINES
MAPFRE
MAPFRE offers four types of policies which
are the Standard Home Insurance, Standard
Home Insurance Additional Benefits, with
Comprehensive
Home
Insurance
and
Comprehensive Personal Liability.
AIG
AIG Philippines lets you choose between AllRisk and Property Terrorism.
AXA Philippines
AXA's property insurance protects you
against natural and unexpected disaster.
Bank of the Philippine Islands (BPI/MS)
BPI Home Care Advantage is a comprehensive
insurance package covering the structure of a
person's private residence
UNDERSTANDING AUTO INSURANCE
PROPERTY
SUCH AS DAMAGE TO OR THEFT OF YOUR
CAR
LIABILITY
YOUR LEGAL RESPONSIBILITY TO OTHERS
FOR BODILY INJURY OR PROPERTY
DAMAGE
MEDICAL
THE
COST
OF
TREATING
INJURIES,
REHABILITATION AND SOMETIMES LOST
WAGES AND FUNERAL EXPENSES
DOS
GET QUOTES FROM SEVERAL INSURANCE
COMPANIES
ASK THE INSURANCE COMPANY ABOUT
DISCOUNTS
ASK IF YOU WILL GET A LOANER CAR
SHOULD YOU GET IN AN ACCIDENT •
CONSIDER PAYING YOUR POLICY IN FULL •
MAKE SURE YOUR CURRENT POLICY
REFLECTS YOUR CURRENT NEEDS
CTPL INSURANCE
Malayan Insurance
Malayan's property repayments for damages.
WHO IS COVERED BY AUTO INSURANCEAND UNDER WHAT CIRCUMSTANCES?
You and other family members on your
policy, whether driving your car or
someone
else's
car
(with
their
permission)
Provides coverage if someone who is not
on your policy is driving your car with
your consent
Your personal auto policy only covers
personal
driving,
whether
you're
commuting to work, running errands or
taking a trip
DONTS
FORGET TO REVIEW YOUR DRIVING
RECORD BEFORE SHOPPING FOR
INSURANCE
FORGET TO ASK YOUR EMPLOYER ABOUT
DISCOUNTS
JUST SIGN UP FOR THE MINIMUM
BE AFRAID TO SWITCH TO ANOTHER
COMPANY IF YOU FIND A BETTER DEAL
LATER ON
BUY A LOT OF UNNECESSARY EXTRAS,
SUCH AS TOWING INSURANCE
COMPREHENSIVE CAR INSURANCE
There are two types of auto insurance: Compulsory Third Party Liability (CTPL) and
Comprehensive Car Insurance (Compre). It's important to establish right off the bat that both
types are equally essential. Unlike comprehensive insurance, CTPL insurance is mandated in
the Philippines.
Compulsory Third Party Liability Insurance
It protects the owner of the vehicle from
financial obligations to anyone who is
injured or killed by the insured vehicle.
The CTPL insurance isn't that expensive,
compared to the problems you might face
on the road. If you plan to get a one-year
coverage, you'll need to pay Php560.00 for
private cars and PhP250.00 for motorcycles.
If you opt for a three-year coverage, private
cars can pay PhP1,610.00 and motorcycles
PhP720.00.
The CTPL only covers injury or death of a
third party. It does not cover the damages
of the insured vehicle and the driver, or any
damages to the property of the third party.
Comprehensive Insurance for Cars in the
Philippines
It's not mandatory, but it is highly
recommended to buy one, especially if you
use your vehicle every day.
A
comprehensive
insurance
provides
financial protection to you and your car by
covering car repairs and insuring you
against damage, liabilities caused by
collision, car theft, floods, and landslides,
among many road mishaps.
Without a comprehensive insurance, you're
basically just gambling with fate.
Uayan, 2023
PERSONAL FINANCE
How to Get Comprehensive Car
Insurance in the Philippines
Take the time to compare the rates
from different providers to find the
best deal possible. Once you've picked
out your provider, here are the
comprehensive
car
insurance
requirements to prepare:
Original vehicle receipt
Certificate of Registration of your
vehicle
Your driver's license
Another valid government ID
Photocopies of each document
Things to Remember When
Buying
Comprehensive
Insurance for Your Vehicle
Know your policy schedule
Don't skip the fine print
Consider your budget
Compare providers
Insurance
WHAT IS INSURANCE? According
to Jullia Kagan, insurance is a
contract in which an entity or an
individual
receives
protection.
Insurance is a way to manage your
risk. "When you buy insurance, you
purchase
protection
against
unexpected financial losses."
