Perfin Finals PDF

PERFIN FINALS ,, (60 ITEMS) (the amount borrowed) plus interest, and once the loan is repaid, the account is ​ Multiple Choice (20 items) c...

PERFIN FINALS ,, (60 ITEMS) (the amount borrowed) plus interest, and once the loan is repaid, the account is ​ Multiple Choice (20 items) closed. ​ True or False (15 items) ​ Identification (10 items) Example: Car loans, mortgages, and ​ Essay (15 points ig) personal loans. 3.​ Revolving Open-End Credit — Revolving credit is an open line of credit with a set Assessing and Securing Credit (Group 3) credit limit that can be repeatedly borrowed against and repaid. Background on Credit It is flexible, allowing borrowers to access According to Madura, Credit represents funds a funds up to the credit limit, repay them, creditor provides to a borrower that the borrower and borrow again as needed. such as credit will repay in the future with interest. Credit is cards, allows consumers to borrow up to a frequently extended to borrowers as a loan with set specified maximum amount (such as $1,000 terms such as the amount of credit provided and or $10,000). the maturity date when the credit will be repaid. The credit limit is determined by the Types of Credits borrower’s income level, debt level, and 1.​ Non Installment Credit — is normally credit payment history. issued for a very short time, such as thirty Example: Credit cards days or less. Advantage and Disadvantage of using credit It is provided by some retail stores to consumers who want to purchase products Advantages of Credit today and need credit for a very short period of time. The full balance is due all at 1.​ Convenience and Flexibility — Credit allows once, without periodic installments. for immediate purchases without needing Interest is generally not charged if paid on to have cash on hand. time, but some companies may add late fees You don't have to worry about how much if not paid by the due date. cash you have on hand. Just remember that Example: Utility bills, medical expenses, or you can always use a debit card instead. any other bills that don't allow for extended Remember to keep track of your checking payment plans. account balance to be sure you can cover what you’re buying. 2.​ Installment Credit — is also provided for specific purchases, but the borrower has a 2.​ Builds Credit History and Score — The longer time (such as a few years) to repay appropriate use of credit helps you build a the loan. good credit history. Payments are made in regular installments Only by using credit wisely can you create (e.g., monthly) over a defined period. Each the capacity to access credit in the future payment includes a portion of the principal for large purchases such as a home or a car.  3.​ Access to Large Purchases — This credit 3.​ Potential for Financial Stress — Credit capacity allows individuals and families to misuse can lead to debt stress, especially if avoid deferring large purchases until payments become unmanageable. It may savings can be accumulated to make such also create stress within households if debt purchases. is shared or if it impacts major life decisions. Credit enables people to make major purchases, like homes or cars, that might Credit Rights otherwise be out of reach if they had to pay Credit rights refer to the legal protections provided in full upfront. Installment loans make it to consumers when they apply for, use, and possible to repay in manageable amounts manage credit. These rights are designed to ensure over time. fair treatment, prevent discrimination, and protect 4.​ Rewards and Benefits — Many credit cards consumers from unfair lending practices. It offer rewards like cash back, travel points, requires creditors to notify applicants within thirty discounts, and other perks that provide (30) days of a credit application whether they will value when used responsibly. receive credit. If credit is denied, creditors must explain the reason for the denial. 5.​ Emergency Support — Credit can be a lifeline in emergencies, covering Agencies and Regulatory of Credit Rights unexpected expenses like medical bills or ​ Equal Credit Opportunity Act (ECOA) — car repairs until you have the funds to pay prohibits creditors from discriminating them off. against credit applicants on the basis of Disadvantages of Credit race, color, religion, national origin, sex, marital status, age when applying for credit. 1.​ Excessive spending — Having access to credit can lead to impulse buying or ​ Fair Credit Reporting Act (FCRA) — an purchasing beyond your means. This act requiring consumer reporting agencies overspending can result in large balances to exercise their functions and that become difficult to repay. responsibilities with fairness, impartiality, and a respect for the consumer’s right to 2.​ A large accumulation of debt — It’s easy to privacy. overspend with credit, especially with revolving credit like credit cards. When ​ Truth in Lending Act of the Philippines balances aren’t paid off, they accumulate (Republic Act No. 3765) — protects you interest, potentially leading to debt cycles against inaccurate and unfair credit billing that are difficult to escape. A low interest and credit card practices. It requires lenders rate may seem like a good deal, but many to provide you with loan cost information people are surprised to find that the rate so that you can compare shops for certain was only temporary. If you don’t read the types of loans. fine print, you may pay far more in interest ​ Data Privacy Act of 2012 — protects than you expected. consumers' personal and financial information, ensuring that financial  institutions handle data securely and only Credit insurance is designed to protect borrowers share it as legally permitted. and their families in case of unexpected events that affect their ability to repay debt. Credit History Types of Credit Insurance ​ A credit history is used to generate a credit report, which is maintained by credit 1.​ Credit Life Insurance: credit life insurance bureaus (like Equifax, Experian, and pays off the remaining loan balance if the TransUnion). Lenders use this report to borrower dies. This insurance is often determine creditworthiness, which is also bundled with certain loans, such as housing represented by a credit score. A strong loans or car loans, and protects the credit history makes it easier to qualify for borrower’s family from the burden of loans with favorable terms, while a poor outstanding debt. history can make credit harder to obtain 2.​ Credit Disability Insurance: Covers loan and more costly. payments if the borrower becomes ​ Your credit history is a record of how you temporarily or permanently disabled and have used credit, including whether your can no longer work. This type of insurance payments have ever been late. If you have a provides protection against unexpected credit card or have obtained a bank loan, income loss due to health issues. perhaps to purchase a car, the amount and 3.​ Credit Unemployment Insurance: timing of your payments will be in your Available for those who are employed, this credit history. insurance helps make loan payments if the ​ You can establish a favorable credit history borrower becomes involuntarily by paying your utility bills on or before the unemployed. It’s less common but can be an due date. Doing so indicates to potential option for borrowers with large loans who creditors that you may also repay other want additional security. credit in a timely manner. Similarly, paying 4.