protecting the life to make sure that living in safe place every single day of our life

the presentation is tips from different life protection protecting the life to make sure that living in safe place every single day of our life

1. 1
Insurance Concepts Review
TRADITIONAL LIFE & VARIABLE UNIVERSAL LIFE
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2. 2
Course Content
Part 1: TRADITIONAL LIFE Part 2: VARIABLE UNIT-LINKED
a.Insurance Commission
b.Insurance Commission Exam (IC)/Insurance
Institute for Asia and the Pacific (IIAP)
Examination Process
c.Concepts of Life Insurance
d.Premium, Basic Plans and Riders
e.Legal Aspects of Life Insurance
f.Policy Provisions
g.Annuities
h.Ethics
a.Concept of Variable Universal Life
b.Financial Planning Process
c.Types of Investment Assets
d.Types of Funds
e.Types of Variable Contract
f.Definition of Terms
g.How does VUL work?
h.Basic Computation of Units
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3. 3
Insurance Concepts Review
PART 1: TRADITIONAL LIFE

4. 4
•Regulatory government
agency
•Executes all laws
pertaining to insurance
•Regulates insurance
companies
Insurance Commission
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5. 5
•Issues licenses to insurance companies
•Reviews policy contracts and premium rates
•Examines the financial condition of insurance companies to
ensure solvency
•Renders assistance to the public on matters pertaining to
insurance
Functions of the Insurance Commission
Insurance Commission
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6. 6
Insurance Commission
1071 United Nations Avenue cor. RomualdezSt., Ermita, Manila
Location of the Insurance Commission
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7. 7
•Rendered the provisions of
Presidential Decree No. 612
•Promulgated in 1978
•Also known as Presidential Decree
No. 1460
•Special law to govern insurance
Insurance Commission
Insurance Code of the Philippines
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8. 8
Insurance Commission
Built on Trust
•Between the company, the
advisor and the client
•Importance of upholding
professionalism and proper
ethics
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9. 9
IC and IIAP Examination Process
INSURANCE CONCEPTS REVIEW

10. 10
✓IC –Offsite Special Exam (BGC)
✓IC Online Agents’ Computerized
Examinations (ONLINE ACE) System
✓IIAP Online Exam
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IC and IIAP Examination Process

11. 11

12. 12
Procedure and Requirements
IC-Offsite Special Exam (BGC)
1.Survey Alchemerfor IC Special Exam schedule and registration will be emailed by
Licensing Team to all FMs and SSAs
2.Kindly ensure completion of requirements:
oInsurance Concepts Certificates
oProof of Exam Payment
✓Traditional:Ps. 1,010
✓VUL: Ps. 1,010
✓Both: Ps. 2,020
3.This is on a First-come-First-served basis with 330 slots per day.
4.Please note that only FULLY VACCINATED examinees are allowed take the exams.
Partially vaccinated examinees may still register as long as they are scheduled to
have the 2nd dose before their desired exam date
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Please advise to only register on one date, otherwise you must payexamfees for allregistrations made

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14. 14
Requirements
IC ONLINE ACE System
1.Completion of Insurance Concepts Training –Life and Variable
2.Payment of Exam Fees
oLife: Ps. 1,010
oVariable: Ps. 1,010
oBoth: Ps. 2,020
3.Transfer or deposit payment to
oBPI Account Name: Sun Life of Canada (Phils.), Inc.
oAccount Number: 0993015679
Proof of payment must be submitted. This can be a screenshot of the online bank transfer/
payment confirmation or validated deposit slip. No need to request for original receipt
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15. 15
System Requirements for the Examinee
IC ONLINE ACE System
PARAMETER MINIMUM REQUIREMENTS
Web Browser Latest version of Mozilla Firefox & Chrome
Operating System Windows 7, MacOS 10.12 “Sierra”, Linux
Processor Dual-core
RAM 2GB
Network bandwidth 1 Mbps
Cisco WebexMeetings. Cisco WebexMeetings is available for Windows and MacOS through
this link: htts://www.webex.com/downloads.html
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16. 16
Procedure
IC ONLINE ACE System
1.Recruiting Manager to email COMPLETE requirements to respective Licensing
Associate:
oCompletely filled-out IC-ACE Excel Information sheet (Please check with SSA
for copy)
oProof of Payment
o2x2 ID Picture in business attire, with white background and name plate
oInsurance Concepts (Life and Variable) Certificate of Completion
2.Licensing Associate will assign the online exam schedule based on the available slots in
the IC-ACE system. Licensing Associate will advise the requesting recruiting manager,
through email, the following information: exam schedule, username, and password of
their examinee, two (2) working days after the receipt of the complete requirements.
