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CHAPTER I

THE PROBLEM AND ITS SETTING

Introduction

Many people around the world struggling to feed their families with interrupted or terminate

income due to poor physical conditions such as illness, disability, death and also, they face

broader adversities like flood, crop failures, fire and etc. All these are known as risk factors those

seriously affect, generating their household income (Midgley and Hosaka, 2011). In order to

provide a formal risk protection scheme, and then to mitigate poor household`s fatalities, Micro

Finance Institutions (MFIs) came in to play and the idea of Micro Insurance popped up.

Poor people are the most vulnerable to shocks arising from sickness, accidents, death or loss

of assets due to natural calamities and riots, etc. Micro Insurance is the protection of such Low-

income people against specific perils in exchange for regular premium payments proportionate to

the likelihood and cost of the risk involve. [ CITATION May17 \l 13321 ]

The term Micro Insurance is comprised of two words “Micro” which means “affordable to the

poor” and “insurance” means “risk pooling to compensate to individual and group”. Micro

Insurance, a recent concept in the field of micro finance, helps reduce vulnerabilities of

microfinance clients and saves them from disastrous liabilities. [ CITATION May17 \l 13321 ]

The last decade has seen several myths being exploded about the repayment capacity of the

poor. With the recognition of the fact that “poor are bankable” micro finance came into play

several players came forward with a view to make the poor financially sustainable. But it was
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felt that the effect of the micro finance intervention would get eroded in absence of a

comprehensive risk mitigation tool this give birth to the idea of micro insurance.

The term “micro insurance” typically refers to insurance services offered primarily to clients

with low income and limited access to mainstream insurance services and other means of

effectively coping with risk. Thus “micro insurance is a financial tool that helps low-income

households mitigate risk and plan for the future. It enables them to cope with unpredictable and

irregular incomes, while also preparing them for financial emergencies that threaten their

livelihood” [ CITATION May17 \l 13321 ].

The strongest drive to understand more about micro insurance comes from the realization

that insurance is an essential tool in improving the protection of low income persons against the

financial exposure due to life cycle events, economic activity, environmental issues and political

issues. Insurance cannot resolve any of the major underlying issues; it can however provide the

tools that delimit the financial exposure of single individuals when adverse, cost generating

events occur [ CITATION May17 \l 13321 ].

Caprino (2018), stated that the top reason why people don’t invest is they have not enough

funds to invest, or even they do have money, but they’re worried about the return on investment.

Somehow many people are not knowledgeable enough in the world investing for their future

condition.

The entity that provides insurance is called insurer and the person who buys the insurance is

known as an insured or policy holder. In insurance transaction involves the insured or policy
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holder assumed to lessen the loss in the form of payment to the insurer in exchange for the

insurer’s oath to compensate the insured in the event of insure loss.

A minimum wage has been defined as the minimum amount of payment that an employer

is required to pay wage earners for the work performed during a given period, which cannot be

reduced by collective agreement or an individual contract. Minimum wage can be set by statute,

decision of a competent authority, a wage board, a wage council, or by industrial or labor courts

tribunal. Minimum wage can also be set by giving the force of law to provisions of collective

agreements. The purpose of minimum wages is to protect workers against unduly low pay.

Minimum wages can also be one element of a policy to overcome poverty and reduce inequality,

including those men and women, by promoting the right to equal remuneration for work of equal

value.

Financial planning is an ongoing process to help you make practical decisions about

money that can help you achieve your goals in life. No financial planning means bigger financial

risks (Sharma, 2018)

It might involve putting suitable wills in place to protect your family will manage without

your income should you fall ill or die prematurely, spending money differently, but involves

thinking about all of these things together.

Providing your family’s financial security is an important part of the financial planning

process. Having the proper insurance coverage and policies in place can provide peace of mind

for you and your loved ones.

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The objective of this study is to evaluate the impact of financial planning and the

importance of Micro Insurance ownership to those minimum wage earners. To show that Micro

insurance is not just another expense but it will help your family in the future. The focus of this

study is to determine several factors that leads for the minimum wage earners to hesitate and

doubt in availing micro insurance and to determine the awareness of the respondent in an

affordable and cheapest way of saving yet provides security and long term investment for the

family.

Background of the study

Most Insurance companies have neglected the poorest communities in the society when

implementing insurance programs, therefore micro insurance schemes should be developed to

increase their accessibility. However those programs should consist with lower entrance barriers

and more flexibility in entire process from enrolment to claim settlement. A study conducted by

Ahuja and Jutting (2004), explains how the demand for insurance affected by lack of access to

credit facilities in the contexts of uneven combination of future and present income levels. Since

the poor are facing survival constrains they have to take a decision on purchasing insurance for

themselves. Access to credit facilities may be weaken the survival constrain of the poor. If poor

can access to credit facilities, they are advised to get health insurance and this situation reflects

that there is a demand for health insurance for poor. In fact that people are willing to spend more

money for securing their health through an insurance policy rather than spending their own

money at a time of illness. An analysis conducted by Jütting, in 2004, revealed that the mutual

financing through paying advances and sharing risks have reduced the financial constrains to
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health care and also risk pooling and prepayment can also be developed for the financial

protection of poorest (Ahuja and Jütting 2004).

Populous countries like China, have implemented the community based health insurance

schemes for larger communities to overcome the barriers in accessibility when providing

insurance services to wider communities (Wang, Yip, Zhang, Wang, and Hsiao, 2005).By

encouraging many insurers to follow strong policy conditions of underwriting and age rating,

could be destructive for accessibility to the insurance by poor people. Several other options such

as reducing administration cost, managing to reduce the agent commissions and direct

communication via e-mails might be appropriate to reduce the premium and those guides to

make insurance products more affordable and accessible to customer (Lutzky, Sevak, and

Claxton, 1997).

Nowadays people are always concern about the quality of the services and they are brand-

conscious. Therefore, micro insurers have to secure the market trust and confidence of their clients to

ensure their service quality. Micro insurance market has immersed by the Bottom of the Pyramid

(BOP) in many places around the world. Awareness about the micro insurance among poor is a major

challenge as many of them are reluctant to pay for intangible products such as insurance that would

never be paid out and also they have a little faith on insurance companies. However informal

insurance structures based on group concept, which depend on trust and mutuality are significantly

play a major role amongst rural communities in group lending. (Churchill, 2006).

The impact of social and cultural factors of indigent also has influenced the demand for micro

insurance. For instance, some cultural believes tend to accept the ill health as a consequence of fate
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by refusing medicines and people follow religious leaders for treatment (Wiesmann and Jütting,

2000).

Most Insurance companies have neglected the poorest communities in the society when

implementing insurance programs, therefore micro insurance schemes should be developed to

increase their accessibility. However those programs should consist with lower entrance barriers and

more flexibility in entire process from enrolment to claim settlement.

A study conducted by Ahuja and Jutting (2004), explains how the demand for insurance affected

by lack of access to credit facilities in the contexts of uneven combination of future and present

income levels. Since the poor are facing survival constrains they have to take a decision on

purchasing insurance for themselves. Access to credit facilities may be weaken the survival constrain

of the poor. If poor can access to credit facilities, they are advised to get health insurance and this

situation reflects that there is a demand for health insurance for poor. In fact that people are willing to

spend more money for securing their health through an insurance policy rather than spending their

own money at a time of illness.

An analysis conducted by Jütting, in 2004, revealed that the mutual financing through paying

advances and sharing risks have reduced the financial constrains to health care and also risk pooling

and prepayment can also be developed for the financial protection of poorest (Ahuja and Jütting

2004).

Cost of Micro insurance system, financial viability and risk protection are three main factors

that are highly co related and trade off among each. In this context, insurance cover can be

designed at an affordable rate and in a way that is financially viable, but it is observed that, in a

catastrophic event, given coverage is not sufficient enough to overcome the situation by low
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income earners (Werner, 2009).By all of four aspects, affordable price is one of the robust

concerns of implementing micro insurance at successful level. Micro insurance should be

included tangible value at affordable price to the people from Bottom of Pyramid (BOP). And at

the same time, insurance business should be given assurance to long-run sustainability in

commercial sense (Churchill, 2006). Many Economists have predicted micro insurance as a

compromising tool for improving the social protection of underserved people in the society.

However a considerable number of micro insurance programs have been failed due to

disorganized plans in sustainable insurance schemes and also those were unaffordable by lower

income people (Loewe, 2006).

In the context of developing countries, two key challenges prevail in providing insurance for

lower income group category. The first challenge is to develop a product at an affordable price

which is reasonable for lower income people. The second is to generate sufficient funds (back up

capital) to cover the claims that have likelihood of occurring in future (Meze-Hausken, Patt, and

Fritz, 2009).

For developing affordable insurance products for lower income people, arrangements are

being made to keep premium and coverage at a lower level (PPP, 2010).Insurers face difficulties

in promoting affordable insurance products without supports from donors. The expandable

insurance market for household and business without the donor support is only 1% in developing

countries. This prevails at 3% in middle income counties and it extends to 30% in Developed

countries (Linnerooth-Bayer, and Mechler2006).

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We know that San Jose Del Monte Bulacan is a Rising city and it is one of the populated city

in the Philippines. Most of the people here are earning minimum and they’re working for

themselves and also for the needs of their family. The researcher thought of how do people

continue to support their family if they pass away. Especially to those who are breadwinners. If

you die, the income you’ve earned will die too. What will be the condition of your family if you

passed away? Especially when you don’t have any savings, and investment like life insurance.

This study shows the importance of life insurance regardless of the salary of the workers.

San Jose Del Monte is one of the 1 st class city in the province of Bulacan, Philippines. It is

located in the south-east of the province, it is bordered by the cities of Caloocan and Quezon of

metro manila in the south, by the town of Rodriquez, Rizal in the east, the towns of Santa Maria

and Marilao in the west and Norzagaray in the north. According to 2015 census it has a

population of 574,089 people making it the largest local government unit within the province of

Bulacan and the 18th most populated city in the Philippines.

Micro insurance is an activity providing specific insurance, insurance-like and other similar

products and services that meet the needs of the low income sector for risk protection and relief

against distress, misfortune and other contingent events.

Micro insurance product is a financial product or service where:

1) The amount of premiums, contribution fees or charges, computed on a daily basis, does

not exceed 5% of the current daily minimum wage rate for non-agricultural workers.

2) The maximum sum of guaranteed benefits is not more than 500 times the daily minimum

wage rate for non-agricultural workers.

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A micro insurance product will also cover unforeseen or contingent events such as death,

accidents and illness, fire and other extended perils, calamities and convulsions of nature and

casualties. However, a micro insurancr product has the following features not usually provided in

traditional insurance products:

1) Affordable premiums, The amount of premium or contribution per micro insurance

policy can range from less than P1.00 up to P19.00 per day. This means that the premium

on a micro insurance product can be designed to cost to as low as P30.00 per month

depending on the coverage and the guaranteed benefits. Payments will be flexible and can

be collected on the basis of the client’s cash flow.

2) Clearly defined and simple contracts with minimum restrictions, (1) a micro insurance

contract shall clearly state the face amount, benefits and terms of insurance coverage. (2)

contract provisions shall be stated in simple terms and if possible, written in English

and/or Filipino with no fine prints; (3) in the case of a micro insurance contract- (1) the

insured is entitled to a maximum grace period of 45 calendar days from due date of

premium/ contribution payment during the effectivity of contract; (2) the contestability

period is one (1) year.

3. Simple claims documentation and requirements.

According to Technavio Research (2016), Technavio announces the top seven leading

vendors in the micro-insurance market in the Philippines from 2016-2020.

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AIG Philippines

AIG is a major insurance provider with over 88 million customers across the world. This

company offers life and retirement services, casualty and property insurance, and mortgage

guarantee. It is serving the institutional, commercial, and individual customers.

Asian Life and General Assurance

Asian Life and General Assurance offers many insurance products to the various institutions

located in the Philippines. This company focuses on providing individual life insurance products

including endowment plans, whole life, and term plans, plan maturity options, capital venture,

and health protect products. In addition, it also provides group life and group health insurance

products to corporate and individual markets.

CARD Pioneer

CARD Pioneer is formed from the joining of CARD and Pioneer together for providing micro-

insurance products to the economically-and-socially challenged families located in the

Philippines. This company focuses on the community-based social development undertakings for

improving the quality of life of the economically-and-socially challenged families and women in

the country. The firm has 34 regional offices, 1,051 unit offices.

CLIMBS Life
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CLIMBS Life is among the leading vendors of insurance products in the Philippines. This

company is a composite insurance co-operative that is owned by more than 2,000 cooperatives in

the Philippines. It is majorly known for offering Grassroots insurance along with insuring co-

operative members.

AFP General Insurance Corporation

The company offers barangay family protection that provides three main coverages: personal

accident, property, and cash assistance. The company pays USD 424.41 in the case of accidental

death of the insured to the beneficiary. A cash assistance of USD 6.37 per day is paid in the case

of hospital confinement for a maximum period of 30 days to the insured. In the case of a total

damage of the insured’s property due to an accidental fire, the company pays the insured an

amount of USD 212.20.

PNB MetLife

The company provides MetLife Vishwas, which is a single premium, micro-insurance, non-

participating term assurance plan that provides life cover at a nominal cost to the insured. On

survival, the insured gets 110% or 125% of the premium (110% of the single premium is paid for

a five-year coverage term and 125% of the single premium is paid for a 10-year coverage term).

MicroEnsure
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MicroEnsure provides insurance to the mass market with more than 15 million customers in 17

markets across Asia, Africa, and the Caribbean. The company provides a range of health, life

insurance, and property products through its widespread distribution partners that include

cooperatives, microfinance companies, and mobile network operators.

Figure 1. Location of San Jose Del Monte Bulacan in the Philippines

The city is home to some of the biggest resettlement area spread over 36 barangays,

Pabahay 2000 in barangay Muzon and Towerville in barangay Minuyan proper. Most of the

city’s population come from former informal settlers along the creeks, esteros, riverbanks and

railway tracks of Metro manila. The municipality of San Jose Del Monte Bulacan was then

officially founded on March 2, 1752. There have 59 barangays.

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Theoretical Framework

The cause-effect relationship is a relationship in which one event makes another event

happen. The less people re availing life insurance is caused by Low income of the

employee’s and not well-informed enough in the importance of life insurance.

Independent variable Dependent variable

Dependent variable
Low income of the
employee’s and not well-
informed enough in the Less people are availing
importance of life Micro insurance.
insurance.

Figure 2. The cause and effect relationship

Prospect theory is a theory in cognitive psychology that describes the way people choose

between probabilistic alternatives that involve risk, where the probabilities of outcomes are

uncertain. The theory states that people make decisions based on the potential value of losses and

gains rather than the outcome, and that people evaluate these losses and gains using some
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heuristics. The model is descriptive: it tries to model real-life choices rather than optimal

decisions, as normative models do. (Kahneman, 1992)

Conventional theory according to Nyman (2003), holds the people purchase insurance

because they prefer the certainty of paying a small premium to the risk of getting sick and paying

a large medical bill.

Alternative theory according to Zweitful, Nyman & Mas-colell (1979) is a contingent state

that utility theory has also been used to explain the demand for health insurance According to

this theory, becoming ill fundamentally changes preferences. Thus, an insured consumer is able

to transfer income into the ill state where the marginal utility of income greater. Under this

theory, the demand for insurance derived from the demand for a payoff in the ill state, rather than

the demand for certainty or risk avoidance. Contingent states dependent utility theory, however

requires that separate utility functions are specified for each state in the model (e.g., one for the

healthy state and one for ill state.) In the present theory, the same single argument utility function

describes both healthy and ill states. It is only the perspective from which the income gain is

viewed that changes with health status.

When the insurance choice is expressed as an expected gain in utility, the choice to purchase

insurance becomes like the choice in any standard economic transaction: a commodity is

purchased because the utility gained from a commodity exceeds its cause in terms the utility

forgone from the other goods and services that could have been purchased. In this case, the
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commodity purchased in additional income in a pre-specified state (e.g., when ill), and the utility

gain is an expected utility. Other than that, it is a normal quid pro quo transaction.

In this case these other goods and services are sometimes given up in one state (illness)

and sometimes in other (health). But, again this is like any other purchase made where there is

uncertainty about the consumer’s future (health) state. The choice to purchase insurance requires

that these other goods and services be given up in order to purchase an insurance policy that has

an expected utility gain associated with it.

An alternative specification of expected utility theory is described, one that emphasizes

the role of the life insurance payoff, a discussion section as Conventional Expected Theory and

Prospect theory. Under the simplest form, conventional expected theory assumes that the

consumer could purchase full insurance coverage for the actuarially fair premium for which the

consumer would receive a payoff transfer. Because of the way that the theory is specified, it

appears as if the choice is between certainty of actuarially equivalent losses.

The choice to purchase insurance is associated with uncertainty and a higher level of

expected utility, therefore, it appears as if insurance is demanded because of the certainty it

provides.

Personal Financial Planning (PFP), Most important theory on decision making pertaining

to financial investment with respect to PFP is based on the foundations of Modigliani, Makowitz

and Becker. Altfest acclaims that there should be more research on this theory, as it is a

challenging task for the financial planner for taking decisions. PFP is a process where individual
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can accomplish their anticipated goal by effective utilization of their capitals. Harrison (2005),

states financial plan is the intentions for achieving desired future financial goal from the current

financial situation.

David et al (2016), explained financial planning is not restricted to only making

pronouncement for accomplishment of money and wealth but emphases on the planning of

various aspects like; managing cash flows, insurance, tax, estate, education planning etc. For

assisting clients, Financial planner are giving tailor made solution for the financial problem.

Financial planner specialized body those have knowledge about financial planning, they

generally guide and giving propositions to the Clint about the current market scenario.

Michel et al (2016), found seven key factors of trust i.e., feeling, honest, confidence,

curiosity, accountable and competence which should be there in between the Clint and financial

planner. The author recommended, there should be trust in affiliation between the financial

planner and Clint for PFP decision.

Lish Huang (2016), specified several guidelines of financial planning for college graduates

with distinct apprehension to financial safety for prudent decision making. Earlier in some

research, some author applied traditional economic approach theory for the household financial

planning. Conventional financial planning was developed in early 1970’s and it was useful for

low and middle income group people.

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Chieffe et. al (1999), discussed financial planning is evaluated by two crucial factors i.e. one

factor related to time that may be current time and another factor related to systematic and

systematic financial event. (retrieved from http://www.ijpam.eu)

Conceptual Framework

The conceptual Framework applied in the study is the Input-Process-Output model to analyze

the process. It is a graph that identifies the input, process and output of the study. The process

represents the activities on how the researcher gathered the data and information to the

respondents to come up with the result or output of the study.

According to Regoniel (2015), A conceptual frame work represents the researcher’s synthesis

of literature on how to explain a phenomenon. It maps out the movements required in the

sequence of the study given his preceding information of other researchers’ point of view and his

observations about research. The conceptual framework is the researcher’s understanding of how

the particular variables in the study connect with each other. Thus, it identifies the variable

required in the research investigation. It is the researcher’s “map” in pursuing the investigation.

Evaluation sheet
Input Evaluation of micro
Process showingOutput
the analysis
Minimum wage insurance on the factors
earners profile: implemented in San affecting the
Age: Jose Del Monte minimum wage
Gender: Bulacan through: earner in San Jose
Civil status: Del Monte Bulacan in
-Questioners
Educational availing Micro
attainment: -Surveys Insurance.
Monthly income:
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Feedback

Figure 3. Paradigm of the study

The input- output (IPO) Model is a functional graph that identifies the input, outputs, and

processing tasks required to transform input into outputs. (Schembri, 2012).

In this IPO model, the research factors summarize the feedback of the Minimum wage earners

and to determine the importance of Micro-insurance. The Factors affecting for not availing

Micro Insurance of minimum wage earner in San Jose Del Monte Bulacan that serve as the

research input. In order to get relevant findings and conclusions, the researcher gathered data

through questioners and survey to the respondents. Based upon the processes, the research output

comes up to knowing The Factors affecting for not availing Micro Insurance of minimum wage

earner in San Jose Del Monte Bulacan that serve as the research

Statement of the Problem

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The main objective of the study was to determine and evaluate the importance of life

Insurance to the Minimum wage earners of San Jose Del Monte Bulacan.

Specifically, it attempted to answer the following sub-problems:

1. What are the demographic Profile of the Respondents in terms of:

1.1 Age

1.2 Sex/Gender

1.3 Civil Status

1.4 Educational Attainment

1.5 Occupation

1.6 Monthly income

2. What is the perception of the respondents regarding the benefits of Micro Insurance?

3. What are the hesitation encountered by the respondents in availing micro insurance?

4. How the strategies and promotional campaign affects the respondents in knowing the

importance of life insurance?

5. What is the level of willingness by the respondents in availing micro insurance?

6. What are the contribution of the research to convince respondents to avail life insurance

through the study of Importance of micro insurance to the minimum wage earner in San Jose

Del Monte Bulacan?

Significance of the study

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This study is mainly about the perceived importance of micro insurance aong the

minimum wage earners in San Jose Del Monte Bulacan. Therefore the proposed study

tends to benefit the following:

To the respondents (Minimum wage earners) of the study

- The result of the study is to give the respondents the opportunity to evaluate the

importance of micro insurance on their lives. The respondents will identify the financial

planning in terms of finances to have Micro insurance. It will help them realize the

importance of micro insurance not just an expense but act as a long term investment that

would help them ease their financial burdens in case of unfortunate events.

To the concerned government agencies

- The findings of this study will provide relevant information about the existing situation of

the insurance industry that plays a vital role in the monetary and fiscal policies release by

the government, thus to the national economy and how they will take positive sections to

collaborate and suggest different and new requirement and policies regarding micro

insurance.

To the Insurance Industry

- The result of this study will accommodate the industry itself on what planned and

advertising campaign procedure they will imply, develop and improve their organization.

It would also help them improve its existing marketing strategies in order to cater more

micro insurance buyers to purchase their investment.

To the researcher
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- The willingness to contribute to have a better and productive country will always be a

great achievement and stay with the researcher. And the researcher will contribute the

data gathered which could be useful to the micro insurance industry and will be

strengthened their effort to provide better services to have additional number of people.

To the Future Researchers

- This study provides a reference for their study when it is related to micro insurance and

the importance of this to people especially to those minimum wage earners.

Scope and the limitation

The scope of this study is to examine the importance of micro insurance to the minimum

wage earner in San Jose Del Monte Bulacan knowing that this city is a rising city and it is the

18th most populated city in the Philippines based on 2015 census it has a population of 574,089

people.

This study only covers the minimum wage earners and not high wage earners or high

class residents and the data will gather only in San Jose Del Monte Bulacan

The researcher randomly selected two hundred (200) respondents of minimum wage

earner and a resident of city of San Jose Del Monte Bulacan

The purpose of this study is to show the importance of investing in life insurance because

most of the Filipinos earn minimum wage and through this issue the discussion of this study is

all about the reason why most of the minimum wage earners are afraid or don’t have the courage
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page22| 22

to invest in a life insurance on for their future security and through this we will know the effect

and the importance of the insurance to the people who earn at a minimum wage.