​ Microinsurance: Microinsurance providers your rent on time each month will have a in the Philippines offer credit insurance as a positive effect on your credit record. part of low-cost insurance packages targeting low-income individuals. These Credit history is a record of a person's past packages may include credit protection borrowing and repayment behavior. It reflects how benefits for borrowers in rural areas or an individual has managed credit, including: those involved in microfinance. ​ Loan and Credit Card Usage: Details Credit Bureaus about loans, credit cards, payment history, and any outstanding balances. ​ Credit bureaus provide credit reports that ​ Payment History: Records of on-time document your credit history. payments, late payments, defaults, or ​ Credit report shows when you apply for accounts sent to collections. credit, whether paying bills on time, ​ Credit Inquiries: A log of each time a maintaining balances in your account and lender checks your credit report, indicating even the late payment fees. how often you've applied for new credit. ​ Equifax, Experian, and TransUnion are the three main credit bureaus in the U.S. Credit Insurance Credit Reports Provided by Credit Bureaus (CIC ​ Credit scores typically range from 300 to Format) 850, with higher scores indicating a better credit profile and lower lending risk. In the Philippines, the Credit Information ​ Your credit score can also affect the interest Corporation (CIC), established under the Credit rate that is quoted on the loan that you Information System Act (CISA), serves as the request. national credit registry, collecting and distributing credit information to assist lenders in assessing Example: Imagine Sarah wants to buy a new car and needs a loan. She has a credit score of 780, which is considered creditworthiness. excellent. Because of her high score, she’s likely to qualify for a CIC compiles data from financial institutions like loan with a low-interest rate, saving her money over the life of the loan. Her bank checks her score, sees she’s a reliable banks and lending agencies to create credit reports borrower, and approves her with an interest rate of 3%. for both lenders and borrowers. Now, imagine her friend John, who has a credit score of 620, Reports typically includes: which falls into the bad range. John applies for a similar loan, but the bank sees his lower score and considers him a higher 1.​ Personal Information: Basic identification risk. While he may still get the loan, he’s offered a higher and employment details. interest rate of 10%. This means John will pay more interest than Sarah, making his loan more expensive in the long run. 2.​ Credit Accounts: Information on credit cards, loans, account status, limits, Different Credit Score balances, and payment history. 3.​ Payment History: Record of payments, Credit scores are used to assess an individual's including any missed ones. creditworthiness and can vary depending on the 4.​ Public Records: Court judgments and scoring model used. bankruptcies. Here are the main types: 5.​ Credit Inquiries: A list of parties who have accessed the report. 1.​ FICO Score: The most widely used credit score model, ranging from 300 to 850. Correcting Credit Report Mistakes FICO scores are calculated based on five If you find inaccurate information in your credit factors: payment history (35%), amounts report, send a letter to the credit bureau that owed (30%), length of credit history (15%), issued the credit report. credit mix (10%), and new credit (10%). ​ A credit bureau is required to investigate 2.​ VantageScore: Another commonly used your claim within thirty (30) days. It will credit score model, also ranging from 300 to forward the proof you provided to the firm 850. that initially filed the information with the consumer reporting company. It is calculated based on six factors: payment history (40%), depth of credit Credit Score (21%), credit utilization (20%), new credit According to Jeff Madura, a credit score is a (11%), available credit (5%), and recent numerical expression derived from a person's credit credit inquiries (3%). history, used by lenders to assess the Calculation Of Different Credit Score creditworthiness of an individual. Credit scores are calculated using several factors, To check your credit score in the Philippines, you’ll with different models like FICO and VantageScore need to request for your credit report from the giving slightly different weights. Here’s a general Credit Information Corporation (CIC). breakdown of how scores are calculated: 1.​ Go to "Services" 1.​ FICO Score Calculation (Most Common) 2.​ Choose "Get your credit report" a.​ Payment History (35%): Timely 3.​ Head to the CIBI Web App. Register or payments on loans, credit cards, etc. log-in Missed payments lower your score. 4.​ Review the Terms and Conditions, then hit b.​ Amounts Owed (30%): The total "I agree" amount of debt you owe, especially 5.​ Pick your Date of Appointment compared to your credit limits 6.​ Follow the Know-Your-Customer (KYC) (credit utilization). process via Google Meet to verify your c.​ Length of Credit History (15%): The identity longer your credit history, the 7.​ Pay the required via CIBI’s available better. It shows how well you've payment channels managed credit over time. Example: (Checking Credit Score) Sarah has a credit score of d.​ Credit Mix (10%): A variety of credit 780, which falls in the excellent range (750–850). This means types (credit cards, loans, Sarah has a strong credit history, with on-time payments, low mortgages) can improve your score. credit utilization, and a mix of different credit accounts. e.​ New Credit (10%): Recent Because of her high score, she’s likely to receive loan approvals with the best interest rates, saving her money over time. applications for credit or opening new accounts can lower your score On the other hand, John has a credit score of 620, which is temporarily. considered bad (600–649). This indicates he may have missed some payments, carries a higher balance on his credit cards, or 2.​ VantageScore Calculation has a shorter credit history. As a result, John might still be approved for loans, but with higher interest rates, making his a.​ Payment History (40%): Similar to borrowing costs more expensive. FICO, your payment history is a major factor. Interpreting Credit Score b.​ Depth of Credit (21%): This Interpreting a credit score helps you understand measures the age and type of your your creditworthiness and how lenders might view credit accounts. your financial behavior. Here's how to interpret a c.​ Credit Utilization (20%): How much credit score based on typical ranges: of your available credit you’re using. d.​ New Credit (11%): Recent credit inquiries and newly opened accounts. e.​ Available Credit (5%): The total amount of credit available to you. How To Check Credit Score In The Philippines  ​ 720 or higher is generally considered ​ Criminals use stolen account numbers to excellent credit. empty your bank accounts or charge ​ 690 to 719 is considered good credit. purchases to your credit cards. ​ 630 to 689 are fair credit. ​ They may also use stolen personal ​ 629 or below are bad credit. information to open accounts in your name. ​ The object instead is to obtain documents Improving Credit Score such as a driver’s license, birth certificate, ​ Check your credit report: Review your Social Security card, passport, visa, and credit report for errors and dispute any other official government documents. inaccuracies. Cost of Identity Theft ​ Make payments on time: Ensure all bills and debts are paid on time, as payment 1.