MoneyWiseTips | Philippines Wealth Management Blog
I'm Christine Caranyagan, a Licensed Financial Advisor from Sunlife of Canada, the first and oldest insurance company here in the Philippines. For six years since 2010, it became the Number 1 Life Insurance Company here. Each one of us deserves to have a wealthy life. Every one of us is capable. It is just the matter of you making the #bright choices in your life. Let me be your financial..
The House has recently approved a bill lowering the optional retirement age for government employees from 60 to 56, but is this relevant to most of us?
I have known not only government employees but also those working in private companies who are not just ready yet to retire even at age 60. Their reasons? They still got loans payable, no savings, or still have kids who are studying.
Most of all, some are not even sure if they’ll receive a retirement fund from the government or the company they’re working for.
There are only two things that can happen during our retirement.
It can be our longest holiday where we just enjoy our lives.
Or it can be our longest nightmare where we suffer financially and become a burden to our next generation.
Obviously, we can’t retire if we don’t have the funds to sustain us. The problem is most, if not all, working adults dream of enjoying a comfortable life after retirement but don’t really know where to start.
Never fear because we have compiled 4 tips that will set you on the path to financial independence:
1. Set a Target Fund
Before executing a plan, you need a goal. You can save and save but how do you know when it is enough? Start by knowing yourself, or more specifically, your expenses. Try answering these questions:
How much will you need for basic living expenses?
What about your need for luxuries such as travel, shopping, etc.?
How much will you need for emergencies like car and house maintenance and health problems?
At what age do you plan to retire?
By answering these questions, you will be able to compute not only your monthly and yearly expenses but also how much you can save and how much you need to save to retire financially independent.
2. Acquire Protection Plans
So now that you have a goal in mind, you need to add support. By the time of your retirement, you would have assets to take care of like a house, a car, and even your own personal health. The emergency funds you have set aside might have a hard time covering the expenses of a high hospital bill or a vehicular accident. Since you want to be financially independent, you don’t want to avoid putting the burden of excess cost to other family members. The answer to this is availing insurance plans.
The earlier you start the better since insurance is cheaper when you’re younger! This is because, at a young age, you are less likely to have some health issues, and applications for insurance are hassle-free.
There are many plans available right now so do your research independently or consult a financial adviser to know the best plan for you!
3. Learn about Investments
Most people are too intimidated to try investing because they associate it with high risk and high reward. This is not always the case though. There are investment options that are less risky with stable growth. Again, the key here is educating yourself and taking action as early as possible.
Your financial adviser will most likely offer you investment options as part of your insurance plan as a startup. These are called Variable Universal Life Insurance (VUL). This makes investing a lot easier because you won’t have to be well versed in the stock market in order to reap the benefits. Aside from VUL plans, Mutual Fund and Unit Investment Trust Funds are other financial instruments that make investing a lot easier.
For a more hands-on approach, you can try setting up an appointment to a Financial Advisor and ask about VUL and Mutual Funds, or opening an account at an online broker and researching the stock market yourself. But only do this once you are more comfortable with investing your money!
4. Build Passive Income
Lastly, retirement doesn’t mean you’ll stop spending. You will have to deduct from your savings but you wouldn’t want to run out of money right? The final answer to financial independence is passive income. Even without investing, building a stream (or two) of passive income will ensure that your account will always be replenished even while you sleep. So what are your options?
Rent out assets (apartments, condo, vehicles, etc.) not just the traditional way, but also explore options like AirBnB or Grab.
Start a business. This can range from something as simple as baking cookies to buying a small plot of land and contract growing livestock. You even have the option of opening an online store to reduce overhead costs
Create and license content to earn royalties. If you write a book and sell it online like on Amazon, you can earn as much as 10% of each sale. You can also take generic photos and license them on Shutterstock so that every time someone downloads your picture, you will also be paid royalties.
Of course, there are many many more things you can do so don’t be afraid to try something different!
What are you waiting for? The future starts today! Be retirement ready as early as possible!
SSS or Social Security System membership has been part of the adulting stage especially when you start to apply for a job. This provides assurance of social protection from the government that covers worker in the private sector, a self-employed or a voluntary member, or as an Overseas Filipino Worker (OFW) through their TWO programs namely:
> The Social Security (SS) Program – provides replacement income
for workers in times of death, disability, sickness,
maternity and old age.
> The Employees’ Compensation Program (EC) – provides double compensation to the worker when the illness, death, or accident
occurs during work-related activities, at the workplace or on the way to/from the workplace. EC benefits are granted only to members with employers.
As a member and contributor, we should have all the rights to know and understand how SSS works and what’s in it for us. So below are the 8 simple (but important) things you need to remember about your SSS membership.
