The Pre-Need Code Of The Philippines: Implications To Market Preference And Product

Marketability¹

Atty. Alfred Roderick T. Manzano, Ph.D.2

Rationale

The passage by the Philippine Congress of Republic Act No. 9829, better known as the

Pre-Need Code of the Philippines, had generated anticipation that this seminal legislation can

squarely address the issues that had hounded the Pre-need industry in the last decade of 2000.

The impact of this piece of legislation on Philippine financial institutions and on the budgetary

practices of the sectors comprising the Philippine society remains yet a reality that would unfold.

In 2010, the implementing rules of Republic Act No. 9829 had been drafted and approved

by the Insurance Commission, eventually setting the law in full motion.

The Pre-Need Industry had been introduced in the Philippine scenario in the decade of the

sixties. Since the first pre-need plan was offered to Filipino consumers in the 1960s, the pre-need

industry has phenomenally grown in the past few decades into a multi-billion business catering

to the needs of Filipinos nationwide (Edralin, 2000). Ungui (2008) recounted that from its birth

in 1967, numerous companies were formed, necessitating the formation of organizations to

facilitate the smooth delivery of the pre-need products. Three pioneering pre-need organizations

were formed: Philippine Association of Memorial Life Plan Companies (PAMLPC); Philippine

Association of Pension and Educational Plan Companies (PAPEPCO), and Philippine

Association of Pre-Need Plan Companies (PAPPCI).

____________________________

¹ Submitted as Doctoral Dissertation for the degree Ph.D. (Commerce) at Saint Mary’s
University, Bayombong, Nueva Vizcaya, Philippines on March 2013

² Faculty Member, Graduate School and School of Accountancy, Saint Mary’s University,
Bayombong, Nueva Vizcaya, Philippines. Dr. Manzano is a member of the Philippine Bar.
 On October 16, 1990, these three organizations collaborated to form the Philippine

Federation of Pre-Need Plan Companies, Inc. The events that transpired in the later part of the

decade 2000 had been characterized as tumultuous insofar as the landscape of the Pre-Need

industry is concerned. With various clienteles turning hostile in their bid to recover their

investments through court action, the fiasco had eventually reached the portals of no less than the

Congress of the Philippines. After investigations had been exhausted, solons eventually felt the

necessity for the passage of a legislation that would institute reforms in the regulatory

mechanism governing management of the Pre-Need industry.

Consequently, the Philippine Congress passed in the year 2009 a Pre-Need Code which

introduced some seminal changes with regard to the regulation of the Pre-Need Industry in a bid

to pump-prime an otherwise ailing industry allegedly wrought by mismanagement, lack of

transparency and a lackadaisical regulatory mechanism. Primordial in the design of this piece of

legislation was the transfer of the regulatory function from the Securities and Exchange

Commission to the Insurance Commission. Republic Act 9829, otherwise known as the Pre-

Need Code of the Philippines, assumingly caters to the needs and challenges besetting the Pre-

Need industry.

Pre-Need companies consequently had embarked into this industry by pooling vast

resources and capital to meet the demands of the market. The Pre-Need Industry, however, is not

without its share of controversies. Recently, media outfits had their field day covering

investigations on the industry that had catapulted it on the spotlight under the scrutinizing eyes of

business experts, government regulatory bodies and the consumers. Sectors which demanded that

something radical needs to be done to save an industry under fire eventually had reached the
portals of the legislative branch. To cater to the clamor for stricter regulation on the Pre-Need

Industry and other demands of the evolving times, the Congress of the Philippines passed in

2009 a legislation geared to institute certain reforms in the Pre-Need Industry, one of which is

the transfer of the regulation of Pre-need companies from the Securities and Exchange

Commission to the Insurance Commission. The Implementing rules had been approved on

March 2010.

Necessity, as the popular adage would tell, is the mother of invention. Preparation for

necessary contingencies had always been, in most cases, of paramount importance even to the

ordinary citizen. The vicissitudes and uncertainties that characterize and accentuate the human

life need not be overemphasized. In the normal course of things, the unthinkable could transpire.