​ Emotional Impact history makes up a large portion of your Violation and Insecurity: Knowing that score. someone has misused their personal ​ Pay down existing debt: Focus on reducing information leaves them feeling vulnerable outstanding debt, especially high-interest and distrustful of financial and online credit card balances. systems. ​ Keep credit utilization low: Aim to use less than 30% of your available credit on each 2.​ Employment Issues account to improve your credit utilization ratio. Turned Down for Jobs: Incorrect ​ Avoid opening new credit accounts: Each information on background checks can new inquiry can slightly lower your score, result in victims being rejected for so only apply for new credit when employment, affecting their livelihood and necessary. career progress. ​ Keep old accounts open: The length of your 3.​ Financial Repercussions credit history matters, so don’t close old accounts unless necessary. Hounded for Back Taxes: Victims may face ​ Negotiate with creditors: If you’ve missed demands for taxes on income they never payments in the past, ask creditors to report earned, as identity thieves might use their your accounts as “paid as agreed.” information to generate false income ​ Consider credit counseling: If you're records. struggling with debt, seek help from a Debt Collection: Victims may be pursued by reputable credit counselor to establish a collection agencies for unpaid mortgages or repayment plan. student loans that were fraudulently taken IDENTIFY THEFT: A THREAT TO YOUR CREDIT out in their name. Loan Refusals, They might be denied loans they would otherwise Identity Theft — Theft that occurs when an qualify for because of the damage done to individual, without permission, uses your their credit history by identity thieves. identifying information for his or her personal gain. 4.​ Legal and Administrative Complications  Revoked driver’s license and Enrollment in 3.​ Skimming — Tactic used when a store Welfare employee steals your credit card number by copying the information contained in the 5.​ Life and Identity Misuse magnetic strip on the card. Skimming has False Birth Certificate Entries: In extreme declined since the introduction of EMV cases, identity thieves use stolen identities technology, which replaced the magnetic in ways that alter personal records. strip on credit cards with an embedded chip. 6.​ Financial Loss and Recovery Time 4.​ Shimming — Tactic of inserting a device (called a shimmer) into the slot on an ATM Monetary Loss: According to the Federal or card reader that can read the information Trade Commission (FTC), the average on an inserted card, allowing identify financial loss from identity theft is over thieves to create a credit card that is close $1,000 per victim. Time Invested in enough to the real card that it may fool Recovery, Victims spend an average of 200 some banks or merchants. hours dealing with the repercussions of 5.​ Pretexting — Tactic used when an identity identity theft. thief poses as an employee of a company The true cost of identity theft extends far beyond with which you conduct business to solicit monetary losses. your personal information. 6.​ Phishing — Tactic used when pretexting While the $1,000 average financial loss is happens online. significant, the emotional and time-related costs 7.​ Pharming — Similar to phishing, but add layers of stress and frustration. Rebuilding targeted to larger audiences; tactic that one’s credit, correcting records, and dealing with directs users to bogus Web sites to collect legal and financial institutions often leads to their personal information. long-term consequences, including difficulty in 8.​ Abusing Legitimate Access to Records — securing future employment or loans. Other sources of data are the employees of This demonstrates that identity theft is not just a places where you work, bank, go to the financial issue but also a psychological and doctor, and shop, and these employees have logistical burden. easy and legitimate access to personal information that can be used to steal your Identity Theft Tactics identity. 9.​ Crime Rings — In some cases, the identity 1.​ Shoulder Surfing — Tactic used when an thieves may be part of a well-organized identity thief stands close to you in a public crime ring that has systematically place and reads the number of your credit infiltrated corporations and financial card as you conduct business. institutions for the sole purpose of 2.​ Dumpster Diving — Tactic used when an obtaining information to facilitate identity thief goes through your trash for large-scale identity thefts. discarded items that reveal personal information that can be used for fraudulent A hacktivist group known as #opEDSA purposes. successfully breached the Department of Science and Technology (DOST)  The organization Philhealth locked mailbox or P.O. box also adds experienced a severe cyberattack in security to your mail and reduces the September 2023, carried out by the chance of mail theft. Medusa Ransomware Group. 6.​ Shop on secure websites: Look for "https://" at the beginning of the web address or a 10.​Violating Your Mailbox — Both incoming padlock icon, which indicates a secure and outgoing mail may provide the connection, when shopping online. information needed for your identity to be 7.​ Be cautious with callers asking for personal stolen. info: Scammers sometimes pose as Protecting Against Identity Theft legitimate companies to ask for your personal data. Get the caller’s details and A. Shielding Personal Information at Home verify by calling the company directly if you're unsure. 1.​ Remove sensitive items from your wallet: 8.​ Consider online bill payment: Online bill Avoid carrying documents with your Social payment is more secure than mailing bills, Security number or any sensitive as sending sensitive information through identification, such as passports, birth the mail carries the risk of theft. If you must certificates, and infrequently used credit mail bills, use a Postal Service dropbox or cards, as this limits the risk if your wallet is post office instead of leaving mail in your lost or stolen. Copying the items you keep home mailbox. in your wallet, front and back, ensures you 9.​ Monitor your accounts frequently: Checking have records of them in a safe location. your accounts regularly (twice a week is 2.​ Document your accounts: Keep a secure list suggested) helps you catch suspicious of all your credit card and bank account activity early, minimizing potential damage details, including company names, account from fraud. numbers, and toll-free phone numbers, so 10.​Exercise caution with phone orders: Avoid you have this information on hand in case giving out credit card information over the of loss or theft. phone, especially in public places, as others 3.​ Use a shredder: Shredding pre approved might eavesdrop and steal your credit card applications and outdated information. receipts helps protect against dumpster 11.​Use separate devices for online banking: divers who might retrieve sensitive Using a dedicated device for banking and information from your trash. Cross-cut shopping can help protect against malware shredders are especially secure, as they slice and hackers who might compromise your paper into smaller pieces, making it harder data on devices used for casual browsing to reconstruct. and other activities. 4.​ Don’t print your Social Security number on 12.​Avoid public Wi-Fi for sensitive checks: Printing it exposes sensitive transactions: Public Wi-Fi networks can be information to anyone who sees or handles insecure, making it easy for hackers to the check. intercept your information. For banking or 5.