SSS covers two types:
Compulsory Coverage – mandatory registration of employees, employers and self-employed persons with the SSS, with corresponding payment and remittance of social security contributions. They include:
– Employees (EE)
– Employers (ER)
– Self-Employed Persons (SE)
Voluntary Coverage – non-mandatory registration and payment of social security contributions by non-working spouses (NWS), overseas Filipino workers (OFWs), and those covered under bilateral agreements. It also includes former employed/SE members who wish to continue payment of social security contributions. They include:
– Separated Members (VM)
– Overseas Filipino Workers (OFWs)
– Non-Working Spouse of SSS Members (NWS)
2. Registration Requirements
To secure an SS number or membership, you need to fill up a Personal Record Form (SSS Form E-1) that you can accomplish either from your nearest SSS branch or online and present the original or certified true copy of your Birth Certificate and submit its photocopy.
Click here to apply online and to check other documents that you can submit in the absence of Birth Certificate.
3. SSS Schedule of Contribution (updated 2018)
Image Source: https://www.sss.gov.ph
SSS monthly contributions are based on the compensation of the members (see table above).
The current SSS contribution rate is 11% of the monthly salary credit (MSC) not exceeding P16,000 and this is being shared by the employer (7.37%) and the employee (3.63%). If your salary goes beyond P16,000, your contribution should be based on P16,000 which is the highest monthly salary credit.
Also, for the Employees Compensation (EC) contribution which is paid only by the employers, it will be P10 for employees with an MSC of P14,500 and below, and P30 for employees with an MSC of P15,000 and up.
Self-employed and voluntary members pay the 11% of the monthly salary credit (MSC) based on the monthly earnings declared at the time of registration.
For OFWs, the minimum monthly salary credit is pegged at P5,000.
For the non-working spouse, the contribution will be based on 50% of the working spouse’s last posted monthly salary credit but in no case shall it be lower than P1,000.
Due Date of Contribution
Image Source: https://www.sss.gov.ph/
Knowing the due dates of your contribution and loans (if any) is a must so you can avoid incurring penalties.
For OFWs, payment of contributions for the months of January to December of a given year may be paid within the same year; contributions for the months of October to December of a given year may also be paid on or before the 31st of January of the succeeding year
As an SSS member, you can assign primary beneficiaries that will receive the benefit in case of death. They are your immediate relatives such as spouse and children.
If still single and have no children, the benefit will go to the dependent parents as secondary beneficiaries.
In the absence of primary and secondary beneficiaries, any other person that you’ll designate in your SSS record can be considered as beneficiaries.
5. Benefits of an SSS Member
It is not enough that you only comply with your contributions. You also should be aware of the benefits you can avail from your SSS membership. These are:
Sickness > a daily cash allowance paid for the number of days a member is unable to work due to sickness or injury.
Maternity > a daily cash allowance granted to a female member who was unable to work due to childbirth or miscarriage.
Disability > a cash benefit granted – either as a monthly pension or a lump sum amount – to a member who becomes permanently disabled, either partially or totally.
Retirement > a cash benefit paid either in monthly pension or as lump sum to a member who can no longer work due to old age.
Death > a cash benefit paid either in monthly pension or lump sum to the beneficiaries of a deceased member.
Funeral > A cash benefit given to paid contributions and CYS. whoever paid for the burial expenses of the deceased member.
Employees Compensation (EC) Program – assists workers and their dependents in the event of work-connected sickness or injury and its resulting disability or death.
See reference here: Summary of SSS Benefits
6. Loans You Can Avail
Salary Loan – A cash loan granted to an employed, currently- paying self-employed or voluntary member. It is intended to meet the member’s short-term credit needs.
Housing Loan – SSS offers fourhousing programs to its members which has eligibility requirements. They are Direct Housing Loan Facility for Workers’ Organization Members, Direct Housing Loan Facility for OFWs, House Repair/Improvement Loan, and Assumption of Mortgage. To check if you’re eligible, click here.
Calamity Loan – a loan assistance program to SSS members and pensioners who are residing in calamity-stricken areas declared under state of calamity by the National Disaster Risk Reduction and Management Council (NDRRMC) are qualified for this loan.
7. Online Monitoring of Account
It is important that you monitor your contribution and details of your SSS account anytime and anywhere you want to. Good thing, you can already access them online. Follow these Simple Steps to Register Your SSS Number Online.
Also, other benefits of having your SSS membership registered online are the convenience of applying for a salary loan & maternity benefit, the record of SSS loan repayment, details of benefit claims, and access to the Member’s Forum where you can ask questions, and submit a complaint or concern regarding your SSS membership.
8. SSS Partnered Payment Centers
Here is the list of accredited banks and collecting agents that accept SSS membership contribution:
Asia United Bank
Bank of Commerce
Bank of the Philippine Islands
Philippine Business Bank
PNB Savings Bank
Security Bank Corp.
Union Bank of the Philippines
Wealth Development Bank, Inc.
CIS Bayad Center, Inc.
Pinoy Express Hatid Padala Services, Inc.
Sky Freight Forwarders, Inc
Ventaja International, Inc.
