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Life Insurance is the best tool for Estate Planning.

Ecclesiastes3_1-2

Ecclesiates 3:1-2 “There is a time for everything and a season for every activity under heaven.  A time to be born and a time to die, a time to plant and a time to uproar.

We know the fact that two things are inevitable in this world: Death and Tax. A lot of Filipinos are not aware about Estate Tax.  What is Estate Tax? Estate tax is a tax on the privilege of the deceased to transmit property based on his gross estate or the market value of his properties at the time of death.  What are included in the gross estate?  All the properties owned by the estate owner at the time of death such as real property, bank accounts, stocks and other securities, personal property such as car, jewelry, works of art, life insurance proceeds and retirement benefits based on fair market value.

As a Financial Planner, I always suggest to my clients and friends that everytime that they will acquire an asset, they have to increase their Life Insurance Protection, 20% of the amount of their newly acquired asset to prepare for Estate Tax. Let’s say a person acquired a Ph5,000,000 condominium unit, he should have an additional Ph2,000,000.00 life insurance protection to not burden his family when he passes away to pay for the Estate Tax. Why would a person invest in Mutual Funds, Stock Market, Save in the banks,UITFs and a lot more? Acquire assets? It’s for himself and his loved ones and why would that person not prepare also to preserve his estate when death comes? That is why Estate Planning is important and Life Insurance is the best tool to prepare for payment of Estate Tax.  What is Estate Planning? Estate planning is the process of arranging for the distribution of the owner’s estate according to his personal wishes and requirements.  Estate planning is for everyone who wishes to make certain that their families and loved ones are provided for adequately. We have to understand that before all the acquired assets of a person can be transferred to his heirs when death comes, estate tax should be paid first. See below the table if how much would be the amount of Estate Tax to be paid once a person dies if he has estate that need to be transferred to his heirs.

estate tax

I know a story shared to me by a friend that he had a client that had a lot of properties, money in the banks, investment in UITFs, Mutual Funds and businesses. When they assessed if how much would be the Estate Tax if he had died that night, his heirs must pay Ph20,000,000.00 to the Philippine government. To that, he asked the client if he had Ph20,000,000.00 that is not in the bank? The client said none. He asked him if what is he going to do if he died that night?  Will he just  save Ph20,000,000 for the next 5 years to 10 years hopefully nothing will happen to him soon or he simply buy life insurance protection of Ph20,000,000.00 and don’t need to pay Ph20,000,000.00 but a small amount of premium only. So, if death comes, his heir will receive Php20,000,000 to pay for the estate tax. What if he can insure himself more than Ph20,000,000.00 just to be sure?The client understood that it was wiser to get a life insurance protection than choosing other options to prepare for the estate tax.  It was also my experience when my father in law died, that my wife and I had to have extra judicial settlement just to transfer the property to us and we paid the estate tax because he had no life insurance. It was so burdensome for us because we had to immediately shell out cash. I don’t want this to happen again and my wife and I now are covered by a life insurance which is a Variable Unit Linked that is investment and life insurance which eventually grows as well thus it can keep up with the market value of our property and our other assets. Life insurance plan is not covered by Estate Tax as long as the beneficiary is designated as irrevocable.

I believe that getting life insurance is the best tool to prepare for Estate Preservation. It is an instant fund that your heirs can get easily if death comes to pay for the estate tax rather than your heirs cannot afford to pay the estate tax, thus, it will result to selling it to lower price or even the government will get your hard-earned assets if you will not pay it. So my friends and readers, if you have already acquired assets like properties, money in the banks, investments in stock market,Mutual Funds, UITFs, businesses and a lot more, you should have considered as well to get yourself insured properly right away so that your estate will be transferred to your heirs without the burden of looking for money to pay for the estate tax when death comes. I suggest you also talk to a a lawyer to help you to create a will as well. Be prepared. As they say, if you fail to plan, you are planning to fail. Life insurance can give your beneficiaries money at the time that they needed it most.

Thank you for reading my blog. I hope that you learn something. God bless.

To learn more about Estate Planning, I suggest that you read also my references:

http://www.foreclosurephilippines.com/death-real-estate-and-estate-tax/

http://www.mb.com.ph/why-do-estate-planning/

To learn more about Financial Literacy, you may contact me.