​ Remove your name and address from phone shopping online, it’s safer to use a secure, directories: This makes it harder for people private network. to find your contact information. Using a 13.​Set up remote data removal for your mobile and create legal complications. Filing early device: This feature lets you erase your makes this less likely. device’s data if it's lost or stolen, protecting B. Protecting Personal Information at Work your information. The auto-lock feature adds another layer of security by locking These guidelines are aimed at protecting your your phone after inactivity. personal information at your workplace and with 14.​Keep track of delivery schedules: Monitor healthcare providers, especially since employers your expected deliveries, particularly and medical providers often handle sensitive data sensitive items like new credit cards, and that can be a target for identity theft. follow up if they don’t arrive on time, as thieves may intercept packages. 1.​ Check that photo IDs don’t display Social 15.​Don’t have checks delivered to your home: Security numbers: If you wear an ID badge Having checks sent to a P.O. box or your at work, ensure it doesn’t show your Social bank reduces the chance of mail theft. Security number, as this would expose Experts advise using personal checks only sensitive information. If it does, ask your for mailing bill payments, as each check employer if an alternate ID system can be contains sensitive information that could be used. exploited. 2.​ Consider direct deposit for paychecks: 16.​Limit what you post on social media: Direct deposit reduces the risk of check Identity thieves often collect information theft or loss. If your employer uses paper from social media, such as birth dates, checks, check that neither the check nor the photos of checks, and other personal stub displays your Social Security number. details. Use privacy settings to limit who If they do, ask payroll to use an alternative can see your posts and be mindful of what or truncated number instead. you share. 3.​ Review your health insurance card for Social 17.​ Secure your home computer: Installing Security number usage: If your health firewalls and virus protection reduces the insurance card has your Social Security risk of hackers accessing your computer. number as an identifier, discuss alternatives Password-protecting sensitive data and with HR, as this can expose you to securely wiping your computer’s memory unnecessary risk if the card is lost or stolen. before disposal ensures your data isn’t 4.​ Discuss security practices with HR easily recovered by others. regarding your records: Ask HR about the 18.​Arrange for mail holds during vacations: security protocols in place for handling When away, arrange with the post office to employee records to ensure your data is well hold your mail to prevent it from protected. accumulating in an unattended mailbox. Key questions include: Avoid leaving sensitive documents in your 1.​ What data is stored online? — hotel room as well. Determine which of your personal 19.​File your taxes early: Filing your tax return details are held in online databases as soon as possible helps prevent tax fraud. and how they are protected. Identity thieves sometimes use stolen 2.​ Who has access to personnel Social Security numbers to file fraudulent records? — Ask about the employees returns, which can delay legitimate refunds  who have authorization to access This insurance is designed to help cover sensitive records. costs associated with identity theft, such as 3.​ Where are hard copies stored? — lost wages, legal fees, and issues related to Learn where paper files are kept to credit denial. assess if they’re in a secure area. 2.​ Choosing coverage options: When selecting 4.​ Security of the record storage area — a policy, consider choosing one with a low Check if the storage location for deductible so that you pay less paper records is physically secure to out-of-pocket if you need to file a claim. prevent unauthorized access. Look for coverage that includes 5.​ Monitoring temporary workers in reimbursement for lost wages (if you miss HR — Inquire about the oversight of work while resolving identity theft issues), temporary HR staff, as they may legal fees (for assistance with any legal handle sensitive information. It’s disputes or restoration of your identity), important to know if access to and any costs related to being denied credit records is limited and monitored. due to fraudulent activity. 6.​ Access logs for personnel files — Ask 3.​ Criticisms of identity theft insurance: Some if the organization maintains a critics argue that identity theft insurance record of individuals who access isn’t necessary because the financial losses employee files, which adds from identity theft aren’t usually as severe accountability and deters or “catastrophic” as other types of unauthorized access. insurance events, like a house fire. They point out that many victims of identity 5.​ Evaluate security practices with healthcare theft don’t face unmanageable financial providers: The same level of care should losses. apply to your medical records. Ask your healthcare providers similar questions Identity theft insurance is designed to offer about online data, access, storage security, financial support for the costs associated with and how temporary workers are monitored. recovering from identity theft. This helps ensure your medical information This type of insurance helps cover expenses like: is equally protected. 6.​ Confirm safe record disposal: Ensure that a.​ Legal fees: Costs for hiring attorneys to healthcare providers, like banks and credit resolve disputes or restore your identity. card companies, dispose of sensitive records b.​ Lost wages: Reimbursement for missed securely when no longer needed. This work if you need time off to deal with minimizes the risk of sensitive information identity theft issues. being retrieved from discarded records. c.​ Credit report monitoring and recovery assistance: Fees related to monitoring C. Identity Theft Insurance credit and resolving credit report issues. 1.​ What identity theft insurance covers: However, it’s essential to understand that identity Identity theft insurance can either be added theft insurance typically does *not* cover direct to an existing homeowner's or renter's financial losses. This means if someone steals policy, obtained through certain credit card money from your accounts or makes unauthorized benefits, or bought as a separate policy. purchases on your credit card, this type of preventing identity thieves from insurance generally won’t reimburse those losses. opening new accounts in your name. Instead, it focuses on the costs of managing and 5.​ Monitor Your Credit restoring your identity after fraud occurs. ​ Regularly review your credit report and monitor your credit score for Response to Identity Theft any unusual activity. Free resources 1.​ Maintain Documentation like Credit Karma offer credit ​ Record all conversations and monitoring services. correspondence with relevant ​ For added security, consider both a organizations, including dates, credit freeze and a free fraud alert. contact information, and the nature 6.​ Contact Creditors of discussions. ​ Notify all creditors and financial ​ Retain copies of all reports, such as institutions where unauthorized credit reports and police reports, accounts may have been opened. and file certified mail receipts. ​ Change passwords for any accounts 2.​ Contact the Police that may be compromised, using ​ Report the theft to local law secure practices to prevent further enforcement or the sheriff’s unauthorized access. department. 