SEC defers capital hike for pre-need firms
Aug. 23, 2001
The Securities and Exchange Commission (SEC) has given in to the request of the association of the country’s pre-need companies to defer raising the termination value rates for pre-need plans being sold to the public.
Termination value refers to the amount the planholder should be paid upon surrender of the preneed plan prior to maturity or availment of full benefits.
The agreement was reached after serious consultation between the corporate regulator and the Federation of Pre-need Plan Companies Inc. (PFPPCI) last week regarding the new set of rules to be implemented that will provide the regulatory environment for the industry.
In an interview, SEC’s nontraditional securities instrument department director Francisco Villaruz said both parties agreed that the termination value provided in the plan will be implemented.
This, according to Villaruz, will level the playing field for the pre-need companies because the new implementing rule for said issue will encourage competition among the players in the sector.
“We agreed that this be implemented … thus, competition will be encouraged within the industry,” he further said.
Under Rule 28 or rule on termination value of the new rules for the regulation and sale of pre-need plans: “a preneed contract shall contain a schedule of termination values to which the planholder is entitled upon surrender of his plan.”
As contemplated in the new rule, the SEC said the termination value shall be fair, equitable and in compliance with the best practices internationally approved.
“The termination value shall be computed at the end of each anniversary year of the contract and pre-determined by the actuary of the pre-need company upon application for registration of the preneed plans with the Commission,” the SEC said. (RGB)
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