Who does not love a generous employer?
Too often, the young will not consider the non-cash component of their compensation package. However, such components like vacation and sick leaves, SSS/GSIS contributions, Pag-ibig contributions, PhilHealth premiums, in-house loans at concessional rates, retirement plan, HMO policy and group life insurance, when quantified and added up can comprise a hefty chunk of the person’s compensation package. In fact, when employers cannot compete on the monetary benefits alone, they often cite their attractive non-monetary benefits not only to entice prospective employees to join but to retain the good ones.
On the other hand, employees cite the same non-monetary benefits for not doing what they are still supposed to do in prudently funding their future needs. Case in point is retirement.
Unless you are part of the top echelon of management, your retirement pay from the company will be a great help but will still not be enough to fund a retirement period that has been getting longer with the help of advances in medicine and technology.
Another point where employees are remiss with is life insurance. While the group life insurance offered by employers is attractive, it may not be enough or even valid up to a certain point. The one size fits all group life insurance coverage may not be enough depending on the life situation of the employee (i.e. age, number of beneficiaries, employment status of spouse).
More importantly, employment tenure nowadays is thrown away for the next greener pasture, particularly with call center and business process outsourcing (BPO) employees. I for one have come across a BPO company where “retirement pay” is given only after five years of employment because the company has resigned to high employee turnover.
So, in a situation where an employee relies solely on his group life insurance benefit, he will always be starting from scratch whenever he joins a new employer. And if he so decides to finally get permanent life insurance at a later age, he will already have to lock himself into a high premium policy. And hopefully this following situation does not happen. But if an employee finds himself out of a job and with little prospect of finding a new one because of his advanced age, he will find himself with zero life insurance coverage.
That is why it is only prudent to supplement the employee benefit of group life insurance coverage with that coming from permanent life insurance. And if it is the tendency of the employee to jump from one employer to another, it is the permanent life insurance policy that should be the main coverage with the group life insurance benefit as just the supplemental one.
As an added tip, instead of permanent life insurance, regular pay variable life would be an even better option as it allows for potentially higher cash values in the form of the investment portion of the policy.
We, your FinancePH advisors, will be glad and more than willing to help you plan your finances. Our customized financial planning approach caters to each individual needs, budgets and priorities.
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(Originally written by Efren Ll. Cruz, RFP at http://www.savingstips.com.ph)
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