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17. 17
Procedure
IC ONLINE ACE System
3. Licensing Associate will remit licensing exam fees to IC three (3) days before your exam
date. Refunding of exams fees is not allowed once paid to IC. “No Show” means
forfeiture of payment.
4. Insurance Commission will directly email the examinee the IC-registration link. The
examinee must register not later than one (1) day before the scheduled examination
date.
5. Once the registration is approved, IC will send another email to the examinee with the
Joint Meeting/ Meeting Link, which will be used to enter the (online) examination
room.
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18. 18
On the Exam Day
IC ONLINE ACE System
1.Examinees are advised to join the meeting 30 minutes before their scheduled batch.
(Cisco Webex).
2.A pop-up dialog will appear once the examinee has clicked the link for the meeting.
3.The examinee must change the Display Name and Email Address with this format :
Insurance Company –Type of Exam-Examinee’s Name
4.Access the Online IC-ACE through https://web.insurance.gov.ph/ace-monitoring/
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19. 19
On the Exam Day
IC ONLINE ACE System
5. The examinee does not require using any paper, pen, pencil, or calculator.
6. The exams will be proctored through the camera and microphone of the
laptop/desktop device.
7. The proctor will ask examinee to present to the camera a valid government ID will full
name, year of birth, country, issue date, and expiration date.
8. Examinee may send a message to the proctor using the chat box for assistance.
9. Turn-around-time for the release of the results may vary.
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20. 20
Important Reminders
IC ONLINE ACE System
1.The exam shall be taken in well-lit, quiet, and private room (alone). The following should
be removed from the workspace (other laptops/desktops, mobile phones, smart devices,
calculators, papers, reviewers/books, any object that may contain writing).
2.All programs, applications and websites must be closed except for WebEx application,
and web browser used to access the Online ACE.
3.Once the exams start, do not refresh the browser, or navigate away from the exam as
this may result in the loss of progress and will not be recoverable, even by the proctor.
4.Individuals who are not taking the examination are prohibited from entering the room.
5.The face of the examinee should be fully visible the entire duration of the examination.
6.Hats, sunglasses, headphones are prohibited during the exam.
7.If hearing aid is required, examinee must inform Licensing Associate 48 hours prior to
the exam starting time.
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21. 21
Important Reminders
IC ONLINE ACE System
8. Bathroom breaks are not permitted.
9. In cases where the proctor suspects that cheating or any other act of impropriety may
be occurring, the proctor may request the examinee to share screen and will provide
instructions for doing this.
10. The online examination room is recorded upon entry of the examinee until the
submission of the last examinee of their exam.
11. If an act of impropriety has been deemed to have taken place, IC reserves the right to
apply the appropriate disciplinary policy.
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23. 23
Requirements
IIAP ONLINE EXAM
1.Completion of IIAP Online Training. Recruiting Manager to enroll the Advisor
Candidate by registering thru https://survey.alchemer.com/s3/5206975/Online-
Courses-Enrollment-Form.
2.After completion of training, Recruiting manager should make a separate e-
mail request to [email protected] for:
oIIAP Application Form 0930, and
oIIAP Exam Undertaking
3.Payment of Online Exam Fee of PhP1,200.00
oBPI Account Name: Sun Life of Canada (Phils.), Inc.
oAccount Number: 0993015679
No need to request for Original Receipt. Instead, proof of payment such as screenshot of
confirmed transfer details or copy of validated deposit slip will be required for submission.
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24. 24
Procedure
1.Advisor Candidate to complete the IIAP Online Training. .
2.Advisor Candidate to accomplish/fill out, scan, and email the following to the recruiting
manager. Each of the examinees must put their requirements in one/continuous PDF to
ensure that the documents are readable, accessible and in uniform format. (1 pdf file= 1
examinee).
oIIAP Application Form 0930 (PDF Format)
oIIAP Exam Undertaking (PDF Format)
o1x1 recent ID photo (JPEG Format) (yellow color background)
oScanned copy of any government-issued ID (PDF Format)
oProof of Exam Payment PDF format (PDF Format)
oIIAP online Examinees Template
IIAP ONLINE EXAM
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25. 25
Procedure
IIAP ONLINE EXAM
3. Recruiting manager to check completion/correctness of requirements and email the
same to Licensing Associate* / Recruitment Specialist concerned:
Email Subject: IIAP ONLINE EXAM REQUIREMENTS XXXX NBO
4. Licensing Associate to email IIAP the list of all online examinees two (2) workings days
after receipt of all the requirements.
5. Licensing to prepare and remit check payment to IIAP within two (2) working days from
date the list of online examinees was submitted to IIAP.
6. IIAP will send directly to the examinee’s email address the exam verification code
within 24hours upon receipt of payment from Sun Life. Please ensure correct e-mail
address of examinees in all forms.
7. Verification code will only be valid for seven (7) days from the date of receipt of email.
Once accessed, examinee must finish the exam within one (1) hour.
*Licensing Associate may vary from time-to-time
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26. 26
Procedure
IIAP ONLINE EXAM
8. IIAP to release the exam results to Sun Life five (5) working days after the exam.
Licensing will email the recruiting manager of the results.
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27. 27
Concept of Life Insurance
TRADITIONAL LIFE

28. 28
Concept of Life Insurance
INCOME EXPENSES
Man at Work
OLD AGE DISABILITY DEATH SICKNESS
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INCOME EXPENSES
LIFE INSURANCE
Man at Work
Concept of Life Insurance
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30. 30
OLD AGE
DEATH
SICKNESS & DISABILITY
Retirement
Income
Guaranteed
Savings
Cash
Values
Maturity
Benefit
Death
Benefit
Family
Protection
THREATS SERVICE BENEFIT
Concept of Life Insurance
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31. 31
•Human life has an economic value
•The capitalized monetary worth of the earning capacity of an
individual devoted to the support of his family during his working
lifetime
Human Economic Value
Concept of Life Insurance
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32. 32
A
RISK–SHARING
BUSINESS
Life Insurance
Concept of Life Insurance
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33. 33
Risk Sharing
•A group of people places a fund together in preparation
for an uncertain event.
•Everyone is prepared to accept a small loss to
compensate the unfortunate from the effect of a larger
loss.
Concept of Life Insurance
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34. 34
Concept of Life Insurance
•Chance of loss.
•Exists when there is
uncertainty about the future.
What is Risk?
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35. 35
Concept of Life Insurance
Types of Risk
1.SPECULATIVE RISK –involves three possible
outcomes: loss, gain, or no change.
2.PURE RISK –is a risk that involves no possibility of
gain; there is either a loss or no loss. May be insured.
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36. 36
Law of Probability
•A likelihood that a given event will occur in the future.
•This is used in determining the number of people dying
& living at a particular age within a given period.
Concept of Life Insurance
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37. 37
•The more frequent a particular event is observed, the
more likely that the observed results will approximate
the true probability of the event happening.
Law of Large Numbers
Concept of Life Insurance
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38. 38
Risk Selection/Underwriter
Concept of Life Insurance
•A systematic evaluation of an
insurance applicant for the purpose
of determining the classification of
risk for possible coverage.
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39. 39
•The high pre-disposition for those with impairments to
purchase life insurance
•Can be prevented through proper Risk Selection/
Underwriting.
Anti-Selection
Concept of Life Insurance
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40. 40
PHYSICAL
OCCUPATION
FINANCIAL
MORAL HAZARD
AVOCATION
RESIDENCE/TRAVEL
Factors in Risk Selection
Concept of Life Insurance
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41. 41
Concept of Life Insurance
•Application Form
•Medical Examination Report
•Agent’s Confidential Report
•Medical Information Database (MID)
Sources of Information
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42. 42
Concept of Life Insurance
RISK CLASSIFICATION
ACCEPT DECLINE
STANDARD SUBSTANDARD
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43. 43
Concept of Life Insurance
•Life Insurance Policy
•Insurer
•Insured
•Policyowner/ Applicant
•Beneficiary
•Face Amount
•Premium
•Death Benefit
•Maturity Benefit
•Cash Values
•Dividends
Basic Insurance Terms
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Concept of Life Insurance
Life Insurance Policy
as defined by the Insurance Code P.D. 1460
AcontractwherebyaPARTYforaCONSIDERATION
agreestopayANOTHERaSUMOFMONEYinthe
eventofhisDEATHFROMANYCAUSENOT
EXCEPTEDINTHECONTRACT,oruponsurvivinga
SPECIFIEDPERIOD,orotherwiseonthe
CONTINUANCEorcessationoflife.
Basic Insurance Terms
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45. 45
Concept of Life Insurance
Party –Insured & Insurer
Consideration–premium payment/policy payment
Another–Beneficiary
Sum of Money–proceeds/face amount/face value
Death from any cause not excepted in the contract–excluded risks
Specified period / Continuance–Maturity period
Life Insurance Policy
as defined by the Insurance Code P.D. 1460
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46. 46
Concept of Life Insurance
Insurer
oThe insurance company
Insured
oThe person whose life is covered under the insurance
policy.
Policyowner/Applicant
oThe person who is buying or applying for life insurance.
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47. 47
Concept of Life Insurance
Beneficiary
oThe person who is designated to receive
the insurance proceeds upon death of
the insured.
Face Amount
oThe amount stated in the policy as payable under a life
insurance policy if the insured dies while the policy is in
force.
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48. 48
Concept of Life Insurance
Premium
oA sum of money given by the insured as
a consideration for the insured’s promise
to indemnify or replace the loss.
Death Benefit
oThe amount payable upon death of insured. The sum
assured the beneficiary (ies) would receive in case the
insured dies during the protection period.
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49. 49
Concept of Life Insurance
Maturity Benefit
oThe amount payable if the insured
outlives the protection period.
Cash Values
oThe guaranteed amount received in case the plan is
terminated prior to the death of the insured or maturity
of the policy.
oLegal reserves or the savings element of the policy.
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50. 50
Concept of Life Insurance
Dividends
oReturn of excess premium paid annually to owner of
insurance policy based on insurer’s performance and
experience over a given year.
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51. 51
C
Re
Fa
L
E
E
R
Fund to pay hospital bills, funeral expenses, and taxes
Fund used to cushion immediate lifestyle adjustment that family must make if the insured dies
Fund to provide for the family’s needs while the children still dependent
Lifetime fund for the widow
Fund that will ensure the education of children
Fund that is designed to provide financial back up for unexpected
Clean Up Fund
Readjustment Fund
Family Dependency Fund
Life Income for the Widow
Educational Fund
Emergency Fund
Retirement Fund
Fund that gives security and peace of mind who have outlived their earning years
Cash Needs: CReFaLEER
Concept of Life Insurance

52. 52
Concept of Life Insurance
Life Insurance gives certainty
to uncertainty
Death is a certainty
When, is an uncertainty
To live is one’s right
How long isn’t one’s choice
Life insurance cannot prevent your death
It prevents your plans from dying with you
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53. 53
Premiums, Basic Plans & Riders
TRADITIONAL LIFE

54. 54
Premiums, Basic Plans & Riders
Concept of Premium
•An ACTUARY is the /a company officer that determines
the premium rates with respect to the principal
elements of the life insurance.
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55. 55
Premiums, Basic Plans & Riders
Factors that affect the premium:
1.Mortality
2.Interest
3.Expense
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Premiums, Basic Plans & Riders
Mortality + Interest = NET PREMIUM
Expense + (Safety Margin Requirement)= LOADING
Net Premium + Loading = GROSS PREMIUM
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Premiums, Basic Plans & Riders
Types of Premium
•Natural Premium
opremiums that increase each year as the age of the
insured increases.
•Level Premium
opremiums that remain the same from year to year
throughout the premium paying period.
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58. 58
Premiums, Basic Plans & Riders
CLASSIFICATION OF
BASIC PLANS
According to
NATURE
According to
PARTICIPATION
According to
COVERAGE
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59. 59
Premiums, Basic Plans & Riders
CLASSIFICATION OF
BASIC PLANS
According to
NATURE
According to
PARTICIPATION
According to
COVERAGE
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60. 60
Premiums, Basic Plans & Riders
ACCORDING TO NATURE
TEMPORARY / TERM PERMANENT
LEVEL TERM DECREASING
TERM
ORDINARY /
WHOLE LIFE
ENDOWMENT
Limited Pay Life
Regular
Endowment
Pure
Endowment
Anticipated
Endowment
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61. 61
Premiums, Basic Plans & Riders
Temporary or Term Plan
•Life Insurance that remains in force for a specified period
or term.
•Term pays the face amount only in the event of death.
•There are no cash values, no profit sharing, and is the
cheapest in terms of initial premium outlay.
•Renewable & Convertible.
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Premiums, Basic Plans & Riders
Age 30 Age 31
Renewable
Age 32
Example: Yearly Renewable Term
Protection Period Renewable for another year
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Premiums, Basic Plans & Riders
Age 30 Age 35
Protection Period
Age 33
May be converted in
whole or in part
Convertible
Example: 5 Year Convertible Term
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64. 64
Premiums, Basic Plans & Riders
Types of Term Plans
1.Level Term
othe death benefit remains constant over the term of
coverage.
2.Decreasing Term
othe death benefit starts at the set face amount and
then decreasesover the term of the coverage.
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65. 65
Premiums, Basic Plans & Riders
Types of Term Plans
1.Level Term
Face Amount
Example: 5 Year Level Term
Php 3M
5 Years
Php3M
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66. 66
Premiums, Basic Plans & Riders
Types of Term Plans
2. Decreasing Term
Example: 5 Year Decreasing Term
Face Amount
Php 2.5M
5 Years
Php5M
Death Benefit
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67. 67
Premiums, Basic Plans & Riders
Whole Life Plan
•Life Insurance that remains in force during the insured’s
lifetime.
•The face amount is paid whenever death occurs up to
the age of 100 of the insured.
•There are cash values as well as profit sharing and
dividends.
