(This is part of Take Charge of Your Money, a partnership between INQUIRER.net and Citibank to help readers handle their personal finances well.) Note from Citi Philippines:
Many Filipinos were badly affected by Typhoon Ondoy which hit Metro Manila last September 26. Not just homes, but entire residential villages were submerged in floodwater, forcing thousands to seek refuge elsewhere. The damage to personal property including cars now number hundreds of millions.
As the affected Filipinos go about rebuilding their homes and restoring their cars, where can they get help to cover all these unexpected expenses? To answer this question which no doubt is in the minds of all those affected, we offer the following guidance.
Many people were caught unaware of the intensity of the recent typhoon. Only when floodwater started rising fast did people leave their cars and homes. News reports have filled us in on the thousands of people affected, either with loss or damage to their property, or unfortunately, loss of lives.
Such an incident as this underscores the need for having non-life insurance coverage to protect one's property (whether house, car, or valuables including jewelry or fine art) in case of theft, fire, flood, earthquake, etcetera. By having insurance coverage, you will be able to claim an amount which corresponds to the value of the items lost. This will allow you to breathe more easily when disaster strikes and unplanned expenses escalate. If the non-life insurance coverage also includes coverage for "acts of God"--disasters that are not man-made, such as flood--you need not worry when the next strong super typhoon comes by.
In case you do not have non-life insurance coverage, allow us to share below some tips which will help you handle your situation. However, we strongly urge you to plan on getting non-life insurance coverage for your house and car and all other valuables once you have recovered from this present situation.
Where to get help At this time, you would like to get back on your feet and back to your normal lives as soon as possible. Although your funds are not enough, you can seek financial help from many institutions. Below are some of your options:
1. Social Security System (SSS) Calamity Loan: This loan is granted by the SSS to members who were victims of a natural disaster in a place declared as a calamity area. Currently, the National Capital Region (Metro Manila) is a calamity area. To avail of this loan, go to the nearest SSS office, get a form for calamity loan, and gather the requirements needed as listed therein (one of which is a barangay certificate). The calamity loan is P8,000, but members with an existing calamity loan can still avail of another one.
2. GSIS Calamity Loan: Members of the Government Service Insurance System (GSIS) may also avail of a calamity loan in the amount of P20,000. Go to a GSIS office to apply for this loan.
3. Pag-Ibig Calamity Loan: The Pag-Ibig Fund is also offering calamity loans to members who have paid at least 24 monthly contributions. Loanable amount may be up to 80 percent of a member's savings.
4. Salary loan from banks, credit cooperatives, and financial institutions: You may also avail of loans from your bank, or from a credit cooperative or a financial institution. Interest rates may be higher than what SSS, GSIS, and Pag-Ibig may offer, but you may be able to avail of higher loan amounts. Before signing on the dotted line, make sure you read and understand all the terms involved.
5. Loan from your insurance company: In case you have a life insurance policy, you may be able to borrow an amount against it. Ask your insurance agent if your premium payments are already enough for you to avail of a loan.
6. Loans from family and friends: Of course you may also be able to tap your family and friends for financial assistance and loan at this time. If you do take out a loan from them, be professional about it and put everything down in writing. Be clear about payment terms and be committed to paying on time so as not to betray trust and ruin the relationship.
Build up an emergency fund When you are more or less back on your feet, make it a priority to start saving for an emergency fund. This fund will be your lifesaver should another unexpected event happen. Aim to build up a fund that can cover for about six months' worth of expenses, and even more if you can. Grow this money even more by placing it in time deposits or in investments such as mutual fund or unit investment trust fund, but decide only after gauging the risk involved.
Things will get better for you and for all others who have been affected by the typhoon. We wish you the best. (INQUIRER.net and Citibank invite readers to ask questions regarding financial matters. Send your questions to personal_finance@inquirer.net or comment through our personal finance blog called MoneySmarts.)
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