Young middle class boosts life insurance market
MANILA, Philippines – A young and booming middle class market with higher purchasing power is fueling the life insurance industry, officials said.
This increased interest from the younger market has come from a burgeoning business process outsourcing (BPO) industry, said Lourdes Lopa, chief marketing officer at Sun Life Financial Philippines.
“In the last 3 years, we’ve seen more and more young people become interested in our financial products. Before, most of our clients would cluster around the 30 to 45 age mark,” Lopa said at a press conference on Thursday, June 27.
“The youth are now more independent and at a very young age they learn how to take care of themselves. Their purchasing power has increased, which has led to more consumption,” she added.
According to a survey conducted by Sun Life Financial on financial literacy, the following age groups have availed of life insurance products:
- age 23 to 35: 41%
- age 36 to 45: 30%
Insurance in PH
Life insurance does not rank high in terms of financial instruments people invest in, Lopa said.
“Unfortunately life insurance is not on top of the list. Traditional bank deposits are the most familiar to them that’s where they are the most comfortable. However, it’s improving. We’re now seeing more the insurance companies coming in,” said Lopa.
“Banks as a way to save money has always been the safest. Marketing plays a big role,” she added.
According to Sun Life Financial’s survey, life insurance penetration is only at 1.14% of the country's Gross Domestic Product (GDP) in the Philippines.
This figure shows it is lagging behind its fellow Southeast Asia nations. Taiwan, for example, boasts of a life insurance penetration at 13.9% of GDP.
However, according to the survey, "The notion of life insurance being useful only when one is dead is slowly changing as more and more Filipinos are realizing its living benefits."
Rizalina G. Mantaring, President and CEO of Sun Life Financial Philippines, said "life insurance in a country tends to take off once you cross a certain GDP per capita. Only recently we’ve crossed that threshold.”
“If you look at the other countries like Malaysia and Thailand, their economic landscape is like ours and their penetration rate is 2% or so. In around 5 to 10 years, if the industry continues to grow at its current rate, the Philippines should reach that level,” Mantaring added. - Rappler.com