•The initial premium outlay is higher than term insurance
but is lower than endowment.
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68. 68
Premiums, Basic Plans & Riders
Age 30 Age 100
Protection Period & Premium Paying Period
Age 65 Age 75 (RIP)
LB = CV+AD DB = FA+AD MB = FA+AD
Whole Life Plan
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Premiums, Basic Plans & Riders
Limited Pay Life Plan
•Provides lifetime protection with premiums payable for
limited term of years.
•Life Insurance that remains in force during the insured’s
lifetime.
•The face amount is paid whenever death occurs up to
the age of 100 of the insured.
•There are cash values as well as profit sharing and
dividends.
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70. 70
Premiums, Basic Plans & Riders
Age 30 Age 100
Protection Period
Age 65 Age 75 (RIP)
LB = CV+AD DB = FA+AD MB = FA+AD
Example: 10 Year Limited Pay Life Plan
Premium Paying Period
Age 40
Limited Pay Life Plan
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Premiums, Basic Plans & Riders
Endowment Plan
•Pays the face amount whether the life insured lives to
the end of a specified period or dies during that period.
•It has cash values, profit sharing or dividends.
•Initial premium outlay is the highest compared to term
and permanent plans.
•Allows for faster accumulation of funds, making it ideal
for saving for future needs.
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72. 72
Premiums, Basic Plans & Riders
Age 40 Age 60
Protection & Premium Paying Period
Age 50 (RIP)
DB = FA+AD MB = FA+AD
Example: 20 Year Endowment Plan
Endowment Plan
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73. 73
Premiums, Basic Plans & Riders
Types of Endowment Plan
1.Regular Endowment
a.Age-based
b.Term-based
2.Pure Endowment
3.Anticipated Endowment
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Premiums, Basic Plans & Riders
Types of Endowment Plan
1.Regular Endowment
a.Age-based -provides maturity benefit
at a specified age (Ex. Endowment at 65)
b. Term-based -provides maturity benefit at the end
of a specified period (Ex. 20 Year Endowment)
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75. 75
Premiums, Basic Plans & Riders
Types of Endowment Plan
2. Pure Endowment
•Promises to pay the face amount only if the
insured survives up to the end of the endowment
period.
•Nothing will be paid if death occurs before the end
of the endowment period.
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Premiums, Basic Plans & Riders
Types of Endowment Plan
3. Anticipated Endowment
•Policy owner does not have to wait for the
maturity date of before a portion of the face
amount is given.
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Premiums, Basic Plans & Riders
CLASSIFICATION OF
BASIC PLANS
According to
NATURE
According to
PARTICIPATION
According to
COVERAGE
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Premiums, Basic Plans & Riders
ACCORDING TO PARTICIPATION
PARTICIPATING
NON
PARTICIPATING
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Premiums, Basic Plans & Riders
Participating vs. Non-participating
•Non-Participating
ois one in which the policy owner does not share in
the insurer’s dividends.
•Participating
ois one under which the policy owner shares in the
insurance company’s dividends.
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Premiums, Basic Plans & Riders
CLASSIFICATION OF
BASIC PLANS
According to
NATURE
According to
PARTICIPATION
According to
COVERAGE
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Premiums, Basic Plans & Riders
ACCORDING TO COVERAGE
INDIVIDUAL LIFEJOINT LIFEGROUP LIFE
Contributory
Non-
Contributory
Joint Life
Joint and Last
Survivor
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Premiums, Basic Plans & Riders
Individual Life
•Provide protection to one person only. There is only one
Insured in this type of plan.
•May be payable annually, semi-annually or quarterly
basis.
•Individual policies may also be paid on a monthly basis in
the form of Salary Savings insurance.
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Premiums, Basic Plans & Riders
Joint Life
•Joint Life plans provide protection to two or more persons,
allowing a single plan to have 2 or more Insureds.
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Premiums, Basic Plans & Riders
Types of Joint Life
•Joint Life
oDeath benefit payable at first death, after which the
policy terminates.
•Joint and Last Survivor
oInsurance coverage is extended until the last person
being covered in the policy dies.
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Premiums, Basic Plans & Riders
Group Life
•Provides protection to a group of people
•A single master policy under which individuals in a natural
group (such as employees of a business firm) are insured
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Premiums, Basic Plans & Riders
Types of Group Life
•Non-contributory
oemployer pays for the premium; 100% of the
employees are included in the policy
•Contributory
oemployer and the employees share in the premium
payment; at least 75% should be enrolled
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Premiums, Basic Plans & Riders
Riders
•Are supplementary contracts that when attached to the
basic policy, will provide additional benefits at minimal
cost.
•It is referred to as a rider because it needs a basic policy
to “ride on” to be effective.
