Three Basic Ways to Make Inheritance
"Pamana", the Filipino term for Inheritance, is always a discussion, if not a dispute in most of the Families. But in this blog, I will not tackle the dispute side, but rather, I will share Three Practical Ways of accumulating inheritance.
But what is inheritance for? Most of the people looked at it as a "Gift" (legal gift) to the left behind family members. For whatever reason, the inheritance serves it purpose for the family members. But for some, inheritance is like a "Protection" for the family members, that their child could continue studying, for his/her partner not exposed to financial shocks, and to pay unpaid loans in case of death.
This type of inheritance is the usual type Filipinos prepare. During a persons' active career life, they try to acquire properties such as land, vehicles, jewelry and the like. These properties are subdivided to the legal heirs of the deceased. This is a highly recommended type of inheritance, but usually afford by the upper class society. And this type needs A Living Will, a document stating how the properties will be distributed. And most likely, the family members will pay for the Estate Tax for this.
This type of inheritance is linked to individuals with particular interest to direct investments in Bonds, Mutual Funds and Stocks. These are financial instruments available in the banks or online investment platforms wherein an individual can purchase units of shares in different Public Listed Companies. While this is a very good form of investment, one should have a technical know how on how these instruments are being used. I do not suggest to use this if an individual does not have patience and basic understanding of financial market. Also, this is not suggested for individuals that do not have basic protection and emergency fund because the tendency is they will pull out the value regardless of the unit cost. Meaning, win or loss, their money will be withdrawn. This type also needs a special Living Will that an attorney will execute in times of death of the owner. But often, like in my family, we had difficulty of acquiring the left inheritance of my grandmother since she left no Living Will and all family members are busy in their life responsibilities.
This type of inheritance is in form of 'Promise' sum assured by an Insurance Company. The sum assured is decided based on the health and age of the insured, and the amount of insurance premium the insured is willing to pay. To give you an idea, an individual can be insured for a year for any accidental death for 1 MILLION pesos by paying a one year premium of 4,300 pesos. In this case, the family will protected to receive 1 MILLION when an unfortunate accident occurred. This is cheap and highly recommended for individuals with multiple life responsibilities (like Solo Parents, Breadwinner, Parents with Children). This type is a Traditional Form of Insurance.
But there is another type of Insurance. The Variable Unit Linked or VUL is a Whole Life Insurance (usually good for 100 years) which provides protection not only for accidental death, but includes death due to health reason. What is interesting in this type of insurance is that it is connected to Investment. Meaning, Insurance is connected to a type of Fund (like Equity, Bond, Mutual). This assures that there will be an Inheritance to be left for the declared beneficiaries.
But it is important to take note that the Insurance Policy should not be depleted from its fund value, because the policy will be terminated, thus the Inheritance will be forfeited.
These three types of accumulating Inheritance are the usual types in the Philippine setting. The first two: Properties and Stocks are usually afforded by the middle to upper class. While the third type, Insurance, is highly recommended for EVERYONE because while it protects what you valued in this life (like your children), it also cheap and affordable.
To know more about these, talk to your trusted Property Brokers, Stock Brokers and Insurance Agents. Take advantage of these while you are young. And for not so young, take advantage of your time while you are not critically ill.
-------------------------
John Ryan Buenaventura
Development Specialist at your Service
+639275880702
plukjrabuenaventura@gmail.com
But what is inheritance for? Most of the people looked at it as a "Gift" (legal gift) to the left behind family members. For whatever reason, the inheritance serves it purpose for the family members. But for some, inheritance is like a "Protection" for the family members, that their child could continue studying, for his/her partner not exposed to financial shocks, and to pay unpaid loans in case of death.
But How can we build Inheritance? Here are the three usual ways of accumulating inheritance.
1/ Inheritance in the form of Properties
This type of inheritance is the usual type Filipinos prepare. During a persons' active career life, they try to acquire properties such as land, vehicles, jewelry and the like. These properties are subdivided to the legal heirs of the deceased. This is a highly recommended type of inheritance, but usually afford by the upper class society. And this type needs A Living Will, a document stating how the properties will be distributed. And most likely, the family members will pay for the Estate Tax for this.
2/ Inheritance in the form of Stocks and Paper Investments
This type of inheritance is linked to individuals with particular interest to direct investments in Bonds, Mutual Funds and Stocks. These are financial instruments available in the banks or online investment platforms wherein an individual can purchase units of shares in different Public Listed Companies. While this is a very good form of investment, one should have a technical know how on how these instruments are being used. I do not suggest to use this if an individual does not have patience and basic understanding of financial market. Also, this is not suggested for individuals that do not have basic protection and emergency fund because the tendency is they will pull out the value regardless of the unit cost. Meaning, win or loss, their money will be withdrawn. This type also needs a special Living Will that an attorney will execute in times of death of the owner. But often, like in my family, we had difficulty of acquiring the left inheritance of my grandmother since she left no Living Will and all family members are busy in their life responsibilities.
3/ Inheritance in the form of Insurance
This type of inheritance is in form of 'Promise' sum assured by an Insurance Company. The sum assured is decided based on the health and age of the insured, and the amount of insurance premium the insured is willing to pay. To give you an idea, an individual can be insured for a year for any accidental death for 1 MILLION pesos by paying a one year premium of 4,300 pesos. In this case, the family will protected to receive 1 MILLION when an unfortunate accident occurred. This is cheap and highly recommended for individuals with multiple life responsibilities (like Solo Parents, Breadwinner, Parents with Children). This type is a Traditional Form of Insurance.
But there is another type of Insurance. The Variable Unit Linked or VUL is a Whole Life Insurance (usually good for 100 years) which provides protection not only for accidental death, but includes death due to health reason. What is interesting in this type of insurance is that it is connected to Investment. Meaning, Insurance is connected to a type of Fund (like Equity, Bond, Mutual). This assures that there will be an Inheritance to be left for the declared beneficiaries.
But it is important to take note that the Insurance Policy should not be depleted from its fund value, because the policy will be terminated, thus the Inheritance will be forfeited.
These three types of accumulating Inheritance are the usual types in the Philippine setting. The first two: Properties and Stocks are usually afforded by the middle to upper class. While the third type, Insurance, is highly recommended for EVERYONE because while it protects what you valued in this life (like your children), it also cheap and affordable.
To know more about these, talk to your trusted Property Brokers, Stock Brokers and Insurance Agents. Take advantage of these while you are young. And for not so young, take advantage of your time while you are not critically ill.
-------------------------
John Ryan Buenaventura
Development Specialist at your Service
+639275880702
plukjrabuenaventura@gmail.com
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