1.

Term Life Insurance

Term life insurance, also known as pure life insurance, is life insurance that guarantees payment of a stated death benefit
during a specified term. Once the term expires, the policyholder can either renew for another term, convert to permanent
coverage, or allow the policy to terminate. Term life policies have no value other than the guaranteed death benefit.
2. Permanent Life insurance
Permanent policies provide lifetime coverage. If, for whatever reason, you want to cancel your permanent life policy, you
will get your cash value in hand and can use it as needed, for example, at the time of emergency. These policies are
typically comprised of two parts: a savings or investment portion and an insurance portion. This makes the premiums
higher than normal policies. Insured people can also take a loan by borrowing against the cash value. For this reason,
permanent life insurance is also known as cash-value insurance.

Two types of PLI:

A. Whole Life Insurance

Whole life insurance covers you as long as you live. You have to pay the same amount of premium for a specific
period to receive the death benefit. Normally, this policy remains intact for the rest of your life, regardless of how long
you may live. This policy is highly suitable for long-term responsibilities like a surviving spouse's income needs
and/or post-death expenses.

One of the features of this type of life insurance is that it combines coverage with savings. As a result, you may end
up paying higher premiums in the beginning, compared to a term life insurance policy.

B. Universal Life Insurance

This policy is also termed "adjustable life insurance" because it offers more flexibility compared to whole life
insurance. You have the liberty to reduce or increase your death benefit and to pay your premiums at any time in any
amount (subject to certain limits) after your first premium payment has been made.

With a universal policy, you can increase the face value of your insurance coverage. But, you need to pass a medical
examination to qualify for this benefit. Similarly, you may decrease your coverage to a minimum amount without
surrendering your policy. But keep in mind, surrender charges may be applied against the cash value of your policy.

When it comes to the death benefit, you have two options: a fixed amount of death benefit or an increasing death
benefit equal to the face value of your policy, plus your cash value amount.

You also have the opportunity to change the amount and frequency of your premium payments. This means you can
increase your premiums or pay a lump sum according to the specified limit in the policy. As you know, part of your
premium minus the cost of insurance is put into an investment account—any interest accrued is credited to your
account. The interest you earn grows on a tax-deferred basis, increasing your cash value.

You can reduce or stop your premiums to use your cash value to pay premiums in case you go through any financial
problems. Nevertheless, there should be enough money accumulated in your cash value account to cover the
premium payments. Make sure to discuss the status of your cash value fund with your insurance advisor before
stopping the premiums. Your policy may lapse if you cease to pay premiums and have insufficient cash value to
cover the cost of insurance.

The alternative of a policy loan is an added perk in universal life insurance. It is important that you do not make
repeated withdrawals from your accumulated fund. This may reduce the cash value amount and will render you
helpless at the time of genuine need. Another good thing about universal life insurance is that your insurance
company discloses the entire cost of insurance to you. This gives you an idea of how your policy works.

The downside of universal life insurance is the interest rate. If the policy performs well, there are chances of potential
growth in a savings fund. On the other hand, the bad performance of your policy means the estimated returns are not
earned. So you end up paying higher premiums to get your cash value account going. Second, surrender charges
may be levied at the time of terminating your policy or withdrawing money from the account.

Universal life insurance offers well-rounded protection to your loved ones, thanks to its security, flexibility, and variety
of investment options. In times of low liquidity, you can alter your premium payments or even withdraw from your
cash value fund. You can also increase or decrease the face value of your insurance as per your circumstances

Types of Life Insurance as Participation to Company Dividends

1. Participating Life Insurance

A participating life insurance policy is a policy that receives dividend payments from the life insurance company. It is
called participating because it is entitled to share or “participate” in the surplus earnings of the life insurance
company. If you want to own a participating life insurance policy, you will probably need to buy whole life insurance.

Whole life insurance policies are usually the only type of policy that is paid a dividend, and therefore is considered
to be participating.
 Universal life policy owners are not owners of the life insurance company. Universal life insurance policies are
already paid interest on their cash value and are not eligible for additional dividend payments. This is usually
because of the way that life insurance companies invest the aggregate cash value in all universal life
insurance policies

What is Paid up additionS?