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Premiums, Basic Plans & Riders
Types of Riders
•Accidental Death Benefit
•Waiver of Premium Due to Disability
•Payor’sBenefit
•Guaranteed Insurability Option
•Term Insurance Rider
•Family Income Rider
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Premiums, Basic Plans & Riders
Accidental Death Benefit (ADB)
•Provides an additional amount equal to the coverage in
the event of accidental death of the insured.
•Limited within the period of 90 days from the date of
the accident.
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Premiums, Basic Plans & Riders
Waiver of Premium due to Disability (WPD)
•Provides for a waiver of premium if the insured suffers
from a total and permanent disability.
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Premiums, Basic Plans & Riders
Payor’sBenefit
•Provides waiver of premium during the rider term when
the payor dies or becomes totally and permanently
disabled.
•Waives premiums until the time the insured child reaches
the age where he can earn and pay for the premiums of
the policy.
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Premiums, Basic Plans & Riders
Guaranteed Insurability Option (GIO)
•Provides an opportunity for people to buy specific
amounts of additional life insurance coverage at stated
future intervals without the need to show evidence of
insurability.
•This means that the insured will automatically pay the
standard rate since there would be minimal underwriting
requirements.
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Premiums, Basic Plans & Riders
Term Insurance Rider
•Provides an additional amount of coverage for a minimal
cost.
•The rider has its own face amount separate from the
coverage of the basic policy, but cost of coverage is lesser
since it is a term coverage.
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Premiums, Basic Plans & Riders
Family Income Rider
•A form of decreasing term rider that provides the family
of the insured monthly income from the insured’s date
of death until the duration of the rider.
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95. 95
Legal Aspects of Life Insurance
TRADITIONAL LIFE

96. 96
Legal Aspects of Life Insurance
Types of Contracts
•Valued Contracts and Contracts of Indemnity
•Informal and Formal Contracts
•Unilateral and Bilateral Contracts
•Aleatoryand Commutative Contracts
•Contracts of Adhesion and Bargaining Contracts
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97. 97
Legal Aspects of Life Insurance
Valued Contract vs. Contract of Indemnity
LIFE INSURANCE NOT LIFE INSURANCE
✓VALUED CONTRACT
Specifies the amount of
benefit that will be payable
when a covered loss occurs,
regardless of the actual
amount that was incurred.
CONTRACT OF INDEMNITY
The amount of policy benefit
payable for a covered loss is
based on the actual amount
of financial loss, as
determined at the time of
loss.
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98. 98
Legal Aspects of Life Insurance
Informal Contract vs. Formal Contract
LIFE INSURANCE NOT LIFE INSURANCE
✓INFORMAL CONTRACT
oParties met requirement
concerning the substance
of the agreement.
oIt may be expressed in a
verbal or written fashion.
Life insurance contracts
are typically written.
FORMALCONTRACT
oParties met certain
formalities concerning the
form of the agreement.
oContract should be written
and should have a seal to
be enforceable.
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99. 99
Legal Aspects of Life Insurance
Unilateral Contract vs. Bilateral Contract
LIFE INSURANCE NOT LIFE INSURANCE
✓UNILATERAL CONTRACT
Only one of the parties
(insurer) to the contract has
legally enforceable promises.
BILATERAL CONTRACT
Both parties to the contract
have legally enforceable
promises.
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100. 100
Legal Aspects of Life Insurance
AleatoryContract vs. Commutative Contract
LIFE INSURANCE NOT LIFE INSURANCE
✓ALEATORY CONTRACT
oOne party provides
something of value to
another party in exchange
for a conditional promise
oOne party may receive
something of greater
value than that party
gave.
COMMUTATIVE CONTRACT
oan agreement which the
parties specify in advance
the values that they will
exchange
oparties exchange items or
services of relatively equal
value.
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101. 101
Legal Aspects of Life Insurance
Contract of Adhesion vs. Bargaining Contract
LIFE INSURANCE NOT LIFE INSURANCE
✓CONTRACT OF ADHESION
One party prepares the
contract and the other may
accept or reject as a whole,
without any bargaining
between the parties to the
agreement.
BARGAINING CONTRACT
Both parties, as equals, set
the terms and conditions of
the contract.
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102. 102
Legal Aspects of Life Insurance
Offer and Acceptance
•For a contract to be valid there must be:
An OFFERandACCEPTANCE
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103. 103
Legal Aspects of Life Insurance
Conditional Receipt
•In most cases when an advisor receives the premium
payment from the client, he/she issues a conditional
receipt to acknowledge payment.
