Philam Plans bares first forfeit-free pension plan

Philam Plans Inc. has introduced a pension product expected to "revolutionize" the pre-need industry, which has been suffering decreasing sales volumes for the past few years.

"What we have is a program that will allow the delinquent client to keep the value of their premiums if they fail to continue to pay," said Jack Howell, president and chief executive officer of Philam Plans. "That is applicable as long as the client has already paid at least 20% of the plan cost."

The general practice of the industry is that delinquent payees are allowed a 60-day grace period to pay unpaid premiums. Failure to pay will lead to a complete forfeiture of the plan.

But Howell said the new feature of their pension plan will force all players to redesign their products to remain competitive.

"iPlan, the new pension product of Philam Plans, will pay a maturity even on a lapsed or cancelled plan," he added.

It will solve the problem of a lot of pre-need planholders who find difficulty in paying their premiums, as they can still receive a certain amount from whatever they have invested as long as it is over 20% of the total amount of the plan.

Howell said starting this year, they will design all their new pre-need products in the same forfeit-free mode.

The pre-need industry has seen a drop in sales due to the inability of several major players to pay claims or specifically pay the maturity claims in education plans. This has resulted in an overall decline in sales of the rest of the industry which is also marketing pension and life or memorial pre-need products.

Aside from the inability of the pre-need company to pay claims, the other concern of the industry is the lapses or the inability of the client to pay the complete premiums for the plan.