Definition of terms

Micro insurance. products offer coverage to low income households or to individuals who

have little savings and is tailored specifically for lower valued assets and compensation for

illness, injury of death. (Investopedia)

Minimum wage earners. It is referring a worker in the private sector paid the statutory

minimum wage or to an employee in the public sector with compensation income or not more

that the statutory minimum wage in the agricular sector where he/she is assigned.

Investment. is the action or process of investing money for profit or material result.

Beneficiaries. is a person who derives advantage from something especially a trust, will or

life insurance policy.

Insurer. A person or company that underwrites an insurance risk. The party in an insurance

contract undertaking to pay compensation.

Insurance. Is a practice or arrangement by which a company or government agency provides

a guarantee of compensation for specified loss, damage, illness or death in return for

payment.

Financial risk. is any of various types of risk associated with financing, including financial

transactions that include company loans in risk of default. Often it is understood to include

only downside risk, meaning the potential for financial loss and uncertainty about its extent.
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page23| 23

Financial vulnerability. the ability to recover from sudden financial shocks, which include

sudden and unexpected loss of income and/or a sudden nd uncontrollable increase in

expenditure.

CHAPTER II

REVIEW AND RELATED LITERATURE

This chapter takes significant view at the definitions of Micro insurance. This literature

review summarizes the theoretical contexts, publications and researches with bearing on the

study, Brief collections of studies that are closely associated to the research are also summarized

in detail.

Most people determine life is full of surprising events that can have far-reaching

consequences. Your car is sideswiped on the road and damaged beyond repair. A family member

falls ill and can no longer work. A fire or other tragedy destroys your home. Your spouse dies

suddenly. Although most people don’t like to think about possibilities like this, protecting

yourself and your family against unexpected events is part of sound financial planning. Insurance

plays a central role in providing that protection. [ CITATION Git141 \l 13321 ]

According to Parvez (2017),Micro Insurance is recognized as a useful tool in economic

development. Since many low-income people do not have access to adequate risk-management

tools, they are vulnerable to risks and economic shocks; the way for them to protect themselves

is micro insurance. By helping low income households in managing risk, it can assist them to

maintain a sense of financial buoyancy even in the face of significant vulnerability.

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Micro Insurance is the tool that protects rural as well as poor urban people by offering low

cost insurance to mitigate their risk. It aims at building mechanisms for insuring the poor against

various risks. [ CITATION Muk15 \l 13321 ].

As per the information given by International Mutual Cooperative Insurance Federation, It is

discovered that 24% of world insurance market represents the mutual and micro insurance sector

(Picard, 2009).

Willingness to buy is always reflected the willingness to pay which is maximum price a buyer

is willing to pay for given quantity. Attitudes of consumer towards fake products, perceptions of

social consequences and innovations have been influenced the consumer`s willingness to buy

fake products (Vida, 2007).

As for long term insurance covers that is life insurance, a similar pattern of willingness to buy

can be observed regardless of the gender of the consumer and the willingness increases gradually

depending on their value of assets. However it is recognized that both men and women in rural

communities have a least willingness to pay for insurance. Most vulnerable consumers are

interested in spending on long term insurance policies, thus long-term care utilizations required

for a proper analysis with a comprehensive data base. The behavior of men and women towards

the negative willingness to pay can be observed in the bottom half of the income pyramids in a

country. A strong negative response on willingness to pay can be seen among women where the

distribution despite prices is lower than actuarially fair as it was loaded negatively. It is

suggested to consider this situation seriously at least for the demand of women for private long-

term care insurance. However the consumers represent high risk segment are willing to pay a
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page25| 25

higher premium above actuarially fair price. And also other factor for negative willingness to pay

is structure/contents of private insurance contact (Jeffrey, Amy, 2004).

Attitudes of consumer towards fake products, perceptions of social consequences and

innovations have been influenced the consumer`s willingness to buy fake products (Vida,

2007).Financial Purchasing behavior of the consumer can be determined through consumer

attitude and the product perception (Huber and Schlager, 2011). Consumer’s decision making

can be divided in to three metal components such as KAI (Knowledge, attitude, intension), those

are analyzing all the information including commercial and non-commercial and finally it is

influenced consumer’s willingness to pay. It is revealed that the willingness to buy is the

threshold for emerging micro insurance markets. The real willingness to buy can be observed

through the behavior of consumer in their purchasing process (Xia and Zeng 2006).

Further it is exposed that a higher consumer willingness can be obtained by introducing an

insurance benefit package in the enrollment process and this may impact on getting a higher

consumer responsiveness towards micro insurance (Dror, and Koren, 2007).In terms of

“customer`s perspective”; product pricing and innovative products play a 6 significant role in

marketing management in order to enhance the customer`s willingness to buy.

 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page26| 26

And also a valid estimate of willingness to buy is required from potential customers to develop

an appropriate pricing strategy for the Insurer. This estimate can be utilized so as to get the

feedback on responsiveness about the changes of prices in the market and also formulating the

demand function (Breidert and et al, 2006).

Willingness to accept is an additional psychological aspect to be taken in to consideration

along with the willingness to pay and willingness to buy. Experiments revealed that the

willingness to accept (WTA) considerably exceeds the willingness to pay in a typical market and

this situation can be perceived in the market where the consumption goods that are not

repeatedly bought and sold. Gary Mclelland and William schulze have conducted several

experiments on “either submit bids to buy (WTP) or offers to sell (WTA) for either a lottery

ticket or an insurance policy”. This experiment provides signaling, whether they would sell the

lottery with a loss of full value or they will keep it without selling at any price. In terms of

insurance, consumers are taking decisions on willingness to accept by looking at the expected

value of the insurance policy. A study carried out by McClelland, Schulze and Coursey revealed

that willingness to accept is equal to willingness to pay at an event where customers bid for

lottery ticket. However when it is applied for bidding insurance against a loss, results indicates

consumer’s willingness to accept exceeding willingness to pay (Hoffman and Spitzer1993).

Jain and Goyal (2012), noted that Insurance means a collective bearing of risk. It provides

people a security and protection that they will be recompense in the event of a calamity or

disaster. It also helps the business men and individuals to give protection to themselves in any

terrible disaster. The Indian Insurance System concentrated mainly among private sectors due to
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page27| 27

nationalization of life insurance companies. For a very long time, some of the Indian insurance

companies faced competition and operated in a protected economy. After the year of 1999 the

market of insurance products and services in India has become more competitive than ever

because of the big private

Insurance companies being introduced in India. Because of the increase competition with the

private and public sector of insurance companies they decided to widen the horizon of their

products and services to meet the demand and fulfill their satisfaction through better facilities.

To feel the taste of success, the insurance companies in India will need to renovate their business

model to create a large volumes, highly scalable operations, package and delivery products in the

dynamic market and so many more renovation and changes just to meet and fulfill he need and

demand of the consumers. But through more number of people taking insurance, their level of

awareness towards the rights and duties that they have is still very low. That’s why this study

conduct a research to full understand the awareness of the people towards the right and duties of

Life insurance products after the privatization of the insurance sector.

Hendon Redzuan (2014), stated in his study that there are seven determinants of life insurance

demand that has a negative and positive effect to the consumers of Malaysia. (1)Income,

(2)Number of dependents, (3)Education, (4)Social Security, (5)Inflation, (6)Savings, (7)Interest

rates. Income is one of the most important factor found in many studies to be considered affects

the demand of life insurance. The capability to pay life insurance policy premium has being

proven and studied to be related to the level of income. As income grows, the insurance is

possible to become affordable. Number of dependents, the desire to protect dependents or love
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page28| 28

ones from financial losses in the time of death to the wage earner is the major driving force for

life insurance purchase. Education has a good result in greater understanding of people to the

function and concept of insurance. The higher the level of education associated with the higher

awareness of insurance the more people are willing to spend on insurance products. Social

security for the survivor social security death benefits is an important income source that may

affect the individuals demand to life insurance. The effect of inflation on life insurance demand

has been reported in many studies. Because during economic volarity and high inflation; the

consumer’s prefer to choose short term and liquid investment rather than long term financial

instrument such as life insurance. According to Black and Skipper studied that consumers prefer

to save their money in the banks rather than to buy insurance when the savings rate increases.

