I had the opportunity to have coffee with a Filipino-Chinese client who had a 10-million life insurance policy with us. This was our first meeting after Sony Life assigned his account to me. With another 10-million policy from another life insurance company and only two kids and his one and only wife, this client (who was just in his 40s) apparently had his most important asset--his family--protected.
In Britain, they call life insurance the last love letter. I couldn't agree more.
I quickly reviewed the policy details with him, and the one thing that stood out was that his primary beneficiary--his wife--was designated as "revocable."
In life insurance, beneficiaries can either be revocable or irrevocable. If you don't indicate otherwise, the default would be "revocable."
What is the difference? Simple, but the repercussion could cost your loved ones a huge sum of money. Up to 2 million pesos in his case.
A revocable beneficiary is someone the policy owner could change any time. The owner could also change the irrevocable beneficiary, but only with the latter's consent. So why bother?
Because the life insurance proceeds to a revocable beneficiary are taxable. And the maximum rate for the estate tax is 20 percent! On the other hand, those to an irrevocable beneficiary are NOT.
So if the life insurance coverage is 1 million pesos, the revocable beneficiary could pay up to 200,000. If the coverage is 10 million, a whopping 2 million could go to the government. Wow! I never met a widow or orphan who complained of too much money that she was willing to let go of 200,000 or 2 million.
The good news is that it's so easy and fast to change the designation of your beneficiaries. And the process is FREE, at least for Sony Life. What you really need is just a few minutes off your busy schedule to find time to contemplate on the future of your loved ones.
For those I am privileged to serve as Lifeplanner, and for those who don't have one yet, call or text me now at (02) 577.1624 (duo), 0917.811.LIFE (5433), 0922.85.CAIRO (22476), or 0919.484.2000. This may yet be your best Valentine gift for your family.
