PCE A Chapter21 - 30

PCE Part C Life Insurance
Revision 01 (25/11/2011)
AIA.COM
AIA confidential and proprietary information. Not for distribution.
CHAPTER 21
LIFE INSURANCE PRELIMINARIES
2
LIFE INSURANCE PRELIMINARIES
Characteristics of Life Insurance Products
Basic Principles of Insurance as Applied to Life

Insurance
Risk Covered by Life Insurance
3
CHARACTERISTICS OF LIFE INSURANCE

PRODUCTS
Long Term Contracts

Principle of Uberrima Fides
Aleatory Contracts
4
CHARACTERISTICS OF LIFE INSURANCE

PRODUCTS
Insurable Interest
Payment of a Claim Terminates a Life
Insurance Contract
The Risk to be Insured Increases with Time
5
RISKS COVERED BY LIFE INSURANCE POLICIES
Premature Death
Permanent Disability
Temporary Disability
Retirement Benefits
Financial Guarantee
6
CHAPTER 22
LIFE INSURANCE PRODUCTS

&
FAMILY TAKAFUL BUSINESS
7

Categories ofLife Insurance Products
Types of Life Policies
Ordinary Life Insurance :
Term, Whole Life (WL)
and
Endowment Insurances
Home Service Insurance
Group Insurance
8

Other Contracts :
Permanent Health Insurance (PHI),
Dread Disease Covers
and Investment-Linked Policies
Supplementary Benefits (Riders)

Miscellaneous Policies :
Childrens Insurances and Joint-Life Insurance
Family Takaful Business
9
CATEGORIES OF LIFE INSURANCE

PRODUCTS
Participating Contracts (Par)
Non-participating Contracts (Non-par)
10
TYPES OF LIFE POLICIES

Ordinary
Home Service
Group Insurance
11
ORDINARY LIFE INSURANCE
Term Insurance
Whole Life (WL)
Endowment
Annuities
12
Term Insurance
Level Term
Insurance
Renewable and
Convertible
Decreasing Term
Insurance
13
Whole Life (WL)
Ordinary Life Policy
Limited Payment
WL Policy
WL Endowment
Policy
14
Endowment
Anticipated
Endowment Insurance
Uses of
Endowment Insurances
15

Annuities :
Level Life Annuity Contracts
Single Life
Joint Life
Guaranteed Immediate
Last Survivor
Deferred Annuity
Reversionary
Deferred Annuity
16
HOME SERVICE INSURANCE
Characteristics:
For the lower income class
Premium payments at more frequent intervals,
usually weekly & small amount
Home services representatives collecting the
premium
Whole life & endowment insurances with low sum
assured are the most popular products
17
GROUP INSURANCE
Characteristics:
Insure lives in large groups at low rates for some
purpose. E.g employess of industrial or commercial
establishment or other organization
A stipulated percentage of all the lives in the group
must be included, to enable a average mortality
experience in accordance with the basis of
calculation
The group must consist of a minimum number of
lives if medical examination is to be
exempted/waived.
The lives assured must be in the regular
employment of the assured employer
18
OTHER CONTRACTS
Permanent Health Insurance (PHI)
Dread Disease Covers
Investment-Linked Policies
19
SUPPLEMENTARY BENEFITS (RIDERS)
Accidental Death Benefits
Disability Benefits
Sickness Benefits
20
MISCELLANEOUS POLICIES
Childrens
Insurance
s sura
s
en
ildr d A
Ch ferre
De
Joint Life
Insurance
e
nc
s
e
i
lic
o
d lP
e
t
a
c
n
e
ot atio
r
P uc
Ed
21
FAMILY TAKAFUL BUSINESS

Types
Benefits
Operation
Participants Accounts (PA) and

Participants Special Account (PSA)
22
CHAPTER 23
POLICY CONDITIONS
23
POLICY CONDITIONS
Definition of a Policy
Privileges and Conditions

Privileges
Restrictive Conditions
Conditions Explaining the Contract
Policy Transactions
Policy Alterations
24
DEFINITION OF A POLICY
Contract
Intangible
Legally Binding
Policy
Tangible
Agreement is in Concrete
Form
Agreement
25
PRIVILEGES AND CONDITIONS
IV
R
P
IL
E
G
E
Days of Grace
Surrender Value
Policy Loans
Paid-up Policy
Non-forfeiture Conditions
Automatic Premium Loan
Paid-up Policy
Extended Term Assurance
Reinstatement Condition
26
R
PRIVILEGES AND CONDITIONS E
C
O ST
N R
Suicide Clause
D I
IT C
Foreign Travel & Residence
T
I
O IV
Occupation & Dangerous
N E
Hobbies
S
Incontestability Clause
27
PRIVILEGES & CONDITIONS
CONDITIONS
EXPLAINING
THE CONTRACT
Admission of Age
Misrepresentation of Age
Understated of Age
Overstated of Age
28
POLICY TRANSACTIONS
Duplicate Policy
Assignment of a Life Policy