Since a higher savings rate the banks provide the more consumers will prefer to save in the

banks. Interest rates was found negative to have a relationship with life insurance assumptions.

Their hypothesis said that interest rates affection life insurance demand is in conclusive.

According to 2017 PIRA FACT BOOK, page32 “Making Insurance Affordable, Accessible to

more Filipinos”, the government in partnership with the insurance industry has established

microinsurance as away of making insurance affordable and available to more Filipino selling

insurance protection for as low as P120 a year for security guards, students, public utility drivers,

and farmers. Specifically geared toward slow income households, micro insurance offers bite-

sized insurance products that effectively mitigate risks while reducing the weakness of those in

the lower end of the market. According to research by the Philippine Institute for Development

Studies, the term “micro” pertains to the capacity of a program to handle the small, sometimes
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page29| 29

irregular cash flow of unfortunate families who have been excluded in the commercial insurance

system. The beginning of micro-insurance may be traced to as early as 2006 with the issuance of

the First Circular on Micro-insurance by the Insurance Commission that led to the creation of

Mutual Benefit Associations. Until 2009,the bulk of what constituted micro insurance products

was primarily credit life insurance a life insurance policy designed to pay off a borrower’s debt

in case of death.

Lorenzo Chan, president of Pioneer Life and a devoted advocate of micro insurance, says this

kind of innovation can be considered the "sachet" of insurance. He said this developed because it

is the only insurance many Filipinos could afford “The market lives on a very tight budget and

often do not have the means to wait for lengthy periods," he said. Chan noted that during the

after math of super typhoon Haiyan (Yolanda), insurance companies had to be quick with

alternative documentation requirements to be able to settle claims. “Back then, we promptly paid

the claims of 1999 families in Leyte and Samar. That’s 20,199 families less dependent on dole

outs and evacuation centers. That’s 20,199 families who started rebuilding so on as their claims

were settled.”

While micro-insurance may not provide the market with all the needed coverage, it offers

appropriate cash assistance, enabling those who suffered losses to start rebuilding their lives and

properties, settle their bills, bury their dead and move on quickly. Chan was just elected to the

Board of Directors of the Micro-Insurance Network a non-profit organization based in

Luxembourg and the only international multi stakeholder platform in the micro insurance

industry with experts committed to promoting the development and delivery of insurance
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page30| 30

services to low income people. As this developed, the Asian Development Bank Japan Fund for

Poverty Reduction (JFPR) concluded its long-running study on the development of micro

insurance in the Philippines.

Michael F. Rellosa, deputy chairman of PIRA, congratulated the ADB for such a very

important project. "How I wish this project could continue on until we micro insurance becomes

part of the everyday life of every Filipino.” Rellosa said that the ADB and PIRA's technical

working group on micro insurance have worked together for the development of regulatory

frame works and the alternative dispute mechanisms for micro insurance.

"We in PIRA believe that poverty should not be an excuse for not buying insurance. On the

contrary, we insist that poverty should are as on to buy insurance because believe it or not, the

poor era person is, the more he or she needs insurance he said. There are already atleast 22 PIRA

member companies with micro insurance products. As early as2008, there has been a typhoon

weather-indexed-based crop insurance from one of PIRA members, Rellosa said. "These

companies have seen the potential of micro insurance. They see what economists label as the

"fortune at the bottom of the pyramid," he said. Rellosa urged the ADB-JFPR to consider in its

future direction to focus more on insurance providers and come up with a study on them.

The PIRA executive also listed two wishes that the industry would want from the government.

First, is lower taxes for all non-life insurance products especially micro insurance. "Micro

insurance is a tool for poverty alleviation and disaster risk mitigation. May be it is high time that

we scrap all the taxes on micro insurance altogether to make it more affordable. This way, more

Filipinos would be able to afford insurance,"Rellosa said. And second, a regulatory environment
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page31| 31

that fosters growth, and does not restrict it. "We all have one hope and one dream. And that is to

harness our market's potential and make insurance inclusive for all, not only for the rich but more

so for the poor.”

The reasons for lack of reliability for insurance companies are social aloofness, geographical

location of rural communities and also it is time bound. Further micro insurance clients often

trust mutual insurance arrangements than commercial organizations because the insurance agents

from these organizations may come from different walks of lives, with different social

backgrounds and attitudes. However, Insurance companies ready to provide reliable micro

insurance products for their clients who pay regular premiums and people believe that they get

claim payments on time when they encounter with perils(Loewe, 2006).It is highly believed that

the successful selling is heavily based on trust perception in financial and insurance services

(Urban, Sultan, and Qualls, 2000).

Majority of micro insurance clients can be found among low income earners who are in the

Bottom Of Pyramid (BOP),and their income get fluctuated frequently and also their income flow

get badly affects when there are calamitous (Cohen, and Sebstad., 2005).

Micro insurance product developers are encouraged to design micro insurance products for

low-income groups with the features of balanced price, cost, sustainability and affordability

(Ahuja and Jütting 2004). Premium for low income people have been set up at a considerable

percentage from their income (Ahuja and Guha-Khasnobis, 2005).

Accordingly, micro insurance products should be affordable by poor otherwise they will not

accept these insurance systems. Preparations such as introducing slight benefit packages,
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page32| 32

premium payment options (time option) and linking to the subsidy programs, could be arranged

to overcome this situation (Churchill, 2006).

In some instances, premium is subsidized and it is being set at a level that is not exceeded the

willing amount the people desired to pay (Biener, 2013). Alternatives such as distance-based

insurance may lead to growth of affordability by enabling customers to buy insurance policies

according to their risk as they can afford. However this system should require the public support

to develop a distance-based insurance policy (Litman, 1997).

Most of the risks faced by micro insurance clients are uninsurable. However they have failed

to make continuous premium payments on time even for their insurable risks (Morduch,.2006).

Clients are ready to pay for insurance, only if they are allowed to withdraw money in future and

also if they are well aware of the benefits specified in the policy. Otherwise they are not willing

to spend for insurance from their current income (Ahuja and Jütting 2004).

Accordingly, it is revealed that the premium charged for micro insurance is significantly low

as its distribution cost held at a lower level (Gitau, 2013).

Sum insured (coverage) is a key factor in promoting micro insurance since clients get

persuade when appropriate coverage is set up for insurance products. Therefore it is important to

understand about “willingness to pay” because micro insurance clients simply do not intend to

pay premiums when they are not covered their necessities or if they do not feel its usefulness for

them (Chatterjee, 2005).As a strategy, many Insurance companies tent to use narrow networks to

maintain an affordable premium for their clients. As a result the quality of the insurance service
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page33| 33

become inferior and clients lose their trust on insurance and it may create situations where they

not go for repeat purchasing (Blumenthal, and Collins, 2014).

Customers are not prepared to pay for all benefits given through the insurance policy.

Accordingly willingness to pay may drive unsuccessful directions in situations where the welfare

facilities are also bundled with the insurance. In some cases, customers might be willing to pay

for the insurance with inappropriate welfare bundles. Consumers typically select insurance

policies by depending on their “affective forecasting” which sometimes leads them to choose

inappropriate bundles. Occasionally consumers overvalue the impact of welfare component of

losses and gains (Cass, 2007).

When discuss about quality of life measures majority of them are correlated with the

willingness to pay for insurance. A study conducted by Blumenschein and et.al in 2001,

identified that the willingness to pay for cure of asthma is related to both objective and subjective

due to severity of disease. When analyzing willingness to pay from householder`s view point,

marginal implicit prices can be interpreted as marginal willingness to pay (Bin, Kruse, and

Landry, 2008).

Additionally the experiment carried out by Cummings and et.al from 1995 to 1997, suggested

that when comparing hypothetical and real willingness to pay, hypothetical responses sometimes

significantly overvalue the willingness to pay. (Blumenschein and et al, 2001). Willingness to

pay can be stated as the only one of three valuation methods that can be used to appraise key

benefits (Mitchell and Carson, 1981).