Insuring Cars and Homes
We can not deny that two of the
most common assets people buy
insurance for are their cars and
their houses/residences. These two
are possibly the biggest personal
assets an individual can own,
hence it is only natural that they
would want these two to be
insured.
Buying Auto Insurance
There are two types of insurance
that can be purchased for your
vehicle. These are Comprehensive
Car Insurance and Compulsory
Third Party Liability Insurance
(CPTL).
CPTL is the basic insurance that
you are required to have before
owning a vehicle, while the
Comprehensive Car Insurance is
optional. CTPL protects you from
any possible liability for a third
party caused bodily injury and/or
death in an accident arising from
the use of your motor vehicle. On
the other hand, Comprehensive
Car Insurance protects you, your
vehicle and passengers from
unforeseen events or accidents
such as floods, theft etc.
Lesson 7: Protecting Household Wealth
Car Insurance Company
MAPFRE Insular
10 years of casa eligibility
366 accredited repair shops
PHP 5,000,000 maximum total sum insured
Overnight accommodation - Yes, up to PHP
3,000 •
Towing - Yes, up to PHP 5,000
Vehicle removal crane services - Yes, up to
PHP 10,000
Malayan Insurance
3 years of casa eligibility
58 casa repair shops
PHP 7,500,000 maximum total sum insured
Overnight accommodation - Yes, up to PHP
1,000
Towing - Yes, up to PHP 4,000
Vehicle removal crane services - Yes, up to
PHP 8,000
Insurers also consider your car's depreciation
when determining the price of your insurance
New India Assurance
10 years of casa eligibility
30 accredited repair shops
PHP 3,500,000 maximum total sum insured
Overnight accommodation - Yes, up to PHP
1,500
Towing - Yes, up to PHP 4,000
Vehicle removal crane services - Yes, up to
PHP 10,000
Prudential Guarantee
10 years of casa eligibility •
PHP 3,000,000 maximum total sum
insured •
Overnight accommodation - Yes, up
to PHP 2,000 •
Towing - Yes, up to PHP 5,500 •
Vehicle removal crane services - Yes,
up to PHP 15,000
SGI Philippines
5 years of casa eligibility •
36 accredited repair shops •
PHP 5,000,000 maximum total sum
insured •
Overnight accommodation - Yes, up
to PHP 2,000 ·
Towing amount - Yes, up to PHP
5,000 •
Vehicle removal crane services PHP 10,000
Stronghold Insurance
10 years of casa eligibility
167 accredited repair shops
PHP 3,000,000 maximum total sum
insured
The Mercantile Insurance Corporation
10 years of casa eligibility •
77 accredited repair shops •
PHP 5,000,000 maximum total sum
insured •
Overnight accommodation - Yes, up
to PHP 2,000 •
Towing - Yes, up to PHP 5,000 •
Vehicle removal crane services - Yes,
up to PHP 10,000
Basic Car Insurance Terms You Need to Know
AT FAULT - REFERS TO THE PERSON/S WHO WERE AT FAULT OR RESPONSIBLE FOR THE
ACCIDENT
DEDUCTIBLE - REFERS TO THE AMOUNT YOU NEED TO PAY FIRST BEFORE THE
INSURANCE COMPANY CAN COVER THE REST OF YOUR EXPENSES
CLAIM - REFERS TO THE REQUEST FOR YOUR INSURANCE COMPANY TO COVER OR
REIMBURSE YOU FROM ANY EXPENSES DUE TO DAMAGES OR LOSS
DEPRECIATION - REFERS TO THE GRADUAL DECREASE IN VALUE OF YOUR CAR DUE TO
EVERYDAY USE
FAIR MARKET VALUE - REFERS TO THE ESTIMATED PRICE OF YOUR CAR ACCORDING TO
ITS MODEL AND SERIES
PREMIUM - REFERS TO THE PAYMENT FOR YOUR CAR INSURANCE
POLICY SCHEDULE - REFERS TO THE FULL DETAILS OF YOUR INSURANCE POLICY
(PRICE, COVERAGE, VALIDITY, ETC.)
PRIMARY DRIVER - REFERS TO THE PERSON/S WHO ARE COVERED TO DRIVE THE
VEHICLE UNDER THE EXISTING INSURANCE POLICY
SURCHARGE - REFERS TO THE INCREASE IN YOUR PREMIUM AFTER A VERY EXPENSIVE
CLAIM
THIRD PARTY - REFERS TO ANY PERSON OUTSIDE AND INSIDE THE CAR INVOLVED IN
AN ACCIDENT. NOTE THAT ANYONE RELATED TO YOU WON'T BE CONSIDERED A THIRD
PARTY.