7.​ Contact Others ​ Request a copy of the police report ​ If the theft involves your bank for your records, as creditors may account, consult check verification need this documentation. services to prevent further fraud 3.​ Contact the FTC (Federal Trade ​ If your Social Security number is Commission) compromised, contact the Social ​ Under the Identity Theft and Security Administration. Assumption Deterrence Act of 1998, ​ Seek legal assistance if notified of the FTC serves as a clearinghouse pending lawsuits or if the theft for identity theft complaints. involves extensive assets ​ Visit www.identitytheft.gov to Credit Cards & Consumer Loans submit a complaint and receive guidance on the steps to follow Consumer Loans: A consumer loan is a good based on the type of identity theft. alternative to a credit card if you want 4.​ Contact Credit Reporting Companies predictability with your monthly expenses. ​ Request a fraud alert from major ​ A consumer loan provides a set plan for credit reporting agencies, which will your monthly down payments which gives remain on the report for 90 days. many a sense of security. Victims can extend this alert for ​ Good for someone who wants to borrow a seven years by providing a police one-time amount that you pay back report. following a set down payment plan. A ​ Consider a credit freeze, which consumer loan provides structure and restricts access to your credit report, predictability in your finances and you know  exactly how much you need to pay back bank's policies. each month. Usage and Consumer loan Credit cards offer Credit Card: A credit card provides a lot more Flexibility involves greater flexibility flexibility in that you can decide how much you fixed-term loans in usage and with a specific repayment. You want to borrow and how much you want to pay purpose and can choose to back every month. repayment pay the schedule. Funds minimum ​ As long as you stay within your credit limit are often amount due, the you have the freedom to decide how much disbursed for full balance, or specific any amount in you want to borrow and how much to pay purchases or between. Also, back each month. needs only. one can use them ​ However, flexibility can tempt some to for a variety of spend beyond their means. A credit card is transactions, including online therefore more demanding since you need shopping and bill to be in charge of your own spending and payments. what you owe. ​ Good for someone who prefers flexibility as Credit Card & Consumer Loans in the it gives you the opportunity to borrow as Philippines you go as long as you stay within your credit Types of Consumer Loans in the Philippines limit provided. 1. Personal Loans — are unsecured loans that Parameter Consumer Loans Credit Card individuals can use for various personal needs, Repayment A consumer loan Credit cards offer such as emergencies, medical expenses, education, Structure product has a revolving credit. or even debt consolidation. They do not require structured This allows the collateral and are usually based on the borrower’s repayment plan cardholder to creditworthiness and income. with fixed borrow and repay monthly funds up to their Features: installments. The credit limit borrower pays repeatedly. ​ No collateral required. these installments over ​ Fixed interest rates. a predetermined ​ Flexible use (can be used for almost any period. purpose). Interest Interest rates on If the total ​ Loan amounts typically range from PHP Rates consumer loan outstanding 10,000 to PHP 2,000,000. vary depending amount is not ​ Repayment terms vary from 1 to 5 years. on the type of repaid by the due loan, the loan date, the credit Examples: Flexible loan amounts from PHP 20,000 up amount, and your card issuing bank to PHP 2,000,000, with terms ranging from 12 to 36 creditworthiness. levies an interest months. No collateral required, and approvals can be on the amount as fast as 5 days and lending institutions (like Home due for payment. Credit). Interest rates can be dynamic, 2. Home Loans (Housing Loans) — are long-term depending on the loans designed to help individuals purchase, renovate, or construct their homes. These loans are purchasing appliances or other consumer goods on secured by the property being financed. an installment basis. They are usually offered by retailers in partnership with financing companies. Types of Home Loans: Features: ​ Home Purchase Loan — For buying a new house or condominium unit. ​ No collateral needed. ​ Home Construction Loan — For ​ Shorter loan terms (3 to 24 months). constructing a new property on owned land. ​ Higher interest rates compared to bank ​ Home Renovation Loan — For home loans. improvements or repairs. ​ Easy application and approval process. ​ Refinancing Loan — To refinance an Examples: In-house financing from stores like SM existing mortgage at a lower interest rate. Appliance, Abenson, or via services like Home Credit and BillEase. Features: 5. Emergency Loans — Emergency loans are ​ Requires collateral (usually the property short-term loans designed to provide quick funds itself). in case of unexpected financial crises, such as ​ Long repayment terms (up to 20 to 30 years). medical emergencies, natural disasters, or sudden ​ Lower interest rates compared to unsecured job loss. loans. Features: Examples: Loans offered by Pag-IBIG Fund or Offers up to 90% financing for home purchases, ​ Quick disbursement and approval process. construction, or home improvement with interest rates starting as low as 3% per annum. ​ High-interest rates due to the urgent nature. 3. Auto Loans — are used to finance the purchase ​ Typically used to cover medical bills, of new or used vehicles, including cars, funeral expenses, or urgent repairs. motorcycles, and occasionally, trucks or vans. Examples: Available to members in areas declared These loans are secured by the vehicle itself. under a state of calamity. The loan amount is based on the member’s monthly salary credit, with a low Features: interest rate of 6% per annum. ​ Loan amount depends on the value of the Advantages and Disadvantages of Consumer vehicle. Loans ​ Down payment required (usually around 20% of the car’s value). Advantages: ​ Fixed interest rates with terms ranging from ​ Immediate Access to Funds: Useful in 1 to 5 years. emergencies or for necessary purchases. ​ The lender holds the vehicle’s title until the ​ Flexible Repayment Terms: Many lenders loan is fully repaid. offer flexible payment terms depending on Examples: Car financing from banks and automotive the loan type. dealers. ​ Builds Credit History: Regular payments 4. Appliance/Product Installment Loans — improve credit scores, which helps in future These are loans specifically designed for borrowing. Disadvantages:  ​ High-Interest Rates for Some Loans: 7.​ China Banking Corporation (China Bank) Personal and credit card loans can have 8.​ Development Bank of the Philippines (DBP) high-interest rates. 9.​ Union Bank of the Philippines (UnionBank) ​ Risk of Over-borrowing: Easy access may 10.​Rizal Commercial Banking Corporation lead to debt accumulation if not managed (RCBC) well. ​ Collateral Requirement: For loans like home and auto loans, the risk of losing the Life Insurance in the Philippines collateral if payments are missed. Premature Death Important Notes: Consumer loans can be beneficial if used wisely. Always read the terms and Premature death in the Philippines is a critical conditions, understand the repayment obligations, public health issue, driven by a mix of and ensure the loan fits your financial situation. lifestyle-related diseases, infectious diseases, With various options available in the Philippines, accidents, and the country's vulnerability to it’s essential to choose a loan that meets your natural disasters. needs with manageable interest rates and repayment terms. TYPES OF CREDITS 1.