 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page34| 34

Usually the Insurance premium is higher due to border coverage provided for insurance

clients. Accordingly, people from lower income group face the problem of paying premium

(willingness to pay) continuously. Then insurer should take precautions or actions in line with

smoothing the financial sock of risks, such as medical emergencies and healthcare, faced by

lower income group. To overcome this situation, three solutions are proposed. First, the premium

should not be so high. Second, the insurance cover is considerably comprehensive to cover the

risks faced by lower income earners. Third, to reduce financial stress of the client, there must be

a proper system introduced for premium collection and methods (McCord, 2001).

In some contexts, it is analyzed that the willingness to pay for insurance to avoid kind of risk

is equal to the discount or price decrease of these valuable factor due to such risk. For instance,

properties are located in flood prone areas, owner of those properties are willing to pay for

insurance to mitigate that risk reflects the households’ willingness to pay to avoid such risks

(Bin, Kruse, and Landry, 2008).

Consumer awareness about the benefits and packages available with insurance should be a

significant factor and it is a factor which will be influenced the increasing of willingness to pay

for insurance (Onwujekwe, et. al, 2009).

Most of the microfinance institutes work with low income earners in rural communities, have

identified that their clients not only need credit facilities but also they look for another facilities

such as insurance facilities (Llanto, 2007).

Microfinance institutions can provide valuable connections to micro insurers in providing

micro insurance facilities in Sri Lanka (Wiedmaier-Pfister, Wohlner, 2004).

 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page35| 35

It is acknowledged that there is enough room to work out the risk and insurance to develop

new innovations those provide a better access to poor (Morduch, 2006). When considering the

risk of poor health conditions, people seek another alternative to mitigate this risk when the

public health services become underserving. Therefore, poor households rely largely on self –

insurance or informal group based risk management mechanisms where they have easy access.

To increase the outreach of micro insurance for low income households, micro insurance needs

to be addressing the areas of accessibility, coverage, period of coverage and affordability

(Cohen, and Sebstad. 2005).

The way that micro insurance products are delivered to lower income groups is a key

determinant that micro insurance being different from other insurance arrangements (Gitau.

2013). Generally micro insurance products are being delivered via Micro Finance Institutions

(MIFs), other governmental and non-governmental institutions; execute their business activities

in rural communities. Although the premium charge for micro insurance products prevails at a

lower level, further arrangements need to be prepared to minimize the distribution cost as well

(Njugunaand Arunga2012).

In order to improve the accessibility by rural community, certain micro insurance schemes

have developed mechanisms that have less entry barriers for the lower income groups (Ahujaand

Jütting 2004). However it is being noticed that the distribution channel is a hub in terms of

improvement of micro insurance around the world. Nowadays, requirement of suitable

distribution channels has become more significant so as to expand the accessibility for insurance

in the rural mass (Marco, 2015). Micro insurance programs can be undertaken as part of social
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page36| 36

protection functions which involves redistribution internal cross-subsidies or linking public

subsidies to their members (Jacquier, et al., 2006).

In a context of rural communities, the accessibility to the health care by poor families is very

limited since they have uneven and insufficient cash flows. Hence they are seeking alternative

methods such as informal self-insurance and informal group-based systems those have easy

access to poor community to reduce their health hazards. These approaches have disadvantages

because those are built up with groups consisting exact poor category and also there the women

participation is very high. Establishment of these informal community groups is highly existed in

the areas where the care given by private and government institutions is least. Another factor

influencing accessibility for the micro insurance is the availability of transportation facilities in

rural communities. The client interface of insurer can be mentioned as another dimension which

influences the accessibility of rural communities. Thus many people experience delaying of their

claim process. Complex and numerous paper works involved in insurance also bring a hassle and

then create poor accessibility for micro insurance. However the personal savings and emergency

lendings are the instant solutions to mitigate the risk faced by poor (Cohen, and Sebstad, 2005).

CHAPTER III

RESEARCH METHODOLOGY

This chapter provided the summary of the method of methodological approaches and

procedures the researcher used that will be applied on the study in order to find out the objectives

of the study. Generally, this chapter briefly verifies the methods of research use, population
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page37| 37

frame and sample size, description of the respondents, instrumentation, questionnaire, data

gathering procedure and statistical treatment of the data.

Method of Research

The researcher used substantial method to gather the data. The method will use is

appropriate to the problem. In this study, Descriptive research method was used by the

researcher. Descriptive research is defined as a research method that describes the characteristics

of the population or phenomenon that is being studied. This methodology focused more on the

“what” of the research subject rather than the “why” of the research subject. And also, it is a

study designed to portray the participants in accurate way. One way of collecting information is

observational, defined as a method of viewing and recording the participants.

Population Frame, Sampling size and Sample Techniques

In selecting the number of respondent of Minimum wage earners assured at City of San

Jose Del Monte Bulacan, the Random Sampling will be use.

Random sampling is one of the simplest form of gathering data from the total population.

Under the random sampling, each member of the subset carriers has equal chance of being

chosen as a part of the sampling process. A sample chosen randomly is meant to be an unbiased

representation of the total population.

In selecting the number of respondents’ random sampling method were applied, the

researchers floated questionnaires to two hundred (200) respondents from City of San Jose Del
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page38| 38

Monte Bulacan. The respondents randomly chose to answer those questionnaires that were given

to them.

Description of Respondents

The Minimum Wage earner in City of San Jose Del Monte Bulacan were the respondents

of the study. The total number of minimum wage earner for every area is 40 and all are from the

city of San Jose Del Monte Bulacan.

The respondents are fully complied in the study since the methodology will use is a

Simple Random Sampling approach. Using the descriptive method questionnaire, the researcher

will survey 200 minimum wage earners. The researcher will visit different area of City of San

Jose Del Monte Bulacan.

Research Instrumentation

For the purpose of data gathering the researcher will use the survey questionnaire as the main

instrument. The questionnaire was entitled “The Importance of Micro Insurance As Perceived By

the Minimum Wage Earner in San Jose Del Monte Bulacan: Basis For Financial Planning” the

questionnaire is divided into five parts, Part I talks about the Demographic Profile of the

respondent. The gender, civil status, educational attainment, monthly income and occupation of

the respondents. Part II talks about the Perception of the respondents with the benefits of Micro

Insurance. Part III focuses on the Barriers or Hesitation of Minimum Wage earners in availing

Micro Insurance of the residence of San Jose Del Monte Bulacan. In Part IV is knowing the

effectivity of Advertising and promotion strategies by insurance companies towards consumer’s

 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page39| 39

awareness regarding Micro Insurance. Lastly, Part V talks about the level of willingness of the

respondents in availing Micro Insurance.

The five-point scale was necessary to measure the assessment of the degree of Agreement to

the following questions related to the Micro insurance.

Value Measured scales of Verbal Interpretation

computed Mean of Computed Mean

5 4.50-5.00 Strongly Agree
4 3.50-4.49 Agree
3 2.50-3.49 Undecided
2 1.50-2.49 Disagree
1 1.00-1.49 Strongly Disagree

The other one five-point scale was necessary to measure the effectiveness of promotional

strategies of Micro Insurance companies towards consumer’s awareness.

Value Measured scales of Verbal Interpretation

computed Mean of Computed Mean

5 4.50-5.00 Highly Effective
4 3.50-4.49 Effective
3 2.50-3.49 Undecided
2 1.50-2.49 Least Effective
1 1.00-1.49 Not Effective
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page40| 40

The other one five-point scale was necessary to measure the willingness of the

respondents to avail life insurance.