Uayan, 2023
PERSONAL FINANCE
Lesson 7: Protecting Household Wealth
FILING AN ACTUAL
CLAIM (SUNLIFE)
STEP 1: Notify Sun Life about your
claim.
To file a claim, simply click the
Claim Notification Form (see links
below) and type the requested
information.
Claim Notification Form
Claim
for
Free
Diagnostic
Procedures
When all
completed,
button.
fields
click
have been
the Submit
You may also notify us by:
contacting
your
Financial
Advisor
visiting our nearest Financial
Store or Client Service Center
calling our Client Care at
telephone number (632) 88499888 from Mondays to Fridays,
8:00 am to 7:00 pm, or
mailing your notice to: Claims
Services
STEP 2: Know the requirements.
Important Reminders:
Submit certified true copies
only. Photocopies, except for
IDs, are not acceptable.
Photocopies of IDs may be
submitted
provided
the
original copies are presented
for verification.
✓
✓
Documents submitted to Sun
Life Canada (Philippines), Inc
(SLOCPI) will not be returned.
Always attach a photocopy of
the claimant's valid ID (any
government-issued ID with
photo and signature) with the
basic claim requirements. •
The parties representing the
claimant or beneficiary should
submit
the
following:
authorization letter from the
claimant/beneficiary, 2 valid
government-issued IDs of the
claimant/beneficiary and 2
valid government-issued IDs of
the representative. •
Buying Auto Insurance
Applying for insurance is pretty straightforward.
You just have to submit the documents to your
chosen insurer, pay the premium and wait for
the insurance policy to be provided to you. The
process is the same for both insurance types.
Buying Homeowners Insurance
LISTED BELOW ARE THE REQUIRED DOCUMENTS:
Original vehicle receipt
Certificate of Registration of your vehicle
Your driver's license
Another valid government ID
Photocopies of each document
1. Malicious Damage, Riots, Strikes, Civil
Commotion
2. Explosion (i.e. explosion of LPG Tank)
3.
Accidental
discharge,
breakage,
leakage or overflow of water tanks,
apparatus and/or pipes (more common to
condominium unit owners)
4. Robbery
5. Temporary Rental/Accommodation
Expense while the insured house/unit is
under repair/reconstruction
6. Liability to the Public due to accidents
occurring within the insured's premises
7. Personal Accident Insurance for the
Family
Buying Homeowners Insurance
There are many insurers offering to protect
your property at varying rates but most of them
offer the same level of protection. It all goes
down to preference and what specific aspects
of your property you want to protect when
selecting your insurer. Common insurers for
houses or property are Insular Life, BDO Insure,
and Prudential Insurance.
Buying Renter's Insurance
As a side note, the same insurance
companies also offer renter's insurance,
which is insurance for all of your
belongings when you move in or reside
within a rented property. Your belongings
are not covered by your landlord's
insurance when the property is being
rented hence the need for renter's
insurance arises.
Due to modern tech, applying for
insurance today is very easy. You just have
to visit the online site of your selected
insurer, fill out a form and wait for the
policies to be emailed to you. You can also
contact them via their hotlines directly if
you have clarifications.
The following benefits are what's
included
in
general
for
property
insurance that most common insurers
provide:
Insurance Claim
An insurance claim is a written request to
an insurance company for coverage or
reimbursement for a covered loss or
policy situation made by a policyholder.
The claim is verified by the insurance
company (or denies the claim).
FILING A HOMEOWNER'S CLAIM
Report any crime to the police
Phone
your
insurance
professional
immediately. •
Promptly fill out claim forms •
Have the insurance adjuster inspect the
damage • •
Prepare for the insurance adjuster's visit
Prepare a list of lost or damaged articles
If you need to relocate, keep your receipts
Beneficiaries below age 18 are
considered minors and must
be represented by their legal
guardian.
STEP 3: Submit the requirements
Sun Life strictly follows the
provisions of the Philippine
laws involving minors, estates
and disqualified beneficiaries.
1. Your Financial Advisor
2. Nearest Financial Store or Client Service Center
Once the claim requirements are ready, submit the
requirements to the following:
For Living Benefits Claims,
please check your policy
contract for the covered
illnesses and their definitions.
We may ask for additional
documents after reviewing the
requirements you submitted.
Claims occurring within 2 years
from date of policy issue or last
reinstatement are contestable
and take longer to process.
Uayan, 2023