The essential question seems to be on the level of preparation one has with regard to how he

should manage himself when these contingencies eventually shall unfold.

In a Senate Press release which appeared on the website of the Senate of the Philippines

dated February 4, 2010, manifestations on the pressing need for the Philippine populace to have

insurance coverage in times of contingencies had been heavily noted. It mentioned the sad fact

that insurance coverage is very low in the country - yet it is one of the world's most disaster-

prone areas. In our country, personal savings are low and many depend solely on monthly

income to cover their regular expenses. But in the event of the unexpected, many are left helpless

and miserable. The Senate Press Release (2010) further stated that life insurance penetration at

0.87 of GDP makes us the second lowest in Asia and among the lowest in the world in terms of

insurance coverage. This means that its value is less appreciated in the Philippines than in the

rest of the world.

 With the pressing events that rocked the stability of pre-need companies today, the

government must provide a remedy to this ailing industry because of its huge contribution to our

national economy.

Hence, certain safeguards had been incorporated in the Pre-Need Code. The Senate Press

Release (2010) stressed the strict compliance of pre-need companies in the budgetary

requirement stipulated by law to provide a solid capital base and lessen the risk of instability in

the future. A Fit and Proper rule is imposed on elected or appointed directors and officers of pre-

need companies, too. Another strong safeguard feature is the Trust Fund model, which

guarantees the delivery of benefits to the plan holder in the future, and minimize the risk of

insolvency as the trust fund remains untouched until the plan matures.

Other protocols contained in the Senate Press Release (2010) centered on transparency of

the pre-need companies in their financial condition; grace period in the premium payment of

planholders; and the immediate settlement of claims to the planholders upon maturity of contract.

Considering the vital role the pre-need industry plays and the imperative to protect the investing

public, the Senate Press Release (2010) assures the proper governance of the operation of pre-

need companies, the regulation of their activities, and their liquidity and solvency for the

protection of their plan holders.

In 2010, the Implementing Rules and Regulations (IRR) for the Pre-Need Code of the

Philippines had been full swing. Desiderio (2010) stressed some points in the Implementing

Rules for the Pre-Need Code of the Philippines, namely: strict compliance, of pre-need

companies on the Licensing of Pre-need Companies and Reports and Examinations features of

the Pre-Need Code; and the examination of the appointed officers of pre-need companies by the

Insurance Commission. In addition, the Insurance Commission can compel the production of
books and records of the pre-need firm, and require a balance sheet and an income statement

certified by an independent public accountant. If the issuer shall refuse to permit an examination

to be made by the commission, its refusal shall give ground for the cancellation of registration.

With the Pre-Need Code as a safeguard to the investment of clientele in the pre-need

industry, it is hoped that in the future, the Pre-Need Code may eventually bring back their trust in

the industry.

This study attempted to determine the extent of influence of the presence of the Pre-Need

Code of the Philippines among pre-selected professionals in the Municipality of Bayombong.

The researcher chose Bayombong as the focus of this study because Bayombong represents a

microcosm of Philippine society. It is a melting pot of cultures as students from the different

parts of Cagayan Valley Region flock to this Municipality to obtain their education. The

Municipality of Bayombong prides itself of being a home to some of the Region’s finest

educational institutions.

Statement of the Problem

This study sought to provide answers to the following questions:

1. What are the conditions of the Pre-need companies offering: a) Pension plans, b) Life

plans, c) Educational plans along the following aspects:

1.1 Compliance to Republic Act 9829?

1.2 Number of plans sold?

1.3 Price of plans sold?

1.4 Financial Efficiency?

2. What is the level of awareness of the respondents on the provisions of the Pre-Need Code

of the Philippines?
 3. What is the preference of the respondents on the pre-need products?

4. What factors do the respondents perceive to hamper the marketability of pre-need

products?

5. To what extent has the Pre-Need Code of the Philippines been a motivating factor on the

decision of the respondents to avail of a pre-need product?