(Absolute and Conditional)
Reassignment
29
POLICY ALTERATIONS
Address
Name
Mode of Payment
Sum Insured
Beneficiary
Term of Insurance
Policy Altered to Paid-up
Class of Policy
Removal of Extra Premium
30
CHAPTER 24
PRACTICE OF LIFE INSURANCE:
NEW BUSINESS-SELECTION OF LIVES AND
OTHER ISSUES
AT & D- Center for Learning Excellence

31
RISK MANAGEMENT PROCESS

Identifying the Risk Factors
Selection of Lives to be Insured
Quantifying Risk
Costing Risk
Monitoring the Insurance Fund

32
THE RISK FACTORS -MORTALITY
Age
Sex
Occupation
Social Status
Ethnicity
Geographical Location
Marital Status
Personal Habits and Family History
Avocation
Foreign Residence
33
SELECTION OF LIVESTO BE INSURED

Financial Underwriting
Medical Underwriting
Non-medical Underwriting
The Role of Agent in the Underwriting Process of
Non-medical Insurance
Objectives of Selection
Standard Life
Sub-standard Life
Deferred
Declined
34
MODES OF ACCEPTINGSUB-STANDARD LIVES

Classification of Extra Risks:
Increasing Extra Mortality
Level Extra Mortality
Decreasing Extra Mortality
Treatment of Sub-standard Lives:
Increasing Premium
Decreasing Death benefit
Bonus Adjustment
Alternative Policy Plan
Exclusion of a Particular Hazard
35
TAXATION OF LIFE INSURANCE PREMIUMS

Objectives:
To Encourage National Thrift
Promote Individual Financial Independence
Total Relief:
RM6000 (Life Insurance and EPF)
36

Taxable / Assessable Income:
Salary, Leave Pay, Commissions,
Bonuses/Dividends, Gratuity,
Fees and Allowances
Income Tax
Rates and Relief:
Subject to Annual Review &
Income Tax Act 1967
Assessment Year:
1 January 31 December.
Personal
Income Tax Basics
Income for the Year of Assessment

shall be the
Income for the Year Preceding
the Year of Assessment
Allowable Deductions:
EPF, Life Insurance Premiums,
Approved Charity Organization,
Personal Relief,
Dependent
Children/Relatives Support
37
Chargeable Income
=
Assessable Income
less
Allowable Deductions
38
Chapter 19
CHAPTER 25
PRACTICE OF LIFE INSURANCENEW BUSINESS-PREMIUM RATING
AT & D- Center for Learning Excellence 39

QUANTIFYING THE RISK

Pooling of similar risk
Law of large numbers
The past forms a guide to the future
40
COSTING THE RISK
Mortality
Expenses
Investment returns
Tax
Other factors
41
COSTING THE RISK
Mortality
Standard Mortality Tables
Expenses
Initial
Renewal
Termination
42
COSTING THE RISK
Investment returns
Taxation
Other factors
Financial costs
Reinsurance costs
Bonus Loading
43
PREMIUM RATE CALCULATIONS

RISK PREMIUM
Basic cost of death risk
LEVEL PREMIUM
Risk increases with passages of time
NET PREMIUM
Cost of mortality & interest
44
PREMIUM RATE CALCULATIONS
GROSS PREMIUM =
Net premium
PLUS
Loading for expenses
PLUS
Loading for profit &
contingencies
45
SATISFACTORY PREMIUM RATE STRUCTURE
ADEQUATE
COMPETITIVE
EQUITABLE
CONSISTENT
PROFITABLE
46
ADJUSTMENT TO GROSS PREMIUMS IN THE

RATEBOOK
MODE OF PAYMENT
ADJUSTMENT OF SUM ASSURED
HEALTH & OCCUPATIONAL EXTRAS
FEMALE LIVES
47
NUMERICAL RATING SYSTEM

Particulars
Percentage
extra
Yields over
Age:30 (basic rating)
+100%
Weight debit
Height: 54
+100%
Weight: 210 lbs
Blood pressure: 140/85- normal +0%
Medical history: Nil
+0%
--------Total rating:
+200%
Less basic rating:
- 100%
--------Extra mortality:
+100%
--------AIA confidential and proprietary information. Not for distribution.
48
CHAPTER 26
PRACTICE OF LIFE INSURANCEMONITORING THE INSURANCE
FUND

49
THE PURPOSE OF A VALUATION

To test insurance companys solvency
To determine the amount of surplus
(if any)
To test the adequacy of existing premium scales
To determine the companys operations
To comply with the statutory requirements
50
VALUATION OF LIABILITIES
LIABILITY =
The Present Value Of The Benefit Payable
Plus
The Present Value Of Expenses

Less
The Present Value Of The Future Premiums

Receivable
51
VALUATION OF ASSETS
E.g. of assets:
Cash
Investment
Shares
Loans
Properties
Furniture
Office Equipments
52
SURPLUS
Sources of surplus include:
INTEREST
MORTALITY
EXPENSE
MISCELLANEOUS
53
METHODS OF DISTRIBUTION SURPLUS
Simple Reversionary Bonus

Compound Reversionary Bonus
Cash Bonus
Maturity Bonus or Terminal Bonus
Interim Bonus
Guaranteed Bonus
54
CHAPTER 27
PRACTICE OF LIFE INSURANCE
- POLICY DOCUMENTS

55
SOURCES OF INFO FOR RISK ASSESSMENT
PROPOSAL FORM
MEDICAL REPORT
ATTENDED PHYSICIANS STATEMENT
AGENTS REPORT
PREVIOUS RECORDS
56
THE PROPOSAL FORM
Personal particulars
Details of insurance
Occupation, residence, travel & hazardous

pursuits
Personal & family history
Declaration & authorization
57
THE MEDICAL REPORT/SPECIAL EXAMINATIONS
Height & Weight
Pulse & blood pressure readings
Chest & abdomen measurements
Condition of the:
Heart
Lungs
Nervous system
Urine analysis
58
ATTENDING PHYSICIANS STATEMENT
Consent of the applicant is required before hand
Attending physician is required to give specific

answers to queries related to the treatment
59
THE AGENTS REPORT
Applicants habits
Appearance
Character
Financial status
60
THE PROPOSAL FORM
Personal particulars
Details of insurance
Occupation, Residence, Travel & hazardous pursuits
Personal & Family history
Declaration & Authorization
61
POLICY FORM & STRUCTURE
THE HEADING
THE PREAMBLE
THE OPERATIVE CLAUSE
THE PROVISO
THE SCHEDULE
ATTESTATION
CONDITIONS & PRIVILEDGES
62
ENDORSEMENTS
Endorsements can be done either at the:

Time of issue of the policy
After issue of the policy
63
ENDORSEMENTS- Time if issue of policy
Premium / Frequency of Payment
Sum Assured / Mode of Payment
Special Benefit
Special Restrictions
64
ENDORSEMENTS- After policy issue
Mode of payment
Alterations to the form of the contract
Imposition / Removal of extra premium
Surrender of bonus
65
CHAPTER 28
PRACTICE OF LIFE INSURANCE- CLAIMS

66
CLAIM ARISE
On the death of the insured
On maturity of the insurance policy
Sickness or Disability benefit claims
Claims arising under supplementary contracts
67
DEATH CLAIMS
NOTIFICATION OF DEATH
Policy holders name & identity card number
Policy number
Address
Date & cause of death
68
DEATH CLAIMS
PROOF OF DEATH
A death certificate
A coroners report
An order pronouncing a statutory presumption of death
Certificate showing death at sea
Medical certificate by last medical attendant
A certificate evidencing the death of service personnel
and war death
69
DEATH CLAIMS
PROOF OF AGE
Birth certificate
School leaving certificate
Certified extract from baptism register
IC by Malaysian Government
Passport
Statutory declaration (for the elderly)
70
DEATH CLAIMS
PROOF OF TITLE & SETTLEMENT

A deed of assignment
A probate of will obtained from the court
of law
A letter of administration issued by a
court of law
For a policy effected under Sec 23 of the
Civil Law act, the money would be
payable to the trustees
71
MATURITY CLAIMS
NOTIFICATION TO POLICYHOLDER
Identity form
Survival form
Discharge form
72
MATURITY CLAIMS
PROOF OF CLAIMS
Proof of age
Proof of survival
Completion of discharge voucher
The policy document
73
MATURITY CLAIMS
SETTLEMENT OPTIONS
By maturity proceeds
Convert to annuities
Leave proceeds of maturity as a deposit with insurer at
a pre-determined interest rate
Draw cash by installments over a number of years
74
CHAPTER 29
LIFE INSURANCE :
SOME MATHEMATICS
AT & D- Center for Learning Excellence75

CALCULATION
AGE
PREMIUM
INTEREST
GUARANTEED SURRENDER VALUE
76
CALCULATION
AGE
Last Birthday
Next Birthday
Nearest Birthday
77
CALCULATION
PREMIUM
Age
Sex
State of Health
Type of policy
Sum assured
Policy term
Mode of payment
78
CALCULATION
INTEREST
Outstanding Premium Charges
Policy Loan Repayment
79
CALCULATION
GUARANTEED SURRENDER VALUE

Incorporate value table in the schedules
80
CHAPTER 30
PRACTICE OF INSURANCE
ETHICS & CODE OF CONDUCT
AT & D- Center for Learning Excellence 81

CODE OF ETHICS
Rebating
Twisting
Misrepresentation
Attitude towards competition
82
REBATING
The practice of sharing an agents commission

with the policyholder may be viewed as
discrimination, and the implication of it clouds
the legality of the contract
83
TWISTING
Persuading a policy holder to discontinue or

lapse a present policy in order to buy a new
policy
84
MISREPRESENTATION
Constitute telling something that is NOT TRUE.

This statement holds true both when the agent
is representing the insurer to the prospect and
when the agent is representing the applicant to
the company
85
ATTITUDE TOWARDS COMPETITION
Nothing is gained by casting doubt upon any

company, in which a prospect may have
insurance, or underlying motive of any other
salesman who may at the moment be
attempting to sell to the prospect
86
GUIDELINES ON THE CODE OF CONDUCT
7 PRINCIPLES OF THE CODE OF ETHICS &

CONDUCT
AVOID conflict of interest
AVOID misuse of position
PREVENT misuse of information
ENSURE completeness & accuracy
87
GUIDELINES ON THE CODE OF CONDUCT
7 PRINCIPLES OF THE CODE OF ETHICS &

CONDUCT
ENSURE confidentiality of communication
ENSURE fair & equitable treatment
CONDUCT business with utmost good faith &
integrity
88

PCE A Chapter21 - 30

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

PCE A Chapter21 - 30

Загружено:

Авторское право:

Доступные форматы

PCE Part C Life Insurance

AIA confidential and proprietary information. Not for distribution.

LIFE INSURANCE PRELIMINARIES

LIFE INSURANCE PRELIMINARIES

Characteristics of Life Insurance Products

Basic Principles of Insurance as Applied to Life

Risk Covered by Life Insurance

CHARACTERISTICS OF LIFE INSURANCE

Long Term Contracts

CHARACTERISTICS OF LIFE INSURANCE

RISKS COVERED BY LIFE INSURANCE POLICIES

LIFE INSURANCE PRODUCTS

LIFE INSURANCE PRODUCTS

LIFE INSURANCE PRODUCTS

Supplementary Benefits (Riders)

CATEGORIES OF LIFE INSURANCE

Participating Contracts (Par)

Non-participating Contracts (Non-par)

TYPES OF LIFE POLICIES

ORDINARY LIFE INSURANCE

Whole Life (WL)

ORDINARY LIFE INSURANCE

ORDINARY LIFE INSURANCE

Whole Life (WL)

Ordinary Life Policy

ORDINARY LIFE INSURANCE

ORDINARY LIFE INSURANCE

HOME SERVICE INSURANCE

Permanent Health Insurance (PHI)

Dread Disease Covers

SUPPLEMENTARY BENEFITS (RIDERS)

Accidental Death Benefits

AIA confidential and proprietary information. Not for distribution.

FAMILY TAKAFUL BUSINESS

Participants Accounts (PA) and

Privileges and Conditions

AIA confidential and proprietary information. Not for distribution.

PRIVILEGES AND CONDITIONS

PRIVILEGES & CONDITIONS

Assignment of a Life Policy

AT & D- Center for Learning Excellence

AIA confidential and proprietary information. Not for distribution.

RISK MANAGEMENT PROCESS

Selection of Lives to be Insured

Monitoring the Insurance Fund

THE RISK FACTORS -MORTALITY

SELECTION OF LIVESTO BE INSURED

MODES OF ACCEPTINGSUB-STANDARD LIVES

TAXATION OF LIFE INSURANCE PREMIUMS

TAXATION OF LIFE INSURANCE PREMIUMS

Income for the Year of Assessment

AIA confidential and proprietary information. Not for distribution.

TAXATION OF LIFE INSURANCE PREMIUMS

AT & D- Center for Learning Excellence 39

QUANTIFYING THE RISK

COSTING THE RISK

COSTING THE RISK

COSTING THE RISK

PREMIUM RATE CALCULATIONS

PREMIUM RATE CALCULATIONS

Loading for expenses

SATISFACTORY PREMIUM RATE STRUCTURE

ADJUSTMENT TO GROSS PREMIUMS IN THE