Value Measured scales of Verbal Interpretation

computed Mean of Computed Mean

5 4.50-5.00 Very much Willing
4 3.50-4.49 Willing
3 2.50-3.49 Undecided
2 1.50-2.49 Unwilling
1 1.00-1.49 Very much Unwilling

Data Gathering Procedure

The researcher is planning to go and visit the different area of San Jose Del Monte

Bulacan and planning to distribute the prepared questionnaire as a main tool in formulating the

research data. In this study, the questionnaires are basically short and require the respondents to

provide a check mark response. The respondent’s choices are limited to the set of options

provided.

The survey questionnaire also recognized questions which give the respondent a chance

to express their ideas or any suggestions from set of options. Spaces are provided for respondents

to make their inputs.

 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page41| 41

Statistical Treatment

Quantitative techniques will be used to determine the following: (a) The Demographic

Profile of the respondent (b) Perception with the benefits of Micro Insurance among Minimum

wage earner in San Jose Del Monte Bulacan (c) Hesitation by the minimum wage earners in

availing micro insurance (d) The effectiveness of advertising and promotional strategies by the

insurance companies in towards consumer’s awareness in micro insurance. and (e) Level of

willingness of the respondents to avail micro insurance.

Ranking will be used to identify the order of standing from highest to lowest of the

variables. he formula below is the formula of ranking.

f
%= ×100
N

Where:

%=Percentage f = Frequency

N= number of respondents

Weighted Mean is a statistical tool used in the understanding of the data and the testing of

the effective hypothesis. The formula will use in this statistical technique is:

⅀ fx
X=
N

Where:

X= weighted mean
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page42| 42

fx = the sum of the products of f and x

F= the frequency of each weight

X= the scale value of each

CHAPTER 4

ANALYSIS AND INTERPRETATION OF DATA

This chapter presents the data gathered, the result of statistical analysis done and the analysis

of findings. Data are presented in a form of table and charts followed by a sequence of

interpretation and claims that supports the result of the findings. The data are interpreted and

analyze in order to come up with the hypothesis regarding the Importance of Micro Insurance as

perceived by the minimum wage earners in San Jose Del Monte Bulacan as a basis for financial

planning.

SEX

29%

71%

MALE FEMALE

Chart 1 presents that the majority of the respondent were male which consist of 71% followed

by females which has the percentage of 29%. It is said to be that most of the minimum wage
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page43| 43

earners are male

CIVIL STATUS
because they are the

one who is
2%
SINGLE 5%responsible for
32% MARRIED
SEPARATED earning a living as

67% they was called to be

the “Pillar of the

Home”.

Chart 2 depicts that the most number of the respondents are single with a percentage of 66%

and 32% are married while there is a 2% of the respondents who answered the questionnaire

were separated.
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page44| 44

EDUCATIONAL ATTAINMENT
3% 11%
11%

18%

58%

ELEMENTARY GRADUATE HIGH SCHOOL GRADUATE COLLEGE GRADUATE

UNDERGRADUATE VOCATIONAL

Chart 3 shows that the majority of the respondents educational attainment were high school

graduate which constitute of almost 58%. Almost half of the minimum wage earners finished

their secondary education. Minimum wage earners who graduated in college ranked second

which has a percentage of 17% followed by both the respondents whom graduated with

elementary and undergraduate which has the same percentage of 11% and lastly was the

respondents who undergoes vocational form of education which resulted in 3% of the results.

According to the study presented by the Philippine Statistics Authority (2009) regarding the

wage and salary of workers resulted in more than three in every five wage and salary workers

were male. This proportion was true across all the survey rounds. Majority of the wage and

salary workers, around 60.0 percent, were at least high school graduates. One in every five had a

college diploma. Female wage and salary workers were more educated compared to their male
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page45| 45

counterparts. About 30.0 percent of the females were college graduates while the males

comprised only 13.0 percent.

According to Redzuan (2014),the higher the level of education associated with the higher

awareness of insurance the more people are willing to spend on insurance products.

AGE

20%

32%

16%

34%

18-22 YEARS OLD 23-27 YEARS OLD 28-32 YEARS OLD 33 AND ABOVE

Chart 4 presents that most of the respondents are aged 23-27 years old which has a percentage

of 33% followed by 18-22 years old which compromises of 31% of the total sample. Next in

rank is the age group of 33 and above which got the total percentage of 20% and lastly is the 28-

32 years old age group which completes the 100% which constitutes the least percentage of 16%.
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page46| 46

MONTHLY INCOME
13%
28%
11%

49%

BETWEEN 5,000 AND BELOW BETWEEN 5,0001-8,000

BETWEEN 8,001-11,000 BETWEEN 11,001 AND ABOVE

Chart 5 represents the monthly income gathered by the researchers to 200 respondents. It

shows that the top on the rank of the respondents has a monthly income between 8,001-11,000

which has a percentage of 49%. Second on the rank were respondents who earned between

11,001 and above with 28% of the total percentage. Next in the rank were earners between

5,001-8,000 which got the total result of 13% and lastly were the earners who has the income

between 5,001-8,000.
 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page47| 47

Rank Mean Interpretation

It provides protection for the family in case of 1 4.55 STRONGLY AGREE

unfortunate event.
It provides financial security. 2 4.31 AGREE
Affordable compared to other insurance. 3 4.165 AGREE

It is easier to acquire loans if stock or property is 4 4.045 AGREE

secured.
It is acts as a long-term investment. 5 4.025 AGREE

Grand mean 4.219 AGREE

PART II: PERCEPTION WITH THE BENEFITS OF MICRO INSURANCE

From the above table, it can be inferred that minimum wage earners strongly agreed that they

perceived the importance of micro insurance as protection for the family in case of unfortunate

event as it ranks on top of the given choices. Second on the rank viewed micro insurance as a

provider of financial security as it is agreed by the respondents. Also, respondents agreed that

micro insurance is affordable compared to the other insurance which got the third rank on the

above data gathered. Fourth on the rank perceived micro insurance as it is easier to acquire loans

if stock or property is secured and the least on the given choices were respondents agreed that

micro insurance acts as a long term investment.

 BULACAN STATE UNIVERSITY – SARMIENTO CAMPUS Page48| 48

Rank Mean Interpretation

The respondent does not have enough idea about 1 4.14 AGREE
Micro Insurance and its benefits
The respondent does not have enough budget. 2 4.115 AGREE
The respondents have other Financial Priorities. 3 4.07 AGREE
It is just a financial burden. 4 3.96 AGREE
It has a lot of requirements needed. 5
3.925 AGREE
Grand Mean 4.042 AGREE
PART III: HESITATION IN AVAILING MICRO INSURANCE

The above table depicts that the number one reason why minimum wage earners hesitate in

availing micro insurance is that they do not have enough idea about what is micro insurance and

its benefits. Another reason is that the respondent agreed that they are reluctant in availing micro

insurance because they does not have enough budget which is second on the rank. Third on the

rank was the respondent have other financial priorities. Fourth on the rank gathered that micro

insurance is just a financial burden as agreed by the respondent. And ranks on the bottom reason

of hesitation agreed that micro insurance has a lot of requirements needed that is why they are

doubting in availing it.

According to the FIS Topline Report conducted by Bangko Sentral ng Pilipinas (2017),

among those who do not have insurance, the most common reason is lack of enough money/ no
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budget (66%). Some do not see the value in availing (30%), while others say it is too expensive

(23%). A few say it provides slow return (5%), while others either do not trust the providers

(4%) or do not have work that will enable them to buy an insurance product (3%).