If you don’t want the hassle of getting in line just to pay your contribution, the good news is you can now pay for it and your loan repayments online thru the following facility:
Just a recap, here are the 8 simple (but important) things you need to remember about your SSS membership:
Schedule of Contribution
Benefits of an SSS Member
Loans you can avail
Online Monitoring of Account
SSS Payment Partnered Centers
It is really important for us to be aware and to educate ourselves about government benefits like SSS. Contributions for this are made everytime we receive our salaries so we must know where our money should be going.
Remember, “If You Think Education Is Expensive, Try Ignorance.”
VUL FAQS are frequently asked questions about VUL that will surely help you get to know more how VUL works and how it can help you achieve some of your life goals in life.
Here are the other things you need to know more about Sun Life VUL insurance plan.
VUL FAQS Part I. Basic Information
What is VUL?
VUL basically stands for Variable Universal Life. This is a kind of plan that offers insurance and gives you and your family a guaranteed amount in case of unfortunate events. At the same time, it offers a bonus of investment where a portion of your premium payments is invested into funds of your choice.
With VUL insurance plan, not only your beneficiaries will enjoy the benefits of it but most of all, it’s you. This is because of the cash values it offers that you can use sometime in the future either for the college fund of your child, for your future business or your retirement.
How much does it cost?
Premium really varies depending on the client’s age, gender, and smoking habit. Generally, you can start acquiring a VUL plan with as low as P1,000 to P3,000 per month. The higher your premium is, the higher the cash value you can also expect in the future.
What are the charges?
Charges in VUL plans are on its first few years. For Sun Life VUL plans, they are:
Premium charge – cost associated in setting up the policy
Mortality charge – pertains to the insurance protection
Monthly periodic charge – regular admin expenses
Fund management charge – for the management of funds. This is already netted out from the unit prices of each fund
Up to what age am I covered in VUL?
You are covered until age 88 in VUL insurance plan.
Can I also attach a health insurance with VUL?
Yes. We have these so-called ‘riders‘ that you can attach to a VUL plan at an additional cost which also gives you additional coverage. With Sun Life VUL plans, some of the riders you can attach are Critical Illness Benefit and Hospital Income Benefit that already gives you a health insurance coverage.
Will I receive any proof that I have acquired a VUL plan?
Yes. Once your application for VUL insurance plan has been approved, a policy contract will be given to you by your chosen advisor.
Do you send statements of account?
Yes. You have options to receive your statement of accounts either via email or with a printed copy.
What are the requirements on getting a VUL plan?
With Sun Life, the requirements are filled up application form, signed proposal, one primary ID or two secondary IDs, SSS or TIN number and initial payment.
Yes. Afterall, it’s your money. However, it is just not recommended within the first few years of the plan because of minimal investment returns. Take note that acquiring a VUL plan is a long-term investment.
What happens when I withdraw all the fund value in my VUL plan?
The plan automatically terminates. You can do partial withdrawals to keep the policy inforced.
I’m an OFW who wants to apply for a VUL plan, am I eligible?
Yes, as long as your application will be signed here in the Philippines.
Will I still be covered even if I go out of the country?
VUL FAQS Part II. Investment Know-About
Do I have an option in VUL plan where I can choose which fund I want to invest with?
Yes. To know the different VUL funds you can choose from with Sun Life, click here.
Can I make fund switches?
Yes. In Sun Life, the policy owner can make four fund switches for free within a policy year.
Can I allocate my investment in more than one fund?
Yes, you can invest in more than one fund. You can allocate at least 10% to each chosen fund for a total of 100%.
VUL FAQS Part III. Payments
Where can I pay my premiums?
You can pay your premiums either OTC transactions or thru online banking. Just have your policy number with you and a bills payment form when paying over the counter. For more info, click here.
Will I receive notifications that my payment has been reflected?
Yes. Upon application, you have the option to receive notifications like this either via sms, email or printed copy.
What if I forgot to pay my premium on my due date, what will happen to my VUL plan? Am I subject to penalty charges for late payments?
The plan will not automatically lapse. The system will just deduct your premium due from the fund value. Because of this, there are no late fees or penalty charges for late payments. Just make sure to fill in your missed premium payments.
What are the modes of payment available in VUL plan? Can I change them from time to time?
The modes of payment available in VUL plan are monthly (ADA), quarterly, semi-annual or annual. VUL plans offer flexibility when it comes to your payment options that’s why you can change them from time to time.
Can I pay in advance to shorten my paying period?
Yes. Paying your premium in advance gives you a higher potential of returns in the investment part of your VUL plan.
Can I pay my VUL plan using a credit card?
This option is not yet available with VUL plans. This option is available with our traditional plans like Sun Fit and Well.
Hope these FAQS minimize your confusion on how VUL plan works. At the end of the day, it is still best for you to meet a trustworthy Financial Advisor (FA) that can address your priorities and goals in life. In that way, your chosen FA can assess if VUL is the right plan for you.
Ready to get a VUL plan? Fill up the form below and let’s set an appointment to further discuss the plan!