Archie M. Yuki

Associate Unit Manager/Financial Planner

The Insular Life Assurance Ltd. Co

Mobile Number: 0917-5769607

Email address: archieyuki30@gmail.com

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My experience in getting Certificate of Registration as Financial Advisor (Part 1 of 2)

As a Licensed Financial Advisor of Insular Life, we are required by the law to register to Bureau of Internal of Revenue because we are considered Professionals just like Doctors, Lawyers, and any practicing profession.Financial Advisors are required to have a Certificate of Registration. I’m kind a proud of this because I’m a licensed Financial Planner regulated by Insurance Commission, Bangko Sentral ng Pilipinas and Securities of Exchange Commission unlike any businesses that you can see in the market which is not even authorized to sell any products and services here in our country. I’m sure that you’ve heard a lot of scams out there that sell investments and promise higher returns. They will tell you to just invest in gold and just recruit 2 of your friends and you can exit with a lot of money. I don’t know why these people get into these scams, even if they earn big with their scam business, it’s still illegal. It’s not in the proper way of earning money. I wonder if how they can stand the fact that what they feed to their family comes from illegal activities. My principle I have learned from Financial Literacy is this: Low Risk=Low Returns and High Risk=High Returns, if someone offers you Low Risk=High Returns, it’s a scam. Nevertheless, enough of these scams, let me share with you my experience in getting Certificate of Registration which I believe that can help you as well if you are also a new Financial Advisor or planning to be a Financial Advisor, you will get some ideas how the process of getting Certificate of Registration will go. Here is my experience:

I went to BIR Mandaluyong RDO 41 at around 9:30 am Thursday and asked the guard how to get Certificate of Registration, he gave me a number and waited for about 10 minutes and my number was called. I went to counter 3 and the guy asked me if I have the requirements. I showed him the requirements. I brought the copy of letter from Insular Life that showed that I was a Financial Advisor and I showed him also my Professional  Tax Receipt(I requested the PTR  two weeks ago from Mandaluyong City Hall ground floor, I  just showed my VUL License exam result and I paid Ph200.00. After that, he asked for a valid ID that showed I lived in Madaluyong City. Unfortunately, I did not have any ID’s with Mandaluyong address. He suggested that I can get a Police Clearance from City Hall because it would show my address in police clearance. I went right away to Mandaluyong City Hall to get Police Clearance, I paid Ph125.00. (Tip: When requesting Police Clearance, don’t say that you are applying for Business or Self-employed because they will ask you Ph200.00, just simply say for Identification requirement only). In fairness, issuance of Police Clearance in City Hall was fast.

police clearance

I went back to BIR RDO 41 and asked number for Certificate of Registration application. I waited for about 20 minutes and my number was called, I went to counter 3 again. I showed him my requirements again which were Letter from Insular Life, Professional Tax Receipt and Valid Identification with Mandaluyong Address which was my Police Clearance. After that he gave some kind of check list and told me to get 3 copies each Payment Form 0605 and Application of Registration 1901 told me to fill it out and went to counter 7 for assessment.

payment form1901

I went to counter 7 after I completely filled out the 2 forms (3 copies each) for assessment. The guy asked me if I would choose VAT or non-VAT. I told him that I would choose Non-VAT or 3% percentage/monthly as this was suggested to me by my manager.  After that he told me that I would pay Php500 for the registration fee. He told me to return to counter 3 again for further checking.

I went to counter 3 and told me that the payment would be in the bank, in my case, BIR RDO 41 was accredited to UCPB. I went there to pay the fee for Certificate of Registration and gave the teller the 3 copies of Payment Form 0605. After paying, the teller gave me the deposit slip copy and 1 copy of Payment Form 0605 which had stamp of received payment. The guy at counter 3 of BIR RDO 041 told me to photocopy the documents the bank gave me and the PTR which I did.

UCPB

I arrived again at BIR RDO 041 and went to counter 3 and gave him the Photocopy Payment Form and the Deposit Slip. While the he took 2 copies of Application of Registration 1901 and gave me 1 copy. He told me to return on Monday and show me the Application of Registration 1901 for next step and it was already 12:30 in the afternoon… to be continued….

Personal Finance

Let’s all aspire to have Financial Independence for better Philippines!