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104. 104
Legal Aspects of Life Insurance
Legal Capacity
•Policyowner
oMust be of legal age
oMust have sound mind and body
•Insurance Company
oRegistration and Regulation
oCapitalization
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105. 105
Legal Aspects of Life Insurance
•Insurable Interest
oInsurable Interest exists when a policyownerhas
reasonable chance of suffering financial loss if the
person who is insured dies.
oIt should also exist between the insured and the
named beneficiaries.
oIts existence during inception of the policy is
required.
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106. 106
Legal Aspects of Life Insurance
Every person has an insurable interest in the life and
health:
1.Of himself, of his spouse and of his children;
2.Of any person on whom he depends wholly or in part for
education or support, or in whom he has a pecuniary interest;
3.Of any person under a legal obligation to him for the payment
of money, or respecting property or services, of which death or
illness might delay or prevent the performance; and
4.Of any person upon whose life any estate or interest vested in
him depends.
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107. 107
Policy Provisions
TRADITIONAL LIFE

108. 108
Policy Provisions
oEntire Contract Clause
oOwnership
oPremium Payment
oGrace Period
oPolicy Loan
oAssignment
oDividend Options
While the insured lives and the policy is active..
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109. 109
Policy Provisions
oMade up of the policy and the
attached application form
oIncludes other reports,
amendments material to the policy
oCannot be affected by later
changes
Entire Contract Clause
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110. 110
Policy Provisions
oRight to assign, transfer or have
policies amended.
oChange beneficiaries and
exercise privileges in the
contract.
oRight to cash values and
dividends.
Ownership
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111. 111
Policy Provisions
oCan be done annually, semi-annually,
quarterly and monthly.
oPayment of the first premium makes the
contract binding.
oSubsequent payments are entirely
dependent on the policyowner.
Premium Payment
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112. 112
Policy Provisions
Grace Period
oProtects the policy from lapsing
oGenerally, 30 days from due date
oRight to cash values and dividends
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113. 113
Policy Provisions
oRight to loan against the cash value
oLoan within prescribed limits; not exceed the cash
value
oTreated as a loan, has interest
Policy Loan
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114. 114
Policy Provisions
o2 years after the policy has
been in force, the company
cannot contest its validity.
oIf the company has no objection
during the period, there can be
no question about the payment
of proceeds.
Incontestability
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115. 115
Policy Provisions
oFor participating
policyholders
oDependent on mortality
experience, investment
earnings and expenses
oNOT GUARANTEED
Dividends
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116. 116
Policy Provisions
1.Cash
2.Reduced Premium
3.Interest
4.Paid-Up Addition
5.YearlyRenewable Term
Dividend Options
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117. 117
Policy Provisions
When the insured dies…
oMisstatement of age
oIncontestability
oSuicide
oBeneficiary
oSettlement
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118. 118
Policy Provisions
Misstatement of Age
oMisrepresentation on the matter of age
oAge is increased or decreased
oAmount of proceeds will be adjusted upon death
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119. 119
Policy Provisions
oRight of the policyownerto
transfer or assign the policy
oTwo types: Absolute and
Collateral
oMust notify the company of any
assignment
oCompany will accept without
question
Assignment
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120. 120
Policy Provisions
Suicide
oTo discourage financially
desperate people from
purchasing policies with suicide
in mind.
oIf committed within 2 years of
the policy, the company will
refund the premiums.
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121. 121
Policy Provisions
Beneficiary
oDesignated to receive the proceeds of the policy
oMust be identified clearly
oTypes of Beneficiary:
✓Primary or Secondary (Contingent)
✓Revocable or Irrevocable
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122. 122
Policy Provisions
Primary vs. Secondary (Contingent)
✓PRIMARY-first person in line to receive the death
proceeds
✓SECONDARY (CONTINGENT) -person next in line to
receive the proceeds in case of death of the primary
beneficiary
Beneficiary
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123. 123
Policy Provisions
Revocable vs. Irrevocable
✓REVOCABLE –changes/amendments to the contract
may take effect without consent. Subject to Estate Tax.
✓IRREVOCABLE-changes/amendments to the contract
require written consent. Not subject to Estate Tax.
Beneficiary
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124. 124
Policy Provisions
Minors are not recommended
to be named as irrevocable
beneficiaries.
Revocable vs. Irrevocable
Beneficiary
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125. 125
Policy Provisions
oLump Sum
oInterest Option
oFixed Period Option
oFixed Income Option
oLife Income Option
Settlement
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126. 126
Policy Provisions
•Lump Sum
oSingle sum payment of the
proceeds.
•Interest Option
oThe company will hold the
proceeds to earn interest.
oInterest earnings will be paid out
regularly.
Settlement
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127. 127
Policy Provisions
Settlement
•Fixed Period Option
oPays the beneficiary equal
amounts at regular intervals
over a specified period of years.
•Fixed Income Option
oPays the beneficiary a specified
amount until proceeds are
depleted.