​ Non Installment Credit — a short-term form of credit, usually lasting thirty (30) days or less, and is commonly offered by retail stores to allow consumers to make immediate purchases. 2.​ Installment Credit — or installment loans, allows borrowers to make larger, one-time purchases and pay them off over an extended period, typically years. 3.​ Revolving Open-end Credit — such as Various factors converge to cause early mortality, credit cards, allows consumers to borrow as many of which could be preventable with better needed up to a specified credit limit based healthcare access, education, and policy changes. on factors like income, debt, and credit history. Here’s a breakdown of the key causes: Bank Providers in the Philippines World Health Organization - Noncommunicable Diseases (NCD) Country Profiles, 2018. 1.​ BDO Unibank, Inc. 2.​ Metropolitan Bank & Trust Company 1. Non-Communicable Diseases (NCDs) (Metrobank) Non-communicable diseases, including heart 3.​ Land Bank of the Philippines (Landbank) disease, cancer, diabetes, and chronic respiratory 4.​ Bank of the Philippine Islands (BPI) conditions, are the leading causes of premature 5.​ Philippine National Bank (PNB) death in the Philippines. Many of these diseases 6.​ Security Bank Corporation are linked to lifestyle habits such as poor diet, lack ​ HIV/AIDS — Though once relatively rare, of exercise, smoking, and excessive alcohol use. HIV/AIDS has seen an alarming rise in recent years, particularly among young ​ Cardiovascular diseases (CVD) — Heart people. attacks and strokes are rampant, largely due to high rates of smoking, hypertension, and 3. Accidents and Injuries unhealthy diets. These diseases claim Unintentional injuries and accidents, especially thousands of lives annually and are often among younger age groups, are a significant cause preventable with lifestyle changes and of premature death. better medical care. ​ Cancer — Many cancers, such as breast, ​ Road accidents — The Philippines sees lung, and colorectal cancer, lead to early thousands of fatalities from road accidents death. Lack of awareness and late detection each year. Poor road conditions, lax contribute to high mortality rates. People enforcement of traffic laws, and insufficient often discover they have cancer at advanced driver education all contribute to high stages when treatment is less effective. death rates, especially among motorcyclists ​ Diabetes — Rising numbers of Filipinos, and pedestrians. including younger adults, are developing ​ Drowning — Given the country’s vast diabetes, which can lead to complications coastline and frequent flooding, drowning is like kidney failure, heart disease, and early a common cause of death, particularly death if left unmanaged. among children. Many drown during natural disasters or in unsupervised water 2. Infectious Diseases activities. Despite progress in healthcare, infectious diseases ​ Occupational accidents — Many Filipinos remain a major cause of premature death, work in high-risk jobs such as construction, particularly among the poor and those living in agriculture, or mining. Without adequate rural areas. safety measures, these workers are often exposed to fatal accidents. ​ Tuberculosis (TB) — The Philippines has one of the highest TB rates in the world. 4. Maternal and Child Mortality Despite being a curable disease, many Maternal and child health remains an ongoing Filipinos still die from TB, especially those challenge, particularly in rural and underserved with limited access to medical care. areas. Many women die from complications during ​ Pneumonia — Particularly dangerous for pregnancy or childbirth due to limited access to young children and the elderly, pneumonia maternal healthcare. Similarly, infant and child continues to be a leading cause of death, mortality rates are elevated due to preventable exacerbated by factors like poor living diseases like pneumonia, diarrhea, and conditions and malnutrition. malnutrition. ​ Dengue fever — The Philippines experiences frequent outbreaks of dengue, a 5. Environmental and Occupational Hazards mosquito-borne virus that can be fatal, especially in children, without prompt The Philippines faces numerous environmental treatment. risks that can lead to early death.  ​ Air pollution — Both outdoor and indoor insurance, but losing an income provider air pollution contribute significantly to can still force tough decisions. premature deaths. Urban areas suffer from ​ Drop in Lifestyle vehicle emissions and industrial pollution, ​ Education Costs while rural households may use solid fuels ​ Retirement and Savings for cooking, leading to respiratory diseases. 3.​ Wealthy Families: While wealthy families ​ Workplace hazards — Many Filipinos work are often better prepared to handle in industries such as mining, construction, financial crises, premature death can still and fishing, where safety standards are cause significant challenges, particularly if often lacking, leading to deadly accidents or the deceased was heavily involved in exposure to harmful substances. managing family businesses or investments. 6. Natural Disasters ​ Business Continuity ​ Estate Taxes As one of the most disaster-prone countries in the ​ Wealth Management world, the Philippines faces frequent typhoons, floods, earthquakes, and volcanic eruptions. These 4.​ Single-Parent Families: Single-parent events not only cause immediate fatalities but also households, where one adult is responsible create long-term public health problems due to for both income and caregiving, are displacement, injuries, and the spread of diseases especially vulnerable to financial collapse in evacuation centers. following a premature death. ​ Total Loss of Income Financial Impact of Premature Death on ​ Impact on Children’s Future Different Types of Families ​ Limited Safety Nets 1.​ Low-Income Families: When a 5.​ Extended Families or Multigenerational breadwinner in a low-income family dies Households: In the Philippines, it’s prematurely, it can devastate the household common for families to live in financially. These families often live multigenerational households, where paycheck to paycheck, with little to no grandparents, parents, and children all savings. The loss of even one source of contribute to the family’s income and income can mean an immediate struggle to expenses. While this provides some afford basic needs like food, shelter, and financial resilience, the death of a key healthcare. family member can still have wide-reaching ​ Income Shock. effects. ​ Healthcare and Debt ​ Income Sharing ​ Education and Future Impact ​ Medical and Funeral Costs 2.