Talking about life insurance is never a “fun” conversation on board the ship.
Most seafarers view life insurance as an expense but never an investment neither a form of savings. In fact, life insurance sounds morbid because it always signifies death. Although it is true that life insurance might not be an investment but it will be a perfect financial protection once the breadwinner is taken out of the picture.
While ocean-going seafarers earn huge amount of salary, they should not in any way leave a gap for any unexpected ‘twist and turn’. Here is exactly when insurance comes into play.
Top reasons why seafarers need insurance:
- Death is never timely. Nobody knows when it will come nor when they will stay useful in this world. Having life insurance coverage will help send your kids to school. It can replace the income that you provide to your family, your loved ones as well as pay for mortgages, and other financial responsibilities.
- Inheritance is something unexpected yet always appreciated. If you are still starting to build your wealth
- There is no other more important than to have the sought-after peace of mind. Since no amount of money can ever replace you as a father and the breadwinner, in the case of your sudden demise, your insurance proceeds can continuously provide for your family’s needs.
Shipping business is facing a lot of uncertainties and risks, and one of these is a risk of losing their ship and its crew and complements due to accident or even due to force majeure. With that, no ship owner who is in his right mind will allow sailing his ship without getting an insurance for his ship and its crew. In fact, seafarers are one of the well protected and well-provided workforces in the market. And that benefit sometimes gets more appealing depending on the CBA (Collective Bargaining Agreement) that their principal signed for them. But, as per the POEA Memorandum Circular no.10 (2010)—Amended Standard Terms and Conditions Governing the Overseas Employment of Filipino Seafarers On-Board Ocean-Going Ships.
Sec 20—Compensation and Benefits B.1: In case of work-related death of the seafarer, during the term of his contract, the employer shall pay his beneficiaries the Philippine currency equivalent to the amount of Fifty Thousand US dollars (US$50,000) and an additional amount of Seven Thousand US dollars (US$7,000) to each child under the age of twenty-one (21) but not exceeding four children, at the exchange rate prevailing during the time of payment.
- The above benefits are separate and distinct from the benefits he or she can get from SSS, Pag-IBIG Fund, OWWA, and ECC. And aside from the benefit above, the seafarers are also covered with:
US$1,000 for burial expenses.
- Disability coverage depending on the impediment grading, but maximum 120% of US$50,000.
If you will look at the above benefits and compensation, you will no longer need to buy your own insurance policy, because you are already well protected by your company. But, the problem is not with the amount of protection. The problem lies in the nature of employment seafarers have—they are on a contractual basis. Meaning every time, they will board the ship, they are required to sign a new contract. Unlike with the employees who are working domestically, they can be regularized, but for seafarers, they don’t have a security of tenure.
What if you were not able to get re-hired after your contract? It can happen for many reasons. You might be over age than what they require; your ship has changed management, or worse you are already sick. For that reasons, you need to take care of your own finances, and that includes your personal financial protection or getting your own life insurance policy.
Unfortunately, many seafarers don’t buy their own insurance simply because they believe that being insured in their company is more than enough coverage for them. They forget that their insurance coverage is only effective from point of hire to point of hire. Meaning, they are only insured once they join the ship, but once they come back to the Philippines, their insurance coverage ceases to be effective.
So, whenever a seaman asks me if they still need to buy insurance, my answer is NO NEED.
You don’t need to buy insurance if you are not planning to disembark on your ship and live there for the rest of your life.
PS: Before you buy any insurance make sure to have a proper need analysis with your trusted Financial Advisor. If you want to have proper need analysis, message us so we can arrange a financial planning coaching for you.