We just recently celebrated our Independence Day and I hope that you enjoyed the long weekend. Some of my friends went out of town and some just did staycation. It is obvious that in everything that we do, planning is important, we have to set goals to everything what we do and we want to achieve in the future. Some people plan their vacations 3 months before, or 6 months before or more than 12 months before the set date but the problem is: Are they planning for their future financial needs as well? As the bible says at Proverbs 29:18 Where there is no vision, the people perish.. I’m quite surprised that some of my clients and friends that I talked to have no plans at all in the future. They can’t articulate it. Even if they are part of the top management of a corporation that they set goals for their employers for the next 3 years to 10 years but they don’t have their own financial goals. This is the reason that after 10 years or so of working hard most of us have not started saving or even investing, our income just goes to spending and payment to loans.

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As a Financial Planner, my job is to help my clients to set their goals for them to start having Financial Plan for them to create funds for their future expenses. With these, I would like to share some tips to start to achieve Financial Independence and I learn these from successful people that I know and I want you to practice this as well. If you have suggestions, you can also comment below.

  1. Be debt-free. We have to avoid the unnecessary and excessive debt. Use your credit cards responsibly. Personally, I discourage using credit cards. If you can’t afford it to pay in cash, you can’t afford it. Don’t fall into high-interest loans. Life after debt gives you a positive perspective to start and grow your finances.
  2. If you want to buy something, practice delayed gratification. A lot of us have an attitude of I-WANT-IT-NOW. Before you buy something, think first if it’s needs or wants. At the end of the day, will you be using that item? Or just merely impulse buying.
  3. Live within your means. Ideally, live 80% on your income and 20% should go to savings and investment. If the income is not enough, be creative and start entrepreneurship. Nowadays, it’s not enough to rely to one source of income. I have friends who started doing Financial Planning business and it can be done part-time. While earning from their job, they also earn from helping people to have Financial Plan.
  4. Don’t compare yourself to others. It’s either you will feel better or you will feel bitter. We have different backgrounds, some may be earning big now but we have to consider that person has been working for quite some time already and gained his skills that’s why he earns bigger than you. Instead, be inspired to the success of other people. Be free of jealousy and insecurities for us to gain financial independence for yourself and your loved ones.
  5. Use the formula of Income-Savings=Expenses than Income-Expenses=Savings. The latter will only leave you without savings because you will prioritize expenses. Set goals that everytime you earn set aside right away a portion of your income to savings and investment no matter what happen until saving will be your habit.
  6. If you are an employee, set goals to have savings equivalent to the six months of your income and if you are an entrepreneur have at least 1 year. Why is this important? So that just in case you will have emergency expenses like you lose your job, you get sick, or the business is not doing well, you have a fund that can cover you rather than you go to a loan shark that will give you high-interest rates. After this you can now look for financial instrument that can help your money grow, there are so many investment plans that you can look in the market just study it if it will fit your personality as investor.
  7. Insure yourself properly. We know that life is full of risks like death, sickness, and retirement. If risks happen, we are insuring that our dependents will be taken care of. Their lifestyle will not be downgraded, even if you will you not be around in the future.
  8. Buy non-life insurance coverage for your home and car. Just in case, you will not be spending too much if accidents happen.
  9. Sharpen the saw. Always take time to learn about personal finance. Read books, blogs, attend seminars, follow experts, how to learn more about to achieve financial independence. It’s not enough just to know but also do.
  10. Always ask guidance from the Lord to give you wisdom in handling your finances. We are his stewards and we have to be responsible to the blessing we received from him. As the bible says at Proverbs 9:10 – “The fear of the LORD is the beginning of wisdom: and the knowledge of the holy is understanding.”

Set your goals, know what do you want to your future financial goals. Use BeSMART. Your goals should begin with end of mind, it should be specific, measurable, attainable, realistic and time-bound. If you know the why, you will be guided why you do things that are not common to other Filipinos. I know that what I do is counter-culture because a lot of Filipinos will just spend their hard-earned money that’s why when retirement comes at age 60 or 65 there are about 63% will be broke because of lack of Financial goals and Financial Planning.

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I hope that you don’t just learn something by reading my blog but also take action to the things that you have learned. Thank you for reading my blog, I look forward that you read my future blogs.

I wish you more success and happiness in life. God bless you!

Let’s all achieve Financial Independence for better Philippines!

If you want to learn more about Financial Planning, you can invite me to give Financial Literacy Forum.

