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Wednesday, May 18, 2005
Ledesma: The Other Side Of Midnight
By Jun Ledesma
Sunbursts
ASIDE from the water rate increase of 72 percent the Davao City Water District is determined to impose on us consumers, we seemed to have overlooked the more tragic story of thousands of children not being able to go to school having been left with an empty bag by the College Assurance Plan (CAP) and the Pacific Plans Inc (PPI).
It's enrolment time and with tuition fees rising parents caught flat-footed with the thought that CAP and PPI will pay their school opening bills, are now left with no option but to sell some of their properties because the two [pre-need firms will not sell theirs. I expect a volatile situation here considering that victims by now are incensed over the raw deal they got from the two companies.
The open-ended educational plan (OPEP) which was offered by the two firms guaranteed the plan holders that no matter what happens the insured child will be enrolled in any school of their choice. CAP and PPI started to have jitters when tuition started to increase in the early 90's.
But even as they anticipated a runaway increase in school fees, the two firms continued without letup selling the open-ended plan. The board of directors of CAP for example never really minded what was happening on the ground after all they were getting over-riding commissions from every plan sold. In fact, even when they were already on the red, CAP still sold plans to gullible clients some of whom already heard of the plight of the company.
In the case of Pacific Plans, they just severed off the benefits of the plan holders as quickly they would chop off the head of the chicken. And like the headless chicken, the poor parents and their children reeled aimlessly after the Yuchengco firm cut off the benefits.
Had these two companies observed caution as early as 1992, they should have already ceased selling their traditional products knowing pretty well their assets cannot handle any further ballooning tuition. But consummate greed consumed them consummately leaving the poor children and their parents in misery and hopelessness.
But insuring the educational future of the children is a wise investment. Other insurance firms, who are concerned with the corporate image more than they do with the pockets of their board members, have judiciously evaluated all the parameters involved in offering products like educational plans.
Their actuarial teams do not look at what will line up the pockets of their board members but what will insure the delivery of benefits of the insured.
That is why in the case of Philam Life and Philam Plans, Incorporated (acronym also PPI) what they offered are fixed (educational) plans.
You get the fixed value of the plan you purchase, and the other insurance perks that are tacked into the plan. Insured kids start to enjoy benefits from the primary levels all the way to college. If the insured is an academic scholar you collect your benefits and invest them elsewhere.
I have two kids covered by Philam life Scholar Gold and am at ease thinking I bought a plan with a company whose assets are bigger than all the assets of other insurance firms combined.
I don't have sleepless nights because the board members are not into other business but insurance. I also knew that the premiums that I paid are not invested in firms owned by the incorporators but placed in companies and bonds that guarantee excellent returns.
I have a son who still has to finish college. I bought his plan from CAP. Now I have to kiss that goodbye and he has to work his way to college as a consequence.
Well, you cannot win them all. But I have learned my lesson and I hope that those of you who are thinking of buying an educational plan, rethink your options.
When you buy a plan you are actually buying a security. Consider a financially solid and stable company. One that has withstood the test of time and has corporate integrity.
BTW, don't you know that there was an attempt to increase the DCWD board member per diem from P12,000 to P20,000 but that the LWUA watered it down? Don't you know that the Regional Trial Court ordered DCWD to deposit in trust 60 percent of the money collected from the previous water rate increase of 60 percent? Have they complied? The financial statement of DCWD should reflect this.
(May 18, 2005 issue)
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