​ Middle-Class Families: Middle-class ​ Redistribution of Responsibilities families, though generally more financially Financial Safety Nets and Gaps stable, can still experience a significant disruption to their lifestyle and financial In all these family types, the presence or absence of plans due to premature death. These financial safety nets plays a big role in determining families often have more assets, savings, or how severely a premature death impacts them. Unfortunately, many families in the Philippines are underinsured or have limited access to safeguarding your loved one's financial future. comprehensive financial protection. Starting with the knowledge provided in this overview can guide you in making an informed Life Insurance: Without this buffer, families are decision about life insurance. left scrambling to manage daily expenses and debts. Role of Life Insurance Government Support: Social Security (SSS) Before purchasing life insurance, it is essential to provides some survivor benefits, but these are assess your financial goals. Life insurance's primary often inadequate, particularly for low-income objective is to ensure continued financial support families. Government assistance programs exist, for dependents. It plays a critical role in but they don’t always reach all those in need, safeguarding a family's financial stability in cases especially in remote areas. where the primary income earner, the breadwinner, passes away. Community Support: In many cases, extended families, communities, and friends step in to help Importance of Life Insurance with funeral expenses and offer short-term Family Protection: Life insurance solves the financial aid, but this is often not enough to offset problems arising from a man's early death by the long-term financial challenges of losing a providing a definite sum of money to replace his family member. lost income for the benefit of his family. The family What is a Life Insurance? is then protected from the financial difficulties immediately following the breadwinner's According to Madura, Life Insurance is a financial premature death. product designed to provide financial support to specified beneficiaries during your death. Its Savings: Through life insurance, one can regularly primary purpose is to offer financial support to set aside an amount for the premium, which dependents or beneficiaries, covering expenses accumulates over the years to build up a fund such as burial and medical costs not covered by guaranteed to be completed whether the insured health insurance and helping maintain the family's lives or dies. It gives him a secure and profitable lifestyle after the death. method of accumulating funds for illness, injuries, or emergencies. For instance, if you hold a life insurance policy with a coverage amount of ₱100,000, this amount will be Retirement Income: Life insurance solves a man's paid to the beneficiary specified in the policy when financial problems associated with old age by you die, and this benefit is typically not subject to enabling him to create a guaranteed source of taxation. Insurance companies manage life income when he grows old. insurance policies, which can operate Types of Life Insurance in the Philippines independently or as part of a larger financial institution. Policyholders pay a periodic premium 1.​ Term insurance — is life insurance (e.g., quarterly) for this coverage. provided over a specified period, typically five to twenty years. Term insurance does While purchasing life insurance may not be as not build a cash value, meaning the policy gratifying as spending on tangible items, it can does not serve as an investment. It is offer profound peace of mind, knowing you are intended to provide insurance to a  beneficiary in the event of death. If the 1.​ Medical History: One of the things that insured person remains alive over the term, insurance companies consider when the policy expires at the end of the term calculating your rate is your medical and has no value. history. Because they are more likely to be 2.​ Whole Life Insurance — sometimes called hospitalized, people with a medical history permanent insurance, continues to provide or pre-existing conditions may pay a higher insurance as long as premiums are paid. insurance premium. However, because they The policy accumulates savings for the are viewed as less hazardous to cover, policyholder over time, which benefits a people without a family history or medical beneficiary if the policyholder dies and history are probably going to pay less for creates a form of savings with a cash value. their insurance. For this reason, whole life insurance is 2.​ Occupation: Your premium will also be sometimes called cash-value life insurance. greater if your employment involves 3.​ Variable Life Insurance — a type of occupational hazards that raise your risk of universal life insurance that allows getting hurt or dying. Generally speaking, policyholders to invest the excess premium this covers higher-risk occupations payments in various investment options, including truck driving, mining, similar to mutual funds. This provides firefighting, construction, and more. flexibility in investment decisions and the 3.​ Gender: According to Our World in Data potential for higher returns. Returns can (2023), Women tend to live longer than vary depending on market performance, men. In 2021, this difference amounted to a and while this can lead to higher gains, it 5-year gap in global life expectancy: the also carries investment risks. Variable Life average life expectancy was 73.8 years for Insurance is suited for individuals seeking a women versus 68.4 years for men. Since blend of insurance protection and potential data indicate that men are generally more investment growth. likely than women to die young, women generally have a longer life expectancy than Determining the Cost of Life Insurance men. This implies that men could have to Insurance premium — The price of your insurance pay more for life insurance than women do. is known as your premium. Depending on the However, because women are more likely policy, your premium is often paid monthly, than males to become ill, their health semi-annually, or annually. Your coverage and a insurance rates are typically higher. number of other variables, like age, lifestyle, 4.​ Lifestyle: Maintaining a healthy lifestyle is medical history, and more, affect how much you one method to lower your insurance rate, pay for your insurance. Factors that raise the even though there are some things beyond chance of hospitalization or death will also raise your control. Your life and health insurance the cost of your insurance, since the cost of an premiums will remain cheaper if you insurance plan is determined by the risk of insuring maintain a healthier lifestyle. Because an individual. smoking increases the risk of major health concerns including heart disease, high Factors That Affect Your Insurance Premium blood pressure, and respiratory disorders, unhealthy behaviors like smoking can result in higher premiums. Additionally, your  insurance rate may be impacted if you often Lifestyle and Health: Lifestyle choices and health partake in risky activities like skydiving, status significantly influence insurance premiums scuba diving, and other comparable and eligibility. The individual needs to consider pursuits. their diet, exercise habits, and any involvement in 5.