Polytechnic University of the Philippines

Sta. Rosa, Laguna

INVESTMENTS ON LIFE PLANS AND

MEMORIAL LOTS

In Partial Fulfillment

Of the Requirements for the Subject

Business Logic

by

Christine Nathalie M. Balmes

2019
 Introduction

Life insurance policies are meant to help family and friends through the hardship of a

loved one's passing, but here in the land of the living, they're a veritable minefield of jargon.

Some people say the disadvantages of whole life insurance outweigh the advantages, and there

are possible factors that make those disadvantages arise. Life insurance can be financial help for

your loved ones once you're gone, but it's a big investment, but indeed, it is inevitable to have a

lot of disadvantageous factors.

The researcher conducted an interview with someone who will be able to answer the

questions that was formulated to strategically gather the needed information for the feasibility of

the study. The researcher thinks that the best interviewee is the one who is an investor herself.

This study aims to confirm if investing in life plans and acquiring memorial lots yields to

disadvantageous effect to the investor. Although, we often see that investments wil lead to a

definite economic benefits, this study will determine if investing in those kind of investment

have risks and will arise to various disadvantages than to returns.

 Objectives of the study

1. To be able determine if there are disadvantages in investing in life plans and acquiring

memorial lots.

2. To be able to cite the disadvantages, if there is any.

3. To be able to know what gave rise to the cited disadvantages, if there is any.

Statement of the Problem

1. What are the possible disadvantages in investing in life plans and acquiring memorial lots?

2. What are the factors that gave rise to the said disadvantages?

Null Hypothesis:

There is no disadvantage in investing in life plans and acquiring memorial lots.

 Discussion with the Resource Person

The action paper aims to determine if the investment in life plans and memorial lots have

disadvantages. Although, we all know that investing is quite good way to put our finances on and

indeed investment is economically strategic, the researchers aims to know if still, there are

disadvantages that were experienced by the investors. In the to gather data to make the study

possible and to be able to formulate an accurate conclusion, the researcher chooses to conduct an

interview with a person, who invested in this kind of investment. The resource person that

willingly participated in the interview is Ms. Niña Carla Alvarez, an admin assistant of BPI, San

Pedro Branch. The resource person cited various disadvantages that she experienced on having

such kind of investment.

According to the resource person, the money that can at least be added to the savings, was

allotted to the investment with not so beneficial returns. Life plans and memorial lots bear a good

thing, the readiness financially since those kinds of investments require a huge sum of money.

But, on the other hand, investing in life plans does not give immediate return on investments.

The resource person said that at some situations, especially, at times of financial distress, she

somehow regretted allocating her finances to that to that kind of investment. Although we can

say that land appreciates its value, and buying a memorial lot is a good idea, still, it cannot bear

the same benefits and returns as much as the commercial and residential lots do. The resource

person, as an investor in those kind of investment, she thinks that she somehow suffers from its

disadvantages of having no immediate returns.

 Life plans and memorial lots are somehow expensive and costs a lot, according to the

resource person. Life plans are wonderful luxury to have, but it is not worth one's bankruptcy. It

seems like the one who invested is trading the possible higher returns in other investments to this

kind of investment. It sometimes taking a large sum money from one's payroll. Although,

according to the resource person, investing in life plans and memorial lots is not a bad thing or

idea, at times of immediate need, it cannot save you from financial distress. Also other people

quoted that this kind of investment as sort of a kind of a kind of luxury for its high price. The

monthly premiums can quickly skyrocket, making the investment financially inaccessible. The

extra years you may spend paying a life plan premiums do not return as much as other

investments that you should have invested instead.

People have always perceive that life plans and memorial plans a not necessary and

advisable. According to the resource person, many acquaintances question her investment. They

say that why is she throwing her money for something that is not useful. Despite the facf that she

made an investment in this kind of insurance to obtain financial assistance for the future, she

can't deny the fact that often she wonders what if the money she allocated to invest in life plans

and acquire memorial lots, was allotted to a kind of investment that is more competitively bears a

more advantageous investment with lower risk and higher liquidity.