Archie M. Yuki

Associate Unit Manager/ Financial Planner

Mobile number: 0917-5769607

Email address: archieyuki30@gmail.com

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Happy Financial Independence to the Filipinos

June 12 is coming, we will now again celebrate our Independence Day. I’m thankful that we now enjoy the independence that we have today. But as a Financial Planner, I have a mission;A mission to help our fellow filipinos to have Financial Independence. With regard to this,Philippines has gone far from being a third-world country,we are now considered a developing country. Philippine Economy is really growing. Have you not noticed it? To some, they say  Philippines has no hope because of the corruptions that what we see and hear in the news. For me, I choose to look at the bright side of the story. I always think of there will be always hope to our country with God’s help. We can really see and feel that most of the Filipinos now are benefiting to the growth of our economy. I heard from Randell Tiongson that we are now in the stage of Demographic Sweet Spot, it means that there are more than 1 Million 25-year-old professionals now are earning and it gives growth to the economy. It’s the same stage when the Baby Boomers started earning, thus, it contributed well to the growth of the US Economy.

economic drivers

2nd fastest

We have to understand the facts that there are economic drivers that can make our economy grow for the next 20 years to 30 years. We are the 2nd fastest growing economy in the world, next to China as reported in Bloomberg. http://www.bloomberg.com/news/articles/2015-02-25/the-20-fastest-growing-economies-this-year Have you also heard in the news that the Euro Nations borrow from Philippines’ IMF Fund? http://www.randelltiongson.com/euro-nations-borrows-from-philippines-imf-fund/ There are economic drivers that I can say that we are in long-term growth. First, the OFWs remittances, it is reported that Filipinos are receiving billion of dollars here in the Philippines.  What does the usual Filipinos families who receive these remittances? Of course, they will spend it. I have a friend that told me that he has a friend that his parents send him money monthly and what he does is he just spends it. He has 2 cars, condo unit, just shop around, drink and party. He told me once that I might want to join them every Friday to drink and party with them, but I refused to go because I don’t drink. I don’t see that for the next 20 years or so that these remittances will decrease, but it will increase.  Second, we know the fact that Business Process Outsource business is growing, in fact we have overtaken India.http://www.ft.com/cms/s/0/1658baac-f30a-11e4-a979-00144feab7de.html#axzz3cNHRvAhE It’s also billions of dollars that come to our country. I don’t see that the growth will decline for the next 20 years. Thirdly, there are now PPPs (Public-Private Partnerships) that has begun. It has created a lot of income opportunities for the Filipinos because of the jobs it has generated.

So what does this mean to us? That our economy is growing? It means that there are so many opportunities for us here.Most of the Filipinos now have disposable income. Thus, it is also good for our economy that we filipinos are spender but it is wiser if we invest as well. Instead of spending all our money while we earn from our job and business, we take advantage in investing. From the mindset of being spender, change to saver and to investor. Hindi na tama na laging ang mga dayuhan na lang ang laging kikita sa bansa natin! Tama na, sobra na, tigilan na! We can take our part as well through having Financial Literacy. Without Financial Literacy, Filipinos will just lose their money.

If we take a look at this assumptions from investing in a Financial plan that gives compound interest of 20% per annum, it can give us higher returns. You can just imagine investing only Ph800,000 for ten years and it will be at Ph11.9M after 20 years on a compound interest of 20% per annum?

20% assumptions

That’s why my advocacy is to have inclusive growth to all the Fiipinos. It means that all class of the society will have growth in financial status through investing.Not only from Class A and B but if it is possible from all the classes. In our company,we have security guards and janitors who who have their own investment.They understood that if they don’t invest now, they will just spend their money. I can proudly say that I’m in company that is Filipino-owned that when our company earns, it will be invested here in the Philippines which it can help our economy, unlike if a foreign company, if they earn, they will bring their earnings to their mother country and invest it there.

After reading this blog,we have to take advantage of our economy for us to reach our financial goals in the future. I know that what I do is counter-culture. A lot of people will disagree with me that they think that they will not lose their job, they are still young, retirement is too early to prepare,they will not get sick, YOLO(you only live once), Buy now and pay later, etc. But one thing I can say, there are three types of person when it comes to seeing an opportunity : those who make things happen, those who watch things happen and those who wonder what happened. I hope that you are the first person.

Thank you for reading my blog.

I look forward that you will read my future blogs.

Help us to spread financial literacy to our fellow Filipinos.

God bless you!

Contact me if you would like to know more about Financial Literacy Program of Insular Life:

Archie M. Yuki

Associate Unit Manager

Licensed Financial Advisor

The Insular Life Assurance Ltd., Co.

Mobile Number: 0917-5769607.

E-mail address: archieyuki30@gmail.com