Paid-up additional insurance is additional whole life insurance coverage that a policyholder purchases using the
policy’s dividends instead of premiums. Paid-up additional insurance is available as a rider on a whole life policy. It
lets the policyholder increase their living benefit and death benefit by increasing the policy’s cash value.

What is Accumulation Option?

An accumulation option is a policy feature of permanent life insurance that reinvests dividends back into the policy,
where it can earn interest. Some types of insurance pay dividends to their policyholders each year when the
insurance company performs better than estimated. Accumulation options are one of several options policyholders
have for what to do with the dividends they receive. An accumulation option is also known as an "accumulation at
interest dividend option," "accumulation at interest option" or "dividends on accumulation."

2. Non-Participating Life Insurance

A nonparticipating policy does not have the right to share in surplus earnings, and therefore does not receive a
dividend payment.
As to Maturity
1. Endowment Insurance Policy
Life insurance policy that pays the assured sum (face amount) on a fixed date or upon the death of the insured, whichever
comes earlier. Endowment policies carry premiums higher than those on conventional whole life policies and term
insurance, but are useful in meeting special lump sum needs such as college expenses or for buying a retirement home.
Also called endowment life policy or endowment policy.

What is pure endowment policy?

An insurance contract promising to pay the insured a stated sum if he survives a specified period with nothing payable in
case of prior death

What is Level Term Life Insurance?

More common than annual renewable term insurance is guaranteed level premium term life insurance, where the
premium is guaranteed to be the same for a given period of years.

2. Term Insurance Policy

What is waiver of Premium?

A waiver of premium for payer benefit clause in an insurance policy says that the insurance company will not require the insured to
pay a fee to maintain the policy under certain conditions. Most commonly, these conditions are the death or disability of the person
paying the insurance premiums. The insurance company may charge a higher premium to include this waiver in the policy to
compensate for the additional risks presented with a waiver of premium for payer benefit.

What is Risk Appraisal in Life Insurance?

Risk appraisal is the process of assessing the likelihood of a policyholder filing a claim. Risk appraisal is used to determine premium
prices for individuals applying for coverage. After the applicant's risk is appraised, they are placed into a certain risk class by the
insurer and are offered insurance options that are priced accordingly.

What is Anti- Selection?

Refers to a situation in which sellers have relevant information that buyers lack (or vice versa) about some aspect of product quality.
A sociological phenomenon in which those persons with the most dangerous lifestyles or careers are the most likely to buy life
insurance policies. Adverse selection may also occur if those persons conceal or falsify relevant information when they apply for the
insurance policy.
Limited Payment Life Policies
Limited Pay Life Insurance, is for an individual who owns a Whole Life Insurance policy but chooses to pay for the total cost of their
premiums for a limited number of years. With the Limited Pay Life Insurance option, you pay premiums in the first 10, 15 or 20 years
of ownership, but the benefits last a lifetime.

Settlement Options
A settlement is the way in which your life insurance policy proceeds are paid out.
There are many life insurance settlement options that can be confusing at first; your policy may pay out a lump-sum cash
payment, life income, a fixed amount, or interest paid periodically.
As a policyholder, you can usually choose the settlement method you prefer although your beneficiary may also get to choose. Most
beneficiaries choose a lump sum payout but it’s a good idea to explore other options. Many life insurance companies offer a
guaranteed interest rate on all settlement options with the exception of a lump sum.
Waiver of Premium Riders
A waiver of premium rider is an insurance policy clause that waives premium payments in the event the policyholder becomes
critically ill, seriously injured, or disabled. Other stipulations may apply, such as meeting specific health and age requirements.
BREAKING DOWN Waiver of Premium Rider
Policyholders often add the rider, which is only available at issue, as an optional or supplemental benefit to a life insurance policy.
Costs vary per insurer and applicant; insurance companies typically add the rider fee to the premium or charge an upfront fee.

critical years in the programming of life insurance

Critical Year (CY) refers to the year in the life insurance policy when your policy has accumulated enough value - either through
bonuses or dividends over the years- so that you can enjoy full life insurance coverage thereafter without having to pay any more
premiums.

Reinstatement Provision
Reinstatement is the restoration of a person or thing to a former position. Regarding insurance, