Agent's Licensing Course Guide

Agents Licensing Course
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Agent's Licensing Course
What is the ALC?

3-day program covering insurance concepts, designed to equip participants with the knowledge to become a successful Financial Advisor Attendance is IMPORTANT to get a training certification You need to PASS the licensing examination given by the Insurance Commission or IIAP
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Exam Requirements
Application for examination Insurance Commission (IC) Insurance Institute for Asia and Pacific (IIAP) Certification of Training (for IC) Certification of Good Moral Character (for IC) 3pcs. (for IC)/2pcs. (for ATS) 1x1 picture (w/ white background, corporate attire) Exam Fee P500
Schedule: Insurance Commission, UN Avenue Tuesday to Friday 8:00-9:00 am, 9:00-10:00 am IIAP, 26th Flr. Ayala FGU Bldg. Saturday 8:00-9:00 am, 9:00-10:00 am
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Module 1 :
Foundations of Life Insurance
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Sources of Income
What is INCOME? Income is the recurrent flow of cash in exchange for service rendered or goods manufactured.
Man at Work Money at Work
Donations/Charity
Lifes risks
HUMAN ECONOMIC VALUE
Man at Work
- Measured by what man has been able to accumulate (assets) and what he can reasonably expect in the future (future earnings). - Economic value of man to his Family
Die too soon
Be disabled
Live too long
Which will it be?

Purpose of Life Insurance

Insures the continuance of INCOME despite LIFE RISKS Die too soon Be disabled Live too long
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Life insurance
Is a device by which a large number of people protect themselves against economic losses due to
DEATH, DISABILITY & OLD AGE.

Risk sharing
It is shared by a group of people, Cooperative Risk Sharing. Economic loss is spread over a large number of people.
* Everybody is willing to accept a small loss in preparation for a greater loss.
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Types of risks
SPECULATIVE RISK
A risk with possibility of gain (i.e. gambling and business)
PURE RISK
A risk with no possibility of gain (i.e. death, disability and old age)
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How life insurance works

Clean- up Fund
A fund to liquidate burial expenses, outstanding personal loans and last illness expenses.
Life Income for the widow Education Fund
Retirement Fund
Emergency Fund Planned Insurance Estate
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How life insurance works

Insurance contributes to the welfare of the country by:
Accumulating capital for investment and commerce Partially relieving the community of the care of dependents Encouraging provisions for the future
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Tools in insurance
1. Principle of Large Numbers
A theory of probability that states that the more times a particular event is observed, the more likely it is that the observed results will approximate the true probability that the event will occur.
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Tools in insurance
2. Mortality table
Charts that display the incidence of death, by age, among a given group of people
Age 65 66 67 68 69 Males 14.248 15.761 17.467 19.373 21.486 Females 8.241 9.114 10.012 10.931 11.916 Age 70 71 72 73 74 Males 23.810 26.353 29.120 32.123 35.398 Females 13.027 14.326 15.872 17.717 19.883
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Tools in insurance
3. Life expectancy
Number of years that persons will live on the average as shown by the mortality table. (Females have longer life expectancy than males)
LIFE LINE
55 65
75
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Tools in insurance
4. Law of Probability
Helps us estimate or predict the chances that a person will still be alive after a given number of years.
Life is a game of CHANCE
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Life insurance terms

INSURED
Person whose life is covered by insurance
INSURER
POLICY
Written contract between the insured and the insurance company
PREMIUM
Payment or one of a series of payments made by the insured to make the policy inforce and to keep it inforce
FACE AMOUNT
Money which the insurance company will provide when the insured dies
BENEFICIARY
Person who will receive the face amount when the insured dies
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Definition of premium
The consideration given by the insured in exchange for the promise of the insurer to pay a stipulated amount in the event of a claim or upon maturity of the life insurance contract.
P8,000
Definition of actuary
The person who makes the necessary assumptions and calculations with respect to the principal elements in a life insurance premium.
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How premiums are determined

a. b. c. d. Age Type of Plan Riders Amount of Coverage (we allow change in coverage as long as proof of insurability is sufficed) e. Sex f. Policy Fee (Fixed amount added to premiums regardless of policy size)
P8,000

1. Mortality Relative incidence of death among a given people. 2. Interest Earnings from invested premiums 3. Safety Margin Requirement Money set aside by the insurance company to meet adverse claims 4. Operating Expenses/Loading Overhead expenses
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Gross Premium is equal to

Loading or Operating cost
Net premium
Interest and safety margin Mortality
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Types of premiums
Single Premium
Premium Only one premium is required
Natural Premium
Premium that increases with age
Level premium
Level Premium
Premium that is level throughout the paying period
Age
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Types of premiums
Graduated Premium
Premium that increases every year until 5th year then remains on that level throughout the duration of the premium paying period
3,000 3,200
3,500
2,500
2,700
Modified Premium
Premium that increases only on the 5th year of the policy then remains on that level throughout the duration of the premium paying period
3,500 3,200
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Types of premiums
Fractional Premium
Proportionate share of the annual premium (i.e. semi-annual, quarterly)
Formula:
Annual Premium
Conversion Factor
= Modal Premium
Desired
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Premium receipt
Binding Premium Receipt
A type of initial premium receipt that makes insurance coverage effective immediately but only until the insurance company either rejects the application or approve it and issues a policy
Binding Premium Receipt Effectivity Initial Premium
Pays Death Benefit (no questions asked)
Binding Premium Receipt Terminates Policy Approval & Issuance
Binds the insurer unconditionally to pay the benefits of the plan If the applicant will die before issuing the policy, the insurer will pay the benefit whether or not the policy would have been issued
Conditional Premium Receipt

A type of premium receipt given when the applicant pays the initial premium and under which the life insurance will become effective before a policy is issued only if the proposed insured is found to be insurable
Conditional Premium Receipt Effectivity Initial Premium
Pays Death Benefit (with conditions)
Conditional Premium Receipt Terminates Policy Approval & Issuance
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Reserves
The sum of money which will enable the company to pay all of its policy claims or maturity.
claims
RESERVES
claims
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Types of reserves
Legal Reserve
A fund set up by insurance company, as required by law to the claims that may arise.
Policy Reserve
The proportionate share of the policy to the legal reserve
Contingency Reserve
A fund set up by the insurance company from the surplus to meet unexpected and unfavorable claims that may arise
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Module 2 :
Basic Plans
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Policies accdg. to line

INDIVIDUAL
Issued to individual applicants
INDUSTRIAL
Premiums are payable daily, weekly or monthly
GROUP
Several individuals are insured under one master policy
UNIVERSAL LIFE
Coverage can vary depending upon the amount of premium and investment performance of the insurance company (stocks, bonds, etc.)
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Policies accdg. to type of plan

PERMANENT
Offers protection & savings (cash values & dividends)
a. Whole life plan b. Limited-pay whole life plan c. Endowment plan
Cost Cost
TEMPORARY
Offers purely protection (Term Plan), Maximum coverage at the least amount of initial premiums
a. Renewable b. Convertible c. Renewable & Convertible
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Permanent plan
A. Whole life plan
Permanent policy that covers an individual up to age 100. It has low level of savings and matures at age 100.
a. Ordinary/ Straight Pay
Payment is up to age 100.
Protection Period Premium Paying Period
PED
Age 100
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Permanent plan
A. Whole life plan
b. Limited Pay
Payment is for a limited period only. Ex. 5pay, 10pay, life paid-up at 65
Protection Period
Premium Paying Period
PED
Limited Period
Age 100
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Permanent plan
A. Whole life plan
c. Universal Life
A variation of whole-life policy where premiums and benefits are flexible due to the performance of its investment fund (real estate or stock fund).
PED
Limited Period
Age 100
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Permanent plan
B. Endowment plan
Permanent policy that cover a person and mature after a specified period. It is actually a level term and a pure endowment. a. Age- based
Endowment that matures at a stated age. Ex. Endowment @ age 65
PED
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Age 65
Age 100
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Permanent plan
B. Endowment plan
b. Term- based
Endowment that matures at a specified period. Ex. 20yr endowment, 15yr endowment
PED
20th yr
Age 100
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Temporary plan
Term plan
a. Level Term
Face amount and premiums remain constant.
PED
Specified Period
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Temporary plan
Term plan
b. Decreasing Term
Face amount decreases by a stipulated amount over a period of time. This plan is usually used for mortgage redemption & loans.
Sum Assured 500K 400K 300K Protection Period Premium Paying Period 200K 100K
PED
Specified Period
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Temporary plan
Features of Term Plan
a. Renewability
Term policies may be renewed for the same number of years before the term ends, even without evidence of insurability.
Protection Period
Protection Period
Protection Period
PED
5 yr Term
5 yr Term
5 yr Term
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Temporary plan
Features of Term Plan
b. Convertibility
Term policies may be converted to a permanent policy before the term ends, even without evidence of insurability.
Protection Period
Protection Period
PED
Specified Period
Age 100
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Policies accdg. to surplus distribution
Participating
A type of policy wherein the policyholder receive policy dividends.
Non-Participating
A type of policy wherein the policyholder does not receive policy dividends.
Cost
DIVIDENDS are divisible surplus earnings of the company, which are distributed equally to the insured
Cost
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Dividend options
1.
2.
Cash payment
Get the dividends as they fall due or when it becomes payable
Premium reduction
Dividends are used to pay future premiums
3.
4. 5.
Accumulate at interest
Leave the interest with the company to earn a specified rate of interest
Buy paid-up addition

Dividends are used to buy additional small paid-up coverages of the same plan
Buy a renewable term insurance

Dividends are used to buy a yearly renewable term equal to the premium paid or cash value
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Module 3 : Supplementary Contracts RIDERS
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What are riders?

They are supplementary contracts that provides additional benefits for a minimal cost. They need a basic plan to be attached to, thats why theyre called riders.
They are term insurance because they are applicable only for a limited period. They may be inforced only until age 60 of the insured.
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Riders
A. Waiver of Premium due to Disability
Stops further premium payments in the event of:
A. Total Disability & B. Permanent Disability (waiting period)
PED Future Premiums waived up to age 60

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Riders
B. Payors Benefit/ Clause
Stops further premium payments in the event of Payors: (Ex. Juvenile Policies) A. Death or B. Total & Permanent Disability
PED
Age 100
Future Premiums waived up to age 60 Or until the child turns 21 which ever comes first
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Riders
C. Accidental Death Benefit/ Double Indemnity
Provides additional benefit if cause of death was due to accident. (Ex. Automobile Accidents) Illustration: Basic Policy + ADB = Total Death Benefit
P100,000
P100,000
P200,000
CONDITIONS: Death must occur within 90 days from the time of accident Death must occur before termination of the rider at age 60 Death is solely and directly due to accident, independent of other causes
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Riders
D. Term rider
It is basically a term plan attached to a permanent plan (Ex. 5 yr Term : P500K) Provides greater coverage for the least amount of premiums Common type is the Family Income Rider, which is a decreasing term.
Illustration:
Basic Policy P100,000 + + Term Rider = P500,000 = Total Death Benefit
P600,000
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Riders
E. Guaranteed insurability rider
It allows purchase of additional policies without evidence of insurability
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Rider limitations
They expire at a specified period.
They cease when cash values are used as premiums.
They do not accumulate cash values.

They can only be purchased before a stated age. They do not take effect if specified conditions are not met.
Note: Dividends are unaffected if riders take effect. (Ex: Even if premiums are waived by WPD/ PB)
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How do I recommend products?
Advisors are expected to make a TOTAL NEEDS SELLING which is to determine a prospects complete financial need preparatory to offering a product
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Module 4 :
Risk Selection
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Risk selection
What is Underwriting?
It is the process of Risk Appraisal. - Risk in Insurance is Hazards on peoples lives. It is done to prevent Anti- Selection.
Anti-selection The tendency of persons with health impairments or hazardous occupations to apply for life insurance
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Underwriting factors
P O F M A R
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occupational financial moral avocation and hazardous pursuits
residence and travel

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Physical
Age Built Physical Condition Personal Medical History Family History
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Occupational
Source of income to pay for premiums. Some occupations may cause injury, disability and even death (ex. Black Jack dealer, Barter Trader) Premiums may be adjusted to include occupational rating.
Classification of occupation: Accident Hazard Unhealthy working conditions Social class hazard
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Financial
Advisors must ask for all sources of income:
Part-time job Harvest from land Rentals Others Can client pay for his premiums?
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Moral
Any immoral conduct involves extra mortality
Infidelity of the spouse Chain smoker Alcoholic Drug addict Gambler
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Avocation/hobby
Hazardous avocations or hobbies post extra risk on the persons life and would necessitate payment of extra premium
Mountain climbing Scuba diving Parachuting Sky diving Car racing, motorcycle racing
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Residence and travel

Living condition, peace and order situation may increase lifes risks
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Sources of information
Where can we get information on prospects age, health condition, occupation, avocation, etc.?
1. 2. 3. 4. 5. 6. 7. Agent Application Form Medical Examiner Attending Physician Inspection Report Financial Report Medical Information Bureau
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AGENT
Observations of the advisor of the prospect Information known about the prospect Confidential report of the advisor
APPLICATION FORM
It is the basis of the policy. It contains all information material to the application for insurance. All statements in the application form are mere representations and not warranties
MEDICAL EXAMINER
Physical examination conducted to establish health condition and history.
ATTENDING PHYSICIAN
Confirmation from a doctor that applicant has fully recovered from a previous illness. It should always be furnished if available.
Date of Illness, Doctors Name and hospital, Diagnosis and treatment, Duration of Illness, Date of relapse or recurrence (if any)
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INSPECTION REPORT
Third party person/company hired to gather additional information about the prospect.
FINANCIAL REPORT
Documents supporting the clients capability to pay and sustain payment of premiums i.e. Income Tax Return, Annual Statement
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MEDICAL INFORMATION BUREAU
Source of confidential medical information on applicants for insurance
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Classification of risks

Standard Sub-standard Modified

(i.e. Removal of ADB, WPD, in forcing liens)
Rated
(i.e. Extra rating of P5.00 per 1000 of coverage)
Declined Postponed
(i.e. 7 months pregnant, undergoing therapy)
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What are liens?

It is a limitation in coverage because of higher risk exposure of the insurer.
Juvenile Lien
Pertains to insured children below 6 years old
Pregnancy Lien
Pertains to pregnant women applying for insurance
Aviation Lien
Civilian or members of AFP engaged in flying may be subject to extra rating or lien
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Module 5 :
Legal Aspects
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What is a life insurance contract?

A contract whereby a party, for a consideration agrees to pay another a certain sum of money in the event of the latters death from any cause not excepted in the contract, or upon surviving a specified period of time or otherwise contingent of the continuance or cessation of life.
( Sec. 179 PD 612)
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Who are parties to a contract? 1. INSURER
A corporation who holds a certificate of authority from the Insurance Commission to issue insurance policies a. b. FOREIGN incorporated under foreign laws and whose respective home office is located outside of the Philippines
DOMESTIC incorporated under Philippine laws and whose respective home office is located within the Philippines Types:
1. Stock derive capitalization from sale of stocks. The owners are stockholders. Mutual Owned by policyowners. The dividends that are realized by the company go to the policyowners.
2.
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Who are parties to a contract?
2. INSURED/OWNER
Legally qualified to enter into a contract 18 years old and above, with sound mind
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Who can represent the insurer?

INSURANCE AGENT
Any person who for compensation, solicits or obtains an insurance on behalf of any insurance company
INSURANCE BROKER
Any person who aids in soliciting or negotiating the making of any insurance contract or in placing risk on behalf of an insured other than himself.
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What is a consideration?
Premiums paid by the insured as agreed in the contract
What is the sum of money involved?

The Face Amount/ Sum Insured/ Benefits specified in the contract
When will the benefits of a life insurance plan be paid?

The benefits of the contract will be paid upon the death of the insured or upon reaching a specified period also known as the MATURITY of the policy.
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Characteristics of a life insurance contract?

A LIFE INSURANCE contract is a.
Unilateral Contract
Only one party (the insurer) makes a legally enforceable promise.
Aleatory Contract
Values exchanged(premiums Vs. Benefits) are not necessarily equal. The insured may receive more than what he has given.
Contract of Adhesion
The terms and conditions of the contract are drafted only by one party (the insurer).
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Characteristics of a life insurance contract?

A LIFE INSURANCE contract is a.
Conditional Contract
The insurers obligations and promises describe in the contract are subject to certain conditions (i.e. exclusions, liens).
Contract of Utmost Good Faith

Each party must depend on the utmost good faith of the other concerning the risk to be transferred.
Valued Contract
An agreement to pay a given amount on the occurrence of a stated contingency or survival after a specified period. No indemnity is attempted because nobody can place a monetary value on life.
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Elements of a contract
Obligation
The insurer is obliged to pay the proceeds if all conditions in the contract have been met by the insured.
Consideration
The sum of money given by the insured as a consideration for the insurers promise to pay in the event of a contingency or after a specified period.
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Contingencies
The contingencies in a life insurance contract are DEATH, OLD AGE and DISABILITY.
Legal Purpose
Life insurance as a contract affect public interest. Therefore, the object or legal purpose of the contract must be in accordance with the provisions of the law.
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Mutual Consent
Both parties agreed to enter into a contract, accepting each others rights, limitations and obligations as specified in the policy.
Insurable Interest
Is the relationship that exist where one suffers (financially) in the destruction of the other, or continually gains from the existence of the other.
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Who may receive the benefits of a contract?

The beneficiary (ies) named in the contract.
Anyone who has insurable interest on the life of another can be a beneficiary. It exists when one is reasonably dependent on the other during the inception of the policy.
Everyone has insurable interest in his own life By virtue of blood or marriage Where there is economic loss upon the death of the insured A finance company on the life of the borrower
Any person with pecuniary interest has insurable interest.
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Who are not qualified to be named beneficiary?

Under Article 739 ( Article 2012 civil Code ) of the New Civil Code provides that the following persons are prohibited from receiving any donations and thus cannot be named as beneficiaries.
Those made between persons who were guilty of adultery or concubinage at the time of the donation; (i.e.common-law wife) Those made between persons found guilty of the same criminal offense; (i.e. public enemies) Those made to a public officer or his wife, descendants or ascendants by reason of his office.
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Beneficiary
According to priority:
PRIMARY
Has priority over the death proceeds of the policy
SECONDARY/CONTINGENT
The beneficiary who will receive the death proceeds if the primary beneficiary (ies) predeceases the insured and no other primary beneficiary is named
ESTATE
Becomes the beneficiary if there are no persons named as beneficiaries or if there are no more living primary nor contingent beneficiaries
Beneficiary
According to right:
REVOCABLE
A beneficiary whose right in the policy are subject to the insureds reserved right to change, or add more beneficiaries or to do anything else with the policy even without the beneficiarys consent.
IRREVOCABLE
A beneficiary who has VESTED right to the proceeds of the policy and therefore, the policyowner cannot exercise his rights over the policy without the WRITTEN CONSENT of his beneficiary.
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Taxes in insurance
ESTATE TAX
Tax levied on the transfer of ownership from the deceased property owner to his heirs. The death proceeds being subject to ESTATE TAX depends on the BENEFICIARY designation.
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Taxes in insurance
ESTATE TAX Revocable
When the beneficiaries receive the death proceeds, it is deemed that there was a transfer of ownership for they do not possess the rights over the policy
Irrevocable
They possess the rights over the policy. So it is deemed that they own the death proceeds and thus when they receive the proceeds there is no transfer of ownership.
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Taxes in insurance
Are all insurable proceeds TAXABLE? DEATH PROCEEDS
It is not subject to income tax, because it is not considered as INCOME. But if the proceeds are left to earn interest, the interest earnings will be deemed as income and therefore taxable.
MATURITY PROCEEDS
Any amount in excess of the TOTAL PREMIUMS paid are considered income and therefore taxable.
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Module 6 :
Policy Provisions
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Policy Provisions
Entire Contract Provision
Made up of the APPLICATION FORM, ENDORSEMENT and the POLICY
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Policy Provisions
WHILE THE INSURED LIVES
EFFECTIVITY OF POLICY
The life insurance contract becomes effective only upon:

Approval and delivery of the policy During the lifetime and good health of the insured Upon payment of the first premium in advance
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Policy Provisions
GRACE PERIOD
The company allows a period of at least 30 days from the due date for the payment of each premium. During this time, the insurance will continue to be in force. If death occurs during the grace period, the company shall be liable for full amount, less the premium due for the period.
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Policy Provisions
AUTOMATIC PREMIUM LOAN

Provides that at the end of the grace period and the premium due has not been paid, an amount equal to the premium due will be deducted from the cash values, to pay the premium due.
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Policy Provisions
POLICY LOAN
A provision that states that at anytime after a cash value is available and the policy is in force other than as Extended Term Insurance, the policyowner may obtain a loan for an amount not exceeding the cash value.
Interest is incurred this is to replace investment income There is no definite payment for the loan itself. This should only be resorted to in dire emergency.
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Policy Provisions
ASSIGNMENT
It is defined as the giving of the right to expect to a third party other than the named beneficiary through a duly notarized Deed of Assignment.
Partial or Collateral
Transfer of some right over the policy for a limited period. Ex. Payments of Bank Loans
Absolute or Complete Assignment

The assignee acquires all the rights and interests of the original policyowner. Ex. Retiring Key Executive, Change of Payor (Estate Conservation)
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Policy Provisions
WHEN THE INSURED DIES
MISSTATEMENT OF AGE
If the age of the insurance has been misstated, the amount of insurance will be adjusted to the amount which the premium would have purchased at the correct age, applicable risk class and applicable premium rates as of the policy date.
Example:
Client pays premiums at P45K where in fact it should be P50K at his correct age. Insurance amount is at P500,000. What is the total adjusted DB?
FA to be paid = P500,000 (P45,000) = P450,000 (Total DB payable) 50,000

Policy Provisions
INCONTESTABILITY CLAUSE
Provides that the policy and any claims can be contested by the insurance company on the grounds of material misrepresentation or material concealment within 2 years from the date the policy was issued or reinstated.
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Policy Provisions
SUICIDE CLAUSE
Provides that if the insured commits suicide within 2 years from the date the policy was issued or reinstated the companys liability is limited to a return of premiums paid.
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Policy Provisions
SETTLEMENT OPTIONS
LUMPSUM total cash proceeds are given INTEREST OPTION
proceeds are left with the company for a specified time. The interest is paid to the beneficiary
FIXED PERIOD OPTION
the proceeds plus interest earned shall be paid in installments for a specified number of years
FIXED AMOUNT OPTION
installments of equal amounts are paid to the beneficiary, until the proceeds and interest are exhausted
LIFE INCOME proceeds and interest are paid to the beneficiary while he or she lives
Note: Theres no option available for payments to be received when a child reaches independency or upon request.
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Policy Provisions
BENEFICIARY
Insurable interest must exist in designating beneficiaries at the time of application.
According to priority: Primary According to right:
Revocable
Irrevocable
Secondary/ Contingent
Estate
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Policy Provisions
WHEN THE INSURED QUITS
LAPSATION
It happens because.
of non-payment of premium
loan + interest exceeded the cash value policyholder doesnt value the insurance policy
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Policy Provisions
The truth about lapsed policies

a. b. c. d. e. f. g. h. i. j. Agents loses all future commissions on renewal premiums Deprive agents of substandard bonus opportunities Many lapsed policies can cause an agents license to be cancelled The agent loses a valuable source of prospects A lapsed policy seldom buys again from his former agent It is a broken promise to a family A total financial loss to a policyowner To lapse a policy is to deny your dependents food, clothing and shelter When a policy lapses the ex-policyowner loses the right to pay for todays insurance at yesterdays price Policyowner expects their agents to remind them of their due date.
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Policy Provisions
NON-FORFEITURE OPTION
A provision that provides the policyholder with options to choose from in the event of premium default, provided that there are cash values and/or dividends in the policy. This option will be implemented at the end of the grace period.
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Policy Provisions
NON-FORFEITURE OPTION

Cash Surrender
Policyowner surrenders his policy for the cash value
Reduced Paid-up Insurance

Company takes the cash value in order to buy a paid up policy but a lowered FA
Extended Term Insurance

Company takes the cash value in order to buy a term insurance with the same FA and receives pure endowment (if any). This is usually the default option.
Note: Pure endowment are any cash values in excess.

Policy Provisions
REINSTATEMENT
Provides for a revival of a lapsed policy, if the policy has not lapsed for more than 3 years, subject to the following conditions:
The policy has not been surrendered for cash or converted to Extended Term Insurance which has expired. Satisfactory proof of insurability of the insured is given to the company. Payment of all overdue premiums and outstanding indebtedness with interest in advance equal to 12% compounded annually.
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Policy Provisions
TYPES OF REINSTATEMENT
BACK PREMIUM METHOD
A method wherein all accrued premiums plus overdue interest and current premium will be paid thereby maintaining the original policy effectivity date.
REDATING METHOD
A method wherein the policy effectivity date is adjusted to a later date. Thus the insured no longer needs to pay unpaid premiums but will instead pay the difference in premium due to the changed in policy effectivity date and the current adjusted premium.
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Module 7 :
Annuities
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What is Annuity?
Annuities
It is a purchase of Income. The person who buys an annuity is an Annuitant. Premiums may be paid in lump sum/ single payment or installment i.e. annually, semiannually, quarterly or monthly
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What is Annuity?
How are annuities received?
STRAIGHT LIFE
Provides an income for life and upon his death liability of the company ceases
LIFE INCOME WITH GUARANTEED PERIOD

Provides life income to the annuitant with guaranteed payment for a definite period
LIMITED INSTALLMENT
Provides payment for a definite period as specified in the contract
REFUND LIFE
Provides life income to the annuitant with a guaranteed amount of payment equal to the total payments made
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What is Annuity?
When do annuities commence?
IMMEDIATE ANNUITY
Payments start at stated period such as one month, three months, six months or one year after the purchase.
IMMEDIATE DEFERRED ANNUITY

Payments start at the end of a specified number of years or until the annuitant attains a specified age or a predetermined date.
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Module 8 :
Health Insurance
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What is Health Insurance?

Provides..
Disability income benefits Accidental death and dismemberment benefit Expense reimbursement benefit
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Module 9 :
Industrial Insurance
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What is Industrial Insurance?

The face amounts are very small Sold by agents who go to the policyholders home to collect premiums, usually on a weekly or monthly basis All industrial life policies have a built in accidental death benefit (granted at no extra cost)
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Module 10 :
Group Insurance
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What is Group Insurance?

A group of people covered by life insurance under one MASTER CONTRACT issued by the INSURER to the EMPLOYER The EMPLOYEES are given a certificate of coverage
It may be non-contributory EMPLOYERS shoulder 100% of the premiums or contributory EMPLOYER and EMPLOYEE shares in the premium (usually 70% by the employer, 30% by the employee)
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Provides..
GROUP LIFE INSURANCE GROUP YEARLY RENEWABLE TERM INSURANCE (GYRT)
It is the most common type of group insurance in Philippines and has the least initial cash outlay, but premiums tend to increase every time policy is renewed.
GROUP MEDICAL INSURANCE GROUP PERMANENT INSURANCE GROUP CREDITORS LIFE (mortgage insurance) GROUP RETIREMENT
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Characteristics of Group Policies:
It covers death of employees regardless of cause except for suicide during the 1 yr or 2 yrs. Enrollment cards are used instead of application forms. Every member of the group should be working for a minimum of 30 hours per week. Certificate of Insurance are issued to the individual members and 1 Master Policy to the representative of the group (employer). Most group policies are on a yearly renewable basis.
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What happens to the Group Insurance if the person is out of the Group?
It can be converted to an individual policy without evidence of insurability before a specified period expires through *Conversion Privilege.
*Conversion Privilege allows the employee to convert to an individual policy with 31 days from date or resignation/retirement without proof of insurability
Note: Group Deposit Administration Policy is a group insurance issued as retirement benefits for employees but does not have any life coverage. In this way, employers are only maximizing the investment expertise of Insurance companies.
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Module 11 : Investments in Life Insurance
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Sources of income
PREMIUMS
INVESTMENTS
Bonds, Mortgage loans, Stocks, Real Estate
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Sources of income
What are BONDS?
Represent a promise on the part of its ISSUER to repay the borrowed sum of money (the principal) to the BONDHOLDER (the investor) at a stated time in the future (the maturity date) and to pay interest to the bondholder at a specified rate (interest).
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Sources of income
What are MORTGAGE LOANS?
Is a legal instrument under which the property pledged can be claimed by the lender if the borrower cannot repay the loan on the due date.
Note: Loanable value is 70% of market value
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Sources of income
What are STOCKS?
Certificate of ownership of a company
Common stockholder
Has voting rights Share in the profits Share in the distribution of assets upon liquidation
Preferred stockholder
No voting rights First priority in dividends & distribution of assets upon liquidation
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Sources of income
What are REAL ESTATE?
Buys or builds properties Acquires real estate through foreclosure of properties or mortgage
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Module 12 :
Code of Ethics/ IC Rules
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Capitalization requirements
Capitalization requirement P100M, P75MPaid-up and P25M for surplus
Reserve requirement Company loan Must not exceed 70% of market value of such real estate Margin of solvency Must not be less than P500,000
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When is the public interest served?

Supervision of Insurance Industry by the Insurance Commission If an agent develops a large number of satisfied clients If a company insists upon its agents working to high standards of performance and integrity
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When is the clients interest served?

Observes the golden rule in conducting a sale. Does not recommend a plan because it has the highest commission rate Does a complete Needs Analysis before offering a plan Maintains a Fiduciary Relationship such as with a Broker and a Potential Investor
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When is the agents license issued?

It will only be issued if applicant has all of the ff:
Clean record of employment Reasonable educational background Prospective character and reputation Passed the licensing examinations
will be renewed if information in the application for renewal are complete and all requirements are met, and will be revoked for fraudulent practices, violation of the insurance code, misrepresentation in the application for license, and influencing a client to misstate true health.
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An agent is committing a criminal offense:

Upon issuance of receipt and subsequent failure to remit such premium collection to the company. Issuance of a receipt for a premium that was not in fact collected. Issuance of an ante-dated receipt for a late payment. Delivery of a policy and collection of an initial premium with the knowledge that the applicant is no longer in good health.
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An agent is doing an unethical practice:

Rebating/ Premium Discrimination
Giving of commissions (partial or full) to clients is in violation of the law. Agent can only share their commission to another agent.
Twisting
Inducing a client to lapse, forfeit, surrender a policy for the replacement of a new policy from another company. It is an offense in the great majority of cases.
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Knocking
Making derogatory remarks against competitors.
Overloading
Selling more insurance than what is warranted by a clients resources.
Alteration
Altering an application without the written approval of the applicant
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Misrepresentation
Giving false or misleading statements about the product, company, services, and himself (credentials).
Material concealment
Considered to be material if the insurance company would have altered its risk appraisal decision had the truth been known
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Facts that agents should know

Orphan Policyowners are good source of prospects and new
sales.
Quality Business are policies which are persistent and

demonstrate good mortality experience.
Conservation of Life Insurance Policy is dependent on the

quality of agents prospecting habits, the use of effective needs selling, agents service oriented attitude and pressure selling.
Record Keeping is essential for agents who sell all life and health
insurance.
Facts that agents should know

Repeat Business
is one of the best source of quality prospects is a good agents reward for conscientious service to his clients is a recognized characteristic of a good agent
is more persistent than quality business generally develops larger sales and hence, larger commissions requires less selling effort and registers better closing ratios
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Agents Licensing Course
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Agent's Licensing Course Guide

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Agent's Licensing Course Guide

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Agents Licensing Course

Agent's Licensing Course

What is the ALC?

Agent's Licensing Course

Foundations of Life Insurance

Agent's Licensing Course

Man at Work Money at Work

Die too soon

Live too long

Which will it be?

Purpose of Life Insurance

Agent's Licensing Course

DEATH, DISABILITY & OLD AGE.

* Everybody is willing to accept a small loss in preparation for a greater loss.

Agent's Licensing Course

Agent's Licensing Course

How life insurance works

Life Income for the widow Education Fund

Agent's Licensing Course

How life insurance works

Agent's Licensing Course

Agent's Licensing Course

Agent's Licensing Course

Life is a game of CHANCE

Agent's Licensing Course

Life insurance terms

Agent's Licensing Course

How premiums are determined

How premiums are determined

Agent's Licensing Course

How premiums are determined

Gross Premium is equal to

Interest and safety margin Mortality

Agent's Licensing Course

Agent's Licensing Course

Agent's Licensing Course

Agent's Licensing Course

Binding Premium Receipt Terminates Policy Approval & Issuance

Conditional Premium Receipt

Conditional Premium Receipt Terminates Policy Approval & Issuance

Agent's Licensing Course

Agent's Licensing Course

Agent's Licensing Course

Policies accdg. to line

Agent's Licensing Course

Policies accdg. to type of plan

Agent's Licensing Course

Agent's Licensing Course

Protection Period Premium Paying Period

Agent's Licensing Course

Agent's Licensing Course

Protection Period Premium Paying Period

Agent's Licensing Course

Agent's Licensing Course

Agent's Licensing Course

Agent's Licensing Course

Policies accdg. to surplus distribution

Agent's Licensing Course

Buy paid-up addition

Buy a renewable term insurance

Agent's Licensing Course

Module 3 : Supplementary Contracts RIDERS