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128. 128
Policy Provisions
Settlement
•Life Income Option
oPays the beneficiary regular income for his lifetime,
no matter how long he lives.
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129. 129
Policy Provisions
When the insured quits paying his premiums..
oNon-Forfeiture Options
oReinstatement
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130. 130
Policy Provisions
Non-Forfeiture Options
oCash Surrender Value (CSV)
oReduced Paid-Up (RPU)
oExtended Term Insurance (ETI)
oAutomatic Premium Loan (APL)
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131. 131
Policy Provisions
•Cash Surrender Value
oPolicyowner claims an immediate cash pay-out for his
policy.
oOnce elected, policy is terminated.
Non-Forfeiture Options
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132. 132
Policy Provisions
30 100
Protection Period
40
No more protection
Quits paying:
✓Receive Cash Surrender
Value and Accumulated
Dividends
✓Policy terminates
Maturity Benefit
= 0.00
Cash Surrender Value
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133. 133
Policy Provisions
•Reduced Paid-Up
oProtection continues for life but for a lower face
amount.
Non-Forfeiture Options
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134. 134
Policy Provisions
100
Protection Period
40
Protection Period
FA = 1,000,000
FA = REDUCED
Reduced Paid-Up
30
Quits paying:
✓Same Protection Period
✓Reduced Face Amount Maturity Benefit
= REDUCED
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135. 135
Policy Provisions
•Extended Term Insurance
oProtection continues for the same face amount but
only until a certain period of years and days.
oAutomatic non-forfeiture option.
Non-Forfeiture Options
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136. 136
Policy Provisions
30
Protection Period
40
Protection Period
FA = 1,000,000
FA = 1,000,000
Reduced Protection Period
Until a certain
period of Years
and Days
Extended Term Insurance
Quits paying:
✓Same Face Amount
✓New Protection Period
Maturity Benefit =
0.00
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137. 137
Policy Provisions
•Automatic Premium Loan
oThe company lends to the insured an amount from
the cash value to pay for the overdue premiums.
oPolicy has to have a sufficient amount of cash
value.
Non-Forfeiture Options
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138. 138
Policy Provisions
30 100
Cash Vaue
40
Maturity Benefit = less
any unpaid dues with
interest
41
missed the 30-day grace period:
•SAME protection period
•COVERAGE : Face Amount
less loan (unpaid due)
•if cash value is sufficient, automatic payment
will be applied on the premium due
•it will be considered as policy loan
Automatic Premium Loan
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139. 139
Policy Provisions
Reinstatement
oPure Reinstatement
oRedating
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140. 140
Policy Provisions
•Pure Reinstatement
oPays back all past due premiums plusinterest
oproof of insurability is necessary
Reinstatement
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141. 141
Policy Provisions
•Redating
oNew premium would be charged
oBased on new attained age
oNew policy effectivity date
Reinstatement
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142. 142
Annuities
TRADITIONAL LIFE

143. 143
Annuities
Annuities
oPurchase of income
oPrimarily used as an income
stream
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144. 144
Annuities
Types of Annuities
•Fixed
oSingle Premium Immediate
oSingle Premium Deferred
oInstallment Deferred
•Variable
oConventional Variable
oDeferred Variable
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145. 145
Annuities
So how are annuities different from
life insurance contracts?
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146. 146
Annuities
LIFE INSURANCE ANNUITY
Estate Creation
Premiums
mostly in
installments
Beneficiary or
Insured
Death of the Insured or at
the Maturity of the Policy
Estate Distribution
Purchase price
mostly paid in
lump sum
Annuitant or
Successor
While the annuitant
is still alive or until a
specified period
NATURE
PAYMENT
RECIPIENT
PAYMENT OF
PROCEEDS
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147. 147
Ethics
TRADITIONAL LIFE

148. 148
Ethics
Unethical Practices
oTwisting
oKnocking
oOverloading
oRebating
oMisrepresentation
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149. 149
Ethics
•Twisting
opersuading the person to lapse or surrender a policy
in order to purchase a new one.
oAlso called Replacement
Unethical Practices
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150. 150
Ethics
•Knocking
oMaking derogatory remarks about competing
policies, advisors or companies.
Unethical Practices
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151. 151
Ethics
•Overloading
oSelling a person insurance more than what is
warranted by his resources.
Unethical Practices
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152. 152
Ethics
•Rebating
oOffering part of your commission to your client.
oAccepting a smaller premium than the one stipulated
in the policy.
oPremium discrimination against policyholders.
Unethical Practices
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153. 153
Ethics
•Misrepresentation
oMisstatement of material facts for insurance
Unethical Practices
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154. 154
THANK YOU!
&
GOOD LUCK!
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