 Critique Analysis

Currently, life insurance is seen as a luxury in the market, which means that we constantly

think about what we could be spending the money on elsewhere. If we didn’t have to pay

premiums, we wonder where the extra money could go. The concept of opportunity cost can be

associated to this disadvantage. As to what mostly effect the purpose of investment in life

insurance, people inevitably tends to think the opportunity cost. They tend to perceive that

investing in this kind of investment made the better ones to be foregone. Cash value life

insurance has a certain opportunity cost element to it because you are taking a large amount of

your money and putting it into life insurance premiums. And whole life insurance rates are not as

cheap as term life, so you can expect to pay 8-10 times more for a basic policy. First, life

insurance is leverage. You pay a relatively small premium for a large death benefit. It acts like a

prison, keeping your money away from your control until someday, in an unfortunate

circumstance out there, when you can finally access your own money, after paying your taxes on

that money.

If you have no dependents or have money saved up for your final expenses and burial costs

with no other debts, life insurance isn’t necessarily a must. Many people have very little

emergency money available, investing in life plans and acquiring a memorial lot is not

Economically a good move when it comes to allocating the finances. This investment can help

you to secure an assistance for the future yet if this will compromise your potential savings and

can suppress you to meet your present needs then it is very disadvantageous and is not necessary.
Why are you settling for a fraction of the money the bank is producing from your deposit? You

can use your life insurance as a personal bank and make many times the return that you are

getting in your bank. According to some people, they simply don’t need it. The should have done

the calculations, researched all possible financial scenarios, and they can be confident in their

family’s financial security in the event of their passing even without life insurance and why

would they throw money away every month for something they truly do not need?

Aside from the two, another general reason why people tends to suffer from the

disadvantages of life plans is that, some of them lacks trust to the entities. The very idea of

insurance is based around trust. At its core, you are trusting the insurance company that when

something happens, in the case of life insurance, your passing away, they will render the

assistance you have paid for years. In many cases, people lose their trust to many life insurance

companies. Part of the blame should be given to rotten egg life insurance agents who put clients

into garbage policies in order to make high premiums. They are afraid that they will be a victim

of those who chase the almighty dollar at the expense of what is in the best interest of the client.

According to study, the biggest hurdle facing the insurance industry is that consumers simply

don’t trust insurance companies. Added to this is lack of awareness and failure of professional

advice. Due to excessive fragmentation of the insurance market, many insurers don’t have the

critical size to build adequate risk pools, underwrite contracts, and innovate. The lack of

professional skills in the industry has been another major deterrent. And this will lead to the last

factor why life plan insurances are disadvantageous, the complexity and confusing appeal to the

potential investors.
 We know that the life insurance market can be a tricky one to understand. As a result, the

majority of people seem to suffer from its risks that to its benefits. The customers don’t try to get

to know about the plans and they jump on to the complex life insurance plans like child plans,

endowment, ULIP which in fact provides a sub optimal return of the money. Also, most agents

provide a bad advice in order to get more commission money. Even the companies are profited

by the ignorance of the customer.

Conclusion

Rejecting the null hypothesis, the researcher therefore concludes that, there are

disadvantages in investing in life plans and acquiring memorial lots. After conducting a simple

interview with a credible interviewee, the researcher was able to gather data that helped to

formulate an answer to the hypothesis. The interviewee was able to cite some disadvantages the

she is experiencing, as having an investment life insurance. Low liquidity with high risk,

compromised savings, vulnerable to scams, and low necessity level are some if the disadvantages

of it.

In the critique analysis by the researcher, it came up that some of the disadvantages that

was experienced by the resource person was made possible to arise by some definite factors.

Those are the opportunity cost concept, lack of trust of the investor to the insurance companies

that results to financial insecurities and the complexity of this kind of investment that results to

confusions of some of the investors and also, potential investors.