Sins of the Father

Once upon a time, a successful restaurateur purchased properties left and right. His chain of restaurants was booming, and he wanted to invest his earnings as soon as he got them.

He was a stingy fellow known to squeeze costs everywhere he could. He was also known to be an aggressive investor. He would use his existing properties as collateral to purchase more assets. By the time he was in his forties, he was a nine-digit millionaire.

One day, he had a heart attack and passed away. No one expected his untimely death. During his wake, his family would tell relatives that he went to the gym thrice a week.

When his family was done grieving, they began fixing his estate: the restaurant business, his loans, and his properties. They discovered that in the decedent's attempt to scrimp on expenses, he waived banks' requirement for Mortgage Redemption Insurance (MRI).

Banks foreclosed almost all the properties he amassed a few years after his death. His restaurant business, likewise, died a slow death without his influence eventually.

End of story.

MRIs are like Life Insurance Coverage (LIC) for those unfamiliar, where a principal's death would allow beneficiaries to get a monetary amount. But unlike LICs, the beneficiaries are the banks that lent the principal. Once creditors get their money back, the loans are closed, and the properties are transferred to the heirs.

I always thought the BSP required banks to have MRI coverage. Apparently, not. Not getting insurance is a bet that something won't happen. In this story, the restaurateur likely thought:

1. He was unlikely to die anytime soon (because he was healthy).

2. His business cash flow was strong enough to cover any surprises.

This story is all too common.