​ Age: Finally, one of the primary insurance risky activities. Additionally, honesty about health premium considerations that young folks conditions and any pre-existing medical issues is tend to ignore is age. Your life expectancy crucial, as insurers evaluate these factors during declines with age, making insurance more underwriting, which may include medical costly. As you age, you may also receive examinations or questionnaires. Understanding different coverage and be subject to one's health profile will help anticipate the costs additional restrictions before being eligible associated with the desired coverage. for insurance. For this reason, as soon as Dependents and Financial Obligations: you can afford it, you should think about Identifying dependents who rely on the individual's getting insurance coverage. income is essential. This includes immediate Things to Consider Before Buying Life family members, such as children or a spouse, and Insurance extended family or other dependents who may depend on them for financial support. Assessing Financial Situation: Before purchasing life their current and future financial needs, including insurance, an individual should thoroughly assess living expenses, education costs, and debts, will their financial health. This includes evaluating provide insight into the necessary insurance current income, savings, investments, and coverage. Additionally, considering other financial outstanding debts. Calculating monthly expenses obligations, such as personal loans and mortgages, and understanding cash flow while reflecting on is vital for determining the coverage required to both short-term and long-term financial goals is protect loved ones' financial futures. essential. This comprehensive financial evaluation is critical in determining the affordable life Provider Reputation: Researching and evaluating insurance coverage and the type of policy that various life insurance providers' financial stability aligns with the individual's financial planning. and reputation is critical. Investigating claims payout histories, customer service ratings, and Policy Duration and Coverage Needs: The policyholder reviews can help gauge reliability and individual must consider how long they will require trustworthiness. Selecting a company with a strong life insurance coverage. For instance, if the goal is reputation for ethical practices and timely claims to protect the family while children are still young, processing is crucial to ensuring a smooth a term policy may be suitable for a defined number experience when a claim arises. of years. In contrast, a whole life or universal life policy may be more appropriate for those seeking Contents of a Life Insurance Policy lifelong coverage that accumulates cash value. A life insurance policy is a contract between an Analyzing future financial obligations, such as insurance company and a policyholder. It outlines mortgage payments and education costs, can help the terms and conditions of the agreement, determine the necessary coverage amount. including the coverage provided, the premiums to Consulting with a financial planner can provide a be paid, and the benefits to be received. clearer picture of these needs. The specific contents of a life insurance policy can ​ The declarations page — This section goes vary significantly between insurance companies over your schedule of benefits and may take and policy types. It's crucial to carefully review the a few pages to cover. It will include several policy document provided by your insurance key pieces of information: company to fully understand its terms and ○​ Your personal information: Make conditions. sure to double-check everything for errors. ​ Beneficiaries — are the people (or entities) ○​ Policy number: The unique number who will receive the death benefit if and given to your life insurance contract. when the insured person dies. Life ○​ The policy type: This will say insurance policies can have one or more whether it is term life insurance or beneficiaries, and the policyholder can permanent life insurance and more customize the allocation of the overall specific information, such as 10-year benefit by person. term, universal life, etc. ​ Coverage Date or Policy Date — is the ○​ Benefit amount: Sometimes also date the life insurance became active. referred to as the "face amount," this ​ Death benefit — is the amount that the is the dollar amount that will be insurer will pay when the insured dies. paid if you die. ​ Insured — is the person who is covered by ○​ Premium amount: How much is the life insurance contract. owed to the insurer per month or ​ Insurer — refers to the organization per year for life insurance coverage. providing the life insurance contract. States ○​ Policy issue date: When the life regulate life insurance companies quite insurance contract was issued. closely to make sure they are able to pay ○​ Risk class: The insured is assigned a their obligations for many years into the "risk class" based on their medical future. exam (and/or medical history), ​ The policyholder — is the person or entity tobacco use, and possible other (such as a family trust or a business) who is determinants. paying for the policy. The policyholder can ○​ Attached riders: These are extra be the person who is insured, or it could be conditions and/or benefits added to another person, such as a parent or spouse. a policy. ​ Policy length — is the period of time that ○​ Beneficiary: The person(s) or the life insurance contract is in effect, entity(ies) that will receive the life meaning that if the insured dies during that insurance benefit if the insured dies. period, the insurer will pay out a benefit. This can be a specific period, or "term," -- The death benefit section defines the benefit e.g., 10 or 20 years -- or it can be a policy details, including how beneficiaries will make a life that lasts for the life of the insured insurance claim after the insured's death. ("permanent" policy) Exclusions: Exclusion refer to situations that could ​ Premium — is the monthly or yearly limit or invalidate payment of the policy benefit. payments needed to keep the life insurance For example, most life insurance policies won't pay contract in effect. out if the insured commits suicide during the contestability period. In addition, Advantages: misrepresentation of information during the ​ No Premiums in Retirement: application process may also limit or void payment Lifetime coverage with no payments and potentially be considered insurance fraud. later in life. Endorsements and Riders are changes and ​ Cash Value Growth: Accumulates add-ons to the policy: The riders section will cash value, which can be accessed if explain what each one is. needed. Disadvantages: ​ Higher Initial Premiums: Higher Examples of common riders include: cost during the payment period due ​ Disability income riders — Replace a to the shorter payment span. portion of the insured's income if they 2.​ Universal Life Insurance — combines life become disabled and cannot work. insurance coverage with an investment ​ Waiver of premium rider — Allows the component, allowing for both adjustable policyholder to stop paying premiums for premiums and death benefits. This policy up to 6 months if they become disabled and provides more control over payments and cannot work. potential growth of cash value, as ​ Term conversion rider — Allows a term policyholders can choose investments for policy to be converted to permanent life the cash value and even add temporary insurance before the end of the term. extra coverage if needed. ​ Accelerated death benefit riders — Pay out a portion of the benefit amount to cover While it provides flexibility and potential costs associated with a terminal illness. for growth, the cash value depends on ​ Critical illness rider pays out — A lump market performance, so savings could drop sum that is subtracted from the benefit if investments perform poorly. amount if the insured becomes critically ill. Advantages: Variations of Whole Life Insurance ​ Adjustable Coverage: Death benefits 1.​ Limited Payment Whole Life Insurance and premiums can be modified. — allows policyholders to pay premiums ​ Investment Options: Cash value can only for a set number of years. After that, grow through investments, with the no further payments are required but still potential for higher returns. have coverage continues for life. Thi