PART IV: ADVERTISING AND PROMOTIONAL STRATEGIES BY INSURANCE

COMPANIES

Rank Mea Interpretation

n
Television 1 3.91 EFFECTIVE F

r Website 2 3.465 EFFECTIVE o

Social Media 3 3.45 EFFECTIVE
m
Newspaper Articles 4 3.359 UNDECIDED
Posters 5 3.32 UNDECIDED
Flyers 6 3.28 UNDECIDED
Grand Mean 3.464 EFFECTIVE

the above table it can be seen that among the six choices, television ranks the top effective

advertising and promotional strategy instrument by insurance companies towards consumer’s

awareness. Next on the rank which is said to be effective is on the website followed by the social

media which is said to be effective instrument too. The bottom three choices depicted by the

respondent as undecided which are in a form of newspaper articles, posters and flyers

simultaneously.
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Rank Mean Interpretation

The respondent is willing to avail Micro Insurance 1 VERY MUCH

once they have enough knowledge about it. WILLING
To ease burden to decedent in case of death through 2 4.365 WILLING
insurance planning
The respondent is willing to secure the education of 3 4.28 WILLING
the children through insurance plan.
The respondent is willing to avail pension plan. 4 4.245 WILLING
Prioritize Micro insurance regardless of Income 5 4.1 WILLING
Capacity.
Grand Mean
PART V: LEVEL OF WILLINGNESS OF THE RESPONDENTS IN AVAILING MICRO

INSURANCE

The above analysis shows that respondents are very much willing to avail micro insurance

once they have enough idea or knowledge about it. They are willing to ease burden of the

decedent in case of death through insurance planning as it ranked as second above the preferred

choices. Also, respondents are willing to secure the education of children through insurance plan

which can be seen as the third rank on the given preferences. Fourth on the rank shows that

respondents are willing to avail pension plan and on the bottom of the rank signifies that they are

willing to prioritize micro insurance regardless of its income capacity.

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CHAPTER V

SUMMARY OF FINDINGS, CONCLUSIONS AND RECCOMMENDATIONS

This chapter presents the summary of the findings, conclusions and recommendations based

on the data analyzed in the previous chapter. It contains the presented findings based on the data

gathered and interpreted and the list of several conclusions that the researcher obtained from the

data processed and recommendations presented in order to come up with the reliable solution.

Specifically, it aims to answer the following questions:

1. What are the demographic Profile of the Respondents in terms of:

1.1Age

1.2Sex/Gender

1.3Civil Status

1.4Educational Attainment

1.5Occupation

1.6Monthly income

2. What is the perception of the respondents regarding the benefits of Micro Insurance?

3. What are the hesitation encountered by the respondents in availing micro insurance?

4. How the strategies and promotional campaign affects the respondents in knowing the

importance of life insurance?

5. What is the level of willingness by the respondents in availing micro insurance?

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6. What are the contribution of the research to convince respondents to avail life insurance

through the study of Importance of micro insurance to the minimum wage earner in San Jose Del

Monte Bulacan?

SUMMARY OF FINDINGS

The salient findings are as follows:

1. The study about the importance perceived by the minimum wage earners in San Jose Del

Monte Bulacan regarding micro insurance constitutes of the respondents with the highest mean

of Male with 71%, high school graduate with 58%, single with 66%, an age group of 23-27 years

old with 33% and a monthly income of between 8,001-11,000 which has a percentage of 49%.

2. In regard with respondent’s perception in micro insurance, most of them strongly agreed that

micro insurance provides protection in terms of unfortunate event with the highest weighted

mean of 4.55. Approximately 4.025 was the lowest mean on the given preferences and they

perceived micro insurance as a form or acts as a long term investment.

3. Most of the respondents are reluctant in availing micro insurance because they do not have

enough knowledge or idea regarding micro insurance and its benefits as reflected with the results

on the data gathered which has the highest mean of 4.14 and on the least of the given reasons is

that micro insurance tends to have a lot of requirements needed which got the lowest mean of

3.925.

4. In terms of effectivity of advertising and promotional strategies by the insurance companies, it

has seen that television is the most effective instrument used by insurance companies as it has the
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highest computed mean of 3.91 and flyers as the least on the preferred choices with the mean of

3.28. Social media tends to become effective too as it was ranked as second on the given

preferences. Respondents are uncertain regarding advertising strategies and campaigns like

poster, newspaper and flyers.

5. When pertaining to the level of willingness by the respondents in availing micro insurance it is

shown that they are very much willing to avail micro insurance once they have enough

knowledge regarding it with a highest computed mean of 4 and ranked on the least of the choices

were respondents are going to prioritize micro insurance regardless of their income capacity with

a lowest computed mean of 4.1.

CONCLUSIONS

In the light of the foregoing findings, the following conclusions are presented and developed:

1. Most of the respondents perceived micro insurance as a beneficial matter that could help them

and their loved ones in case of uncertain events happened.

2. Inadequate knowledge regarding micro insurance leads to their hesitation in availing it.

Although, they had a little idea about micro insurance, they do not totally knew the benefits that

micro insurance could bring to them and to their loved ones. Also as a minimum wage earner,

their budget was adequate only for their daily living and they viewed micro insurance as another

form of expense not as a form of long term investment because as stated above they are not fully

aware with the benefits of availing micro insurance.

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3. The effectivity of advertising and promotional campaign strategies by the insurance

companies had a great impact on the willingness of the respondents to avail micro insurance. As

with the findings, television, social media ads and websites are effective instruments but not all

information are fully segregated and it only gave basic information regarding a product and its

main purpose is to persuade people in order to increase demand of a particular product or

service. It reflects that advertising are so what effective but not highly effective in order for the

minimum wage earner to persuade and demand to avail micro insurance.

4. Willingness of the respondent are inclined with the proper segregation and flow of information

regarding micro insurance. As it is reflected in the findings, minimum wage earners are very

much willing to avail insurance once they had enough idea or knowledge regarding micro

insurance so, the main problem is not the income capacity of the minimum wage earner but

resulted with the effectivity of insurance companies to designate information regarding micro

insurance.

RECOMMENDATIONS

In the following conclusions above, the researchers recommend the following:

1. As it is conclude that respondents are not fully aware with the benefits of micro insurance, the

researchers highly recommend that awareness should be created about the benefits of micro

insurance by increasing microinsurance distribution channels not only to the minimum wage

earners but also with the poor people because micro insurance is an insurance for the mass.
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2. The researchers recommend that insurance companies and other micro insurance vendors must

use advertisements campaigns that is made in the local languages to reach all over the country.

3. Many of the non-government and non-profit organizations are working in the field of micro

insurance. These organizations must form a cartel and government backing should be provided to

the cartel so that they can work together with the support of the government for the upliftment of

the poor and the weaker sections.

4. No doubt, micro insurance is a specialized risk protection solution for the low income markets

in relation to its cost, terms, coverage and delivery mechanisms but the sector is facing many

challenges in providing micro insurance to the target segment. Innovations in technology,

designing products for different types of risks, client level distribution, understanding the

requirements of the low income households, maximizing member benefits, huge volumes,

efficiency, creating relationship and trust, brand awareness and making policy holders familiar

with the insurance schemes will hold the key to success in micro insurance sector in Philippines.

5. Establishing and conducting seminars and educational campaign strategies to the minimum

wage earners and discuss them the various benefits of what micro insurance can brought to them

so that they will become fully aware and poor people will be covered by micro insurance to ease

their burdens specifically in relation with financial matters and not to view it as another form of

expense but a long term future planning in a form of investment.

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6. Conduct data collection activities as soon as possible after campaign activities to ensure the

highest degree of recall from respondents about their exposure to and knowledge of campaign

content.

7. Link jingles to other sources where listeners can receive more information about insurance for

instance from the radio drama or advocates.

8. There is a strong need to build an insurance culture among the poor. Educating the low-

income market to overcome their bias against insurance is a major challenge. There is a need for

implementation of a comprehensive financial education program that teaches clients to become

proactive money managers. Such program should enable them to consider microinsurance as one

of several financial instruments they can use effectively to build their assets and improve their

income position. Being at the forefront of development, the local government units may be

tapped as partners in implementing financial literacy programs for clients at the local level.

9. Government agencies and organizations implementing climate change adaptation programs

may be encouraged to partner with microinsurance providers to give additional risk protection to

their clients and constituents. Pilot-testing partnership between local government units, private

insurance providers, and national agencies in the area of climate change and microinsurance is an

endeavor worth pursuing given current realities on the occurrence of natural disasters and

catastrophic risks.