In my last post, I briefly talked about my plan of opening up a BPI Save Up account because of its life insurance aspect. I was surprised at the number of comments I got regarding that bit in my rambling post because it seems as if a lot of people are also interested or are already using BPI Save Up.
The information online regarding BPI Save Up is pretty straightforward:
- It uses an automatic savings system where you transfer a set amount of cash every month or twice a month from an existing BPI savings or checking account.
- There is no required minimum deposit but the required minimum average daily balance is Php1,000. It earns an ASTOUNDING 0.5% in interest per annum. (source)
- The only way to top it up is through online transfer from another BPI account.
- You will not get an ATM card (to prevent the temptation of withdrawing your savings!), but you will get an Info card as evidence of your account and which your heirs can use to claim the life insurance.
- It comes with a free life insurance from Philam Life Insurance which is equivalent to 5x your average daily balance of the past three calendar months before you croaked, but not to exceed Php2,000,000. There is also additional coverage of up to Php2,000,000 in the event of accidental death or accidental dismemberment. Again, the amount will be based on 5x your month to date average daily balance for the past three calendar months before your death.
I had a few questions though that weren't answered by the website, so I stopped by a BPI branch to interview a banker. She was able to answer most of my questions but didn't seem quite confident about the insurance aspect and had to consult with some higher up who in turn checked out the product information in her computer (From where I was seated, I could see them consulting some slides).
Anyway, since the life insurance is tied up with a savings account, my question was when I die and my heir wants to claim the insurance proceeds, can he claim it right away or will it be frozen subject to the payment of estate taxes? I know that bank accounts are automatically frozen upon the account holder's death and may only be released upon a go signal from the proper tax authority (local government unit ba?) that the estate taxes have been settled or that no estate tax is due. Since the life insurance is tied up with a savings account, will it be governed by those rules or will its being a life insurance prevail and be exempt from the freezing of assets (assuming that the beneficiary is irrevocable)? Maybe someone out there knows?
Also, how do I get to name my beneficiary? I just opened a BPI Save Up account using my BPI Express online account and there's no option there on how you can name your beneficiary. Is it assumed that my beneficiary is my legal heir? What if I want to bequeath the insurance proceeds to some charity I'm supporting? And how can I give my beneficiary irrevocable status so that the insurance proceeds won't be covered by estate taxes?
I hope these questions will be finally answered when I receive my information card.
Personally, I think it's a good idea to park our emergency funds with BPI Save Up because it pretty much functions like a regular savings account so the money is relatively easy to access,* but at the same time, there's a life insurance component that I can rely on as an additional source of protection.
The ideal is that your salary is remitted through a BPI account and so you just automate a transfer every two weeks or every month. By sweeping a set amount directly into your savings account on a regular basis, you build up your war chest without lifting a finger and before you know it, you already have a pretty sum tucked away!
In our case, I use my BPI account to house our emergency funds and since we are rebuilding it, I set the transfer to a very slow Php1,000 every month and will ramp it up when our emergency funds have substantially recovered. I don't plan to transfer all our emergency funds to BPI Save Up though, maybe just put Php200,000.00 there to ensure a Php1,000,000 life insurance coverage and maintain the regular account with a month's worth of expenses for easy access. But we are still very far away from our target amount for emergency funds, so in the meantime, ipon-ipon muna.
Hope you're all doing well during this wet and stormy day!
*To withdraw money from BPI Save Up, you transfer the amount you need online to your BPI account and then withdraw it from there.