6. Is there significant relationship between respondents’ profile characteristics and their:

6.1 Level of awareness on the Pre-Need Code of the Philippines?

6.2 Decision to avail of pre-need products?

6.3 Preference for pre-need products?

6.4 Perception on the marketability of pre-need products?

Scope and Delimitation

The research focused on conditions of pre-need companies that offer pension plans, life

plans, and educational plans in terms of their compliance to RA 9829, number of plans sold,

price of plans sold, and financial efficiency. This research delimited its scope on the interplay of

the personal attributes of the pre-selected respondents of the Municipality of Bayombong,

Province of Nueva Vizcaya, Philippines and their level of awareness on the provisions of the

Pre-need Code of the Philippines and their personal decision to purchase pre-need products vis-

à-vis their level of awareness of the Pre-need Code of the Philippines. Responses from the

prepared survey questionnaire administered to the respondents of this study served as the source

in determining the extent of influence of the Pre-Need Code of the Philippines on the personal

decision of the respondents to avail of Pre-need products.

Definition of Terms

The following terms carry specific meanings in this study.

Compliance to R.A. 9829 in this study refers to the condition of a pre-need company

that has fully satisfied the provisions of the Pre-Need Code of the Philippines, specifically on

capitalization and documentary requirements

Paid-up Capital in this study refers to the required amount deposited by each pre-need

company with the Insurance Commission to generate payments for planholders’ benefits and

services as provided for in the contract

Number of plans sold refers to the exact number of educational, pension and life plans

sold to the planholders, including the total cost of the plans

Financial Efficiency refers to obtaining the most (e.g. revenues, profits, assets, networth,

investments) out of the least amount of financial resources. In this study, it refers to the

presentation of information released by the Insurance Commission regarding paid-up capital,

assets, investment at cost, and the net worth of the pre-need companies.

Awareness in this study refers to the familiarity of the respondents on the salient

features of the Pre-need Code of the Philippines as determined by the prepared survey

questionnaire. It implies having knowledge of something through alertness in observing or in

interpreting what one sees or hears.

Level of awareness refers to the qualitative and quantitative measures of the familiarity

by the respondents on the salient features and provisions of the Pre-need Code of the Philippines

through the use of a survey questionnaire

Marketability refers to the consumer demand for a particular product

 Planholder refers to any natural or juridical person who purchases pre-need plans from a

pre-need company for whom or for whose beneficiaries’ benefits are to be delivered, as

stipulated and guaranteed by the pre-need company. The term includes the assignee, transferee

and any successor-in-interest of the planholder.

Pre-need company, with reference to the Pre-need Code of the Philippines, pertains to

any corporation registered with the Commission and authorized/licensed to sell or offer to sell

pre-need plans. The term “pre-need company” also refers to schools, memorial chapels, banks,

non-bank financial institutions and other entities which have also been authorized/licensed to sell

or offer to sell pre-need plans insofar as their pre-need activities or business are concerned.

Pre-need products, with reference to the Pre-need Code of the Philippines, pertain to

contracts, agreements, deeds or plans for the benefit of the planholders which provide for the

performance of future service/s, payment of monetary considerations or delivery of other

benefits at the time of actual need or agreed maturity date, as specified therein, in exchange for

cash or installment amounts with or without interest or insurance coverage and includes life,

pension, education, interment and other plans, instruments, contracts or deeds as may in the

future be determined by the Commission. In this study, pre-need products refer to pension plans,

life plans, and educational plans.

Analytical Framework

Ungui (2008) pointed out that the Pre-Need Industry was introduced in the 60’s when it

introduced the Memorial Plan in 1967. This industry evolved into one of our economy’s strong

and vital pillars and it had grown so huge to respond to the growing demands of the Filipino

family, thereby providing security in times of uncertainty.

 However, the Pre-need industry was rocked by scandal due to mismanagement by

providers, lack of transparency by providers and poor regulatory mechanism (Desiderio, 2010).

The public clamored for radical changes for their protection. Hence, the Congress of the

Philippines passed in 2009, a legislation geared to institute reforms in the Pre-need industry. In

March, 2010, Republic Act 9829, known as the Pre-Need Code of the Philippines, was approved.

The study focused on two (2) phases: Phase I dealt with the conditions of the pre-need

companies offering pension, life and educational plans along a) Compliance to Republic Act

9829, b) Number of plans sold, c) Price of plans sold, and d) Financial Efficiency. It also

discussed the factors that may have influenced the pre-need companies’ conditions along the

above aspects. This was done through documentary analysis.

Financial efficiency was measured by some published materials by the Insurance

Commission which dealt with paid-up capital, investment at cost, net worth, and net income of

top pre-need companies.

Phase II focused on the Pre-Need Code of the Philippines. A survey questionnaire was

administered to the respondents. Their level of awareness on the Pre-Need Code was determined

by profile characteristics, namely, sex, civil status, age, educational attainment, monthly income,

and ownership of pre-need plan. And the level of awareness of the respondents on the provisions

of the Pre-Need Code may tend to influence the respondents’ decision to avail of a pre-need

product, preference of pre-need products and on factors that hamper marketability of pre-need

products. The expected output will be the improved policies and procedures for Pre-need

companies.
Research Design

This study used the documentary scanning to determine the conditions of pre-

need companies and the factors that may have contributed to such conditions. The descriptive

survey type of research was used because a questionnaire was administered to determine the

profile of the respondents, level of awareness of the respondents on the Pre-need Code, extent of

influence of the Pre-need Code on the decision to avail of a pre-need product, product

preference, and on the factors that may hamper the marketability of pre-need products.
Research Locale

This study was conducted within the territorial limits of the Municipality of Bayombong,

Province of Nueva Vizcaya. Philippines. It has a land area of around 15,197.58 hectares and is

politically subdivided into 25 barangays, eight of which is located in the urban area and the

remaining 17 is within the rural area. Bayombong is one of the biggest towns of the province that

is most compact. It is considered as first class Municipality of the Philippines. The amalgam of

income earners in both the private and government sectors forge a dynamic force that shapes the

Municipality’s economy. Bayombong is the capital town of Nueva Vizcaya. It is the center of

government institutions where most government buildings and offices, national, provincial and

municipal are found. It is where educational institutions are located. With the above

circumstances, migrants flock the area for their education and employment in private and

government offices. Also, two big insurance companies namely, The Philamlife Company and

the National Life Insurance Company are found in Bayombong. Since Bayombong is the home

of many government and private employees, many of those who are employed in this town had

insurance sales as part time job, too. It is for these reasons why the researcher chose Bayombong

as the locale of the [Link] hundred (200) employees from the public and private sectors were

the respondents of this study. Of this number, 100 respondents were drawn from the public

sector and the other 100 employees came from the private sector. There were only 200

respondents included because the scope of the study was limited to residents of Bayombong

only. Many private and government employees come from the different towns of Nueva

Vizcaya and nearby provinces that is why they were not included as [Link]

institutions of learning represented the private sector. Thirty five (35) respondents each came
from the collegiate level while 15 respondents each came from the elementary and high school

levels. All respondents were randomly chosen.

For the public sector, 40 respondents were drawn from the government high school, 30

from the government university, and the other 30 from government offices.

Research Instrument

To gather necessary data pertaining to the conditions of the pre-need companies,

documents provided by the Insurance Commission were reviewed and analyzed by the

researcher.

To determine the level of awareness of the respondents on the provisions of the Pre-Need

Code of the Philippines, a survey questionnaire (See Appendix B) was administered to the two

hundred government/public and privately employed respondents.

The survey questionnaire was constructed by the researcher and was subjected to content

validity and reliability tests. The items were drawn from the provisions of the Pre-need Code of

the Philippines (See Appendix F).

Part I consists of items that gathered the profile of the respondents along these variables:

age, sex, civil status, educational attainment, monthly gross income, and ownership of pre-need

contracts.

Part II consists of items that reflect the level of awareness of the respondents on the Pre-

Need Code of the Philippines. It consists of thirty nine (39) items which dealt with these aspects

of the Pre-Need code of the Philippines:

A. Regulatory Mechanism (Items 1 to 4)

B. Organization, Management and Licensing of Pre-need Companies (Items 5 to 9)

 C. Licensing of Sales Counselors and General Agents (Items 10 to 12)

D. Default and Termination by Planholders (Items 13 to 15)

E. Claims Settlement (Items 16 to 18)

F. Trust Fund (Items 19 to 21)

G. Appointment of Actuaries (Items 22 to 24)

H. Reports and Examinations (Items 25 to 39)

Part III consists of three (3) items which simply asks the respondents to respond if the

Pre-Need Code influences the marketability of pre-need products.

Part IV consists of thirty (30) items from the Pre-Need Code of the Philippines that may

influence or motivate respondents to purchase a pre-need contract. The different aspects

contained in the Code are the following: Regulatory Mechanism (2 items); Organization,

Management and Licensing of Pre-need Companies (8 items); Licensing of Sales Counselors and

General Agents (2 items); Default and Termination by Planholders (2 items); Claims Settlement

(4 items); Trust Fund (6 items); Appointment of Actuaries (2 items); and Reports and

Examinations (4 items).

Part V deals with respondents’ responses on what pre-need products to buy in case they

would purchase one. (3 choices)

Part VI consists of five (5) variables that may hamper the marketability of pre-need

products.
Scoring Procedure

Responses to the items on Part II of the questionnaire were grouped according to some

dimensions contained in the Pre-Need Code of the Philippines. Each respondent was asked to

determine his level of awareness on the Pre-need Code of the Philippines by choosing a

True/False answer. If he gets it correctly, then that measures his awareness on the

features/components of the Pre-need Code.

A criterion which served as the basis for the interpretation of the results of the study was

formulated and adapted from the concept of a boundary of a numeral (Pagano, 2010) which is as

follows:

A. Level of Awareness on the Pre-Need Code

Mean Score Percent Range Qualitative Interpretation

81-100 Very High

61-80 High

41-60 Average

21-40 Low

0-20 Very Low

B. Extent of Influence of the Pre-Need Code

Mean Range Qualitative Description

2.50-3.0 To a great extent

1.50-2.49 To some extent

0.50-1.49 To a little extent

0-0.49 No motivation at all

C. Variables that hamper marketability of Pre-Need Products

Mean Range Qualitative Description

2.50-3.0 Strongly discourage

1.50-2.49 Most likely will discourage

0.50-1.49 Will slightly discourage

0-0.49 Will not discourage

Data Gathering Procedure

The research procedure is demonstrated by way of illustration presented in Figure 1.

The study focused on two (2) phases: Phase I dealt with the conditions of the pre-need

companies offering pension, life and educational plans along a) Compliance to Republic Act

9829, b) Number of plans sold, c) Price of plans sold, and d) Financial Efficiency. It also

discussed the factors that may have influenced the pre-need companies’ conditions along the

above aspects. This was done through documentary scanning from the documents released by

the Insurance Commission on their website.

Phase II focused on the Pre-Need Code of the Philippines. A survey questionnaire was

administered to the respondents. Their level of awareness on the Pre-Need Code was determined

by profile characteristics, namely, sex, civil status, age, educational attainment, monthly income,

and ownership of pre-need plan.

After noting the profile characteristics of the respondents, their level of awareness on the

provisions of the Pre-Need Code was determined. This level of awareness by the respondents
was further analyzed to determine if it had influenced them in their decision to avail of a pre-

need product, preference for pre-need products and on factors that may hamper the marketability

of pre-need products.

Statistical Treatment of Data

The responses of the two hundred (200) employed respondents to the questionnaire were

the sources of data for the study.

To determine the profile of the respondents along some variables (Part I), the influence of

the presence of a Pre-Need Code on the marketability of pre-need products (Part III), most

preferred pre-need product among the respondents (Part V), frequency counts and percentages

were computed.

To determine the extent of the influence of the Pre-need Code of the Philippines on the

decision of the respondents to avail of a pre-need product (Part IV), and to determine the

perception of the respondents on the factors that hamper the marketability of the products (Part

VI) and to determine the level of awareness of the respondents on the pre-need code (Part II), the

means and SDs were computed.

To determine the mean differences on the respondents’ level of awareness on the features

of the Pre-Need Code by educational attainment, monthly gross income, ownership of pre-need

contracts and age, the Analysis of Variance (ANOVA) was used.

To determine the mean differences on the respondents’ level of awareness on the features

of the Pre-Need Code by civil status and sex, the t-test was used.

To determine the relationship between the respondents’ profile characteristics and their

decision to avail of a pre-need product, their preference for a pre-need product and the factors
that they perceived to hamper the marketability of pre-need products, the chi-square and the

Fisher’s exact test were used.

3. FINDINGS

A. Conditions of the Pre-Need Companies offering Educational, Pension and Life Plans

along:

1. Compliance to Republic Act 9829

As released by the Insurance Commission in May 7, 2012, twenty (20) pre-need

companies complied with the provisions of the Pre-Need Code of the Philippines while sixteen

(16) of them were retained with the SEC because they are under

rehabilitation/receivership/liquidation.

2. Number of Plans Sold

Life Plans had the most number of plans sold both during the first and second quarters of

2012 registering at 125,340 and 164,580 respectively.

3. Price of Plans Sold

Life Plans had the greatest value of plans sold both during the first and second quarters of

2012 registering at P3,985,414,664.00 and P4,962,784,795.00 respectively.

4. Financial Efficiency
 The twenty (20) pre-need companies that complied with the budgetary requirement of the

Pre-Need Code were found financially efficient. Sixteen (16) pre-need companies need

rehabilitation/receivership/liquidation.

B. Level of Awareness of the Respondents on the Pre-Need Code

The respondents had a very high level of awareness on appointments of actuaries feature;

high level of awareness on licensing of pre-need companies, licensing of sales agents and

counselors, claims settlement, trust fund, and reports and examinations; average level of

awareness in default and termination by planholders; and low level of awareness in regulatory

mechanism.

C. Respondents’ Pre-Need Products Preference

1. Fifty four percent (54%) of the respondents preferred the pension plan.

D. Factors that may Hamper Marketability of Pre-Need Products

1. Mismanagement by providers, lack of transparency by providers, and ineffective

regulatory mechanism were perceived by the respondents as factors that can strongly discourage

clients to invest in pre-need plans.

E. Extent of Motivation of the Pre-Need Code on the Marketability of Pre-Need Plans

1. The respondents were motivated to a great extent on these items of the Pre-Need

Code: Redefined scope of authority and powers of the concerned regulatory body over pre-need

companies, Registration requirements for pre-need contracts, Accreditation of actuary,

Requirements for the issuance of license to sales counselors and general agents, Procedure for

payment of plan proceeds, Recovery of investment in case of insolvency or bankruptcy,

Distribution of dividends by pre-need companies, Requirement for a trust fund for every
category of pre-need contract, Investment of the trust fund, Terms and conditions of the trust

fund, Requirement for an annual pre-need reserve valuation report, Requirement for a liquidity

reserve, Rule on the appointment of trustee bank for the management of the trust fund, Required

actuarial reports, Rule on disaccreditation of an actuary, Requirement for submission of pre-need

reserve valuation report, Requirement for submission of annual audited financial statement,

Annual statement of trust fund, Publication of annual financial statements by pre-need

companies.

2. On the whole, the respondents perceived that the Pre-Need Code can motivate future

clients of pre-need plans to a great extent. The achieved mean was 2.5350.

F. Relationship of the Respondents’ Profile Characteristics and their Level of Awareness

on the Pre-Need Code, Decision to Avail of a Pre-Need Product, Preference for a Pre-Need

Product and Marketability of Pre-Need Products

1. Respondents’ Profile Characteristics and their Level of Awareness on the Pre-Need

Code

a. Sex

There was a significant relationship between sex and Licensing of Sales Agents and

Claims Settlement.

There was no significant relationship between Regulatory Mechanism, Licensing of Pre-

need Companies, Default and Termination by Planholders, Trust Fund, Appointment of

Actuaries and Reports and Examinations.

b. Civil Status
 There was a significant relationship between civil status and Claims Settlement.

There was no significant relationship between civil status and Regulatory Mechanism,

Licensing of Pre-need Companies, Licensing of Sales Agents, Default and Termination by

Planholders, Trust Fund, Appointment of Actuaries and Reports and Examinations.

c. Age

There was a significant relationship between age and Licensing of Sales Agents and

Claims Settlement.

There was no significant relationship between age and Regulatory Mechanism, Licensing

of Pre-Need Companies, Default and Termination by Planholders, Trust Fund, Appointment of

Actuaries and Reports and Examinations.

d. Educational Attainment

There was a significant relationship between educational attainment and Reports and

Examinations feature of the Pre-Need Code.

There was no significant relationship between educational attainment and Regulatory

Mechanism, Licensing of Pre-need Companies, Licensing of Sales Agents, Default and

Termination by Planholders, Claims Settlement, Trust Fund and Appointment of Actuaries.

e. Monthly Income

There was a significant relationship between monthly income and Claims Settlement.

There was no significant relationship between monthly income and Regulatory Mechanism,

Licensing of Pre-need Companies, Licensing of Sales Agents, Default and Termination by

Planholders, Trust Fund, Appointment of Actuaries and Reports and Examinations.

f. Ownership of Pre-need Contracts

 There was a significant relationship between ownership of pre-need contract and

Licensing of Pre-need Companies, Licensing of Sales Agents and Claims Settlement.

There was no significant relationship between ownership of pre-need contracts and

Regulatory Mechanism, Default and Termination by Planholders, Trust Fund, Appointment of

Actuaries and Reports and Examinations.

2. Respondents’ Profile Characteristics and their Decision to Avail of a Pre-Need Plan

There was a significant relationship between the respondents’ monthly income and their

decision to avail of a pre-need product.

There was no significant relationship between the respondents’ sex, civil status, age,

educational attainment, and ownership of pre-need contract on their decision to avail of a pre-

need product.

3. Respondents’ Profile Characteristics and their Preference for Pre-Need Products

There was a significant relationship between the respondents’ age and their preference for

pre-need products.

There was no significant relationship between the respondents’ sex, civil status,

educational attainment, monthly income and ownership of pre-need product.

4. Respondents’ Profile Characteristics and their Perception on the Factors that may

Hamper the Marketability of Pre-Need Products

 There was a significant relationship between the respondents’ monthly income and the

factors mismanagement by providers and ineffective regulatory mechanism.

There was no significant relationship between monthly income and the factors lack of

transparency, not a budgetary priority and not a need.

There was a significant relationship between the respondents’ age and the factor not a

budgetary priority.

There was no significant relationship between the respondents’ age and the other factors

that hamper the marketability of pre-need products.

There was no significant relationship between the respondents’ profile characteristics:

sex, civil status, educational attainment, and ownership of pre-need plans and the factors that

hamper the marketability of pre-need products.

Conclusions

In the light of the findings gleaned from the analysis of data and in so far as the

respondents of the study were concerned, the following conclusions have been formulated.

1. There are few pre-need companies that complied with the provisions of the Pre-Need

Code of the Philippines in terms of budgetary and documentary requirements.

2. The respondents had an average level of awareness on the features/components of the

Pre-Need Code.

The most preferred product is the pension plan.

3. Mismanagement by providers, lack of transparency, and ineffective mechanism were

the factors that hampered the marketability of pre-need products.

 4. The features of the Pre-Need Code motivated the respondents to a great extent in their

decision to avail of a pre-need product.

6. a. Level of Awareness

Civil status, age, monthly income and ownership of pre-need contract produced variation in the

claims settlement feature of the Pre-Need Code.

Sex, age and ownership pf pre-need contract produced variation in the licensing of sales agents

feature of the Pre-Need Code.

Educational attainment produced variation in the reports and examinations feature of the Pre-

Need Code.

b. Decision to Avail of a Pre-need Product

Monthly income produced variation in their decision to avail of a pre-need product.

Sex, civil status, age, educational attainment and ownership of pre-need contract did not produce

variation in their decision to avail of a pre-need product.

c. Preference for Pre-need Products

Age produced variation in their preference for pre-need products.

Sex, civil status, educational attainment, monthly income and ownership of pre-need contracts

did not produce variation in their preference for pre-need products.

d. Factors that Hamper the Marketability of Pre-need Products

Monthly income produced variation in the factors mismanagement by providers and ineffective

regulatory mechanism. It did not produce variation in the factors lack of transparency, not a

budgetary priority and not a need.

 Sex, civil status, age, educational attainment, and ownership of pre-need product did not

produce variation in the factors mismanagement by providers and ineffective regulatory

mechanism.

Recommendations

On the basis of the findings of this study, the following recommendations are hereby

given.

A. For the Improvement in the Operations of the Pre-need Industry

1. Pre-need companies give very limited information about their requirements on their

websites. It is hereby recommended that the requirements as stipulated by law on paid-up capital,

financial statements, latest articles on incorporation and by-laws, bio-data of its officers and

board of directors, organizational chart of the corporation and general information sheet showing

the latest incorporators, their citizenship and percentage of shares owned and paid should be

published by them for viewing by future buyers of pre-need plans. With this, prospective clients

can make necessary comparisons before making his investment with any company. The

Insurance Commission should come up with additional regulations for the uniform

implementation of this transparency measure on the websites of all pre-need companies.

2. Since the respondents of the study had low level of awareness on the Regulatory

Mechanism feature of the Pre-Need Code and it is common observation that sales agents play

little role in creating awareness on insurance policies, there is an important role which Area

Managers of pre-need plans to play to enhance the knowledge and skills of branch managers and

their sales counselors. Managers and sales counselors should undergo adequate training and be

equipped with some competencies, like knowledge of the features of the pre-need plan, and sales

strategies to prepare them for the task ahead.

 3. The present study found that the level of awareness of the respondents on the Pre-

Need Code was only average. It is hereby recommended that the Insurance Commission, being

the regulatory body of the pre-need industry, should create a committee which will take charge in

the dissemination of the different provisions of the Pre-Need Code. This can be done by creating

a website in the internet, frequent ads both in print and broadcast media taking into consideration

the features/components of the provisions of the Pre-need Code. It is suggested that one

feature/component will be disseminated monthly for thorough information of that particular

feature to the public.

4. The Insurance Commission which now regulates activities of all pre-need companies

should really be strict in the compliance of these companies along the different

features/components of the Pre-Need Code. Since lack of transparency and mismanagement by

providers were viewed as factors that can strongly discourage marketability of pre-need plans,

scheduled and random checks by the Insurance Commission on these companies are equally

important.

5. Pre-need companies should have a databank with regard to its products or services to

satisfy its consumers. There is a need for these pre-need companies to educate people on their

need to provide for their economic security. The insurance industry should make an effort

toward a more informed public, creating awareness, need for insurance, and economic security in

the future.

B. For Future Researchers

6. The study was conducted only in the Municipality of Bayombong; hence, it is hereby

recommended that a parallel study may be conducted in key towns (first class municipalities) of

the region and the findings of the present study would provide basis for comparison and
integration and finally result to the formulation of useful guideline/policies for pre-need

companies by the Insurance Commission.

7. There is a dearth of research on the pre-need industry in the Philippines. It is hereby

recommended that students in Business Administration, Economics and Marketing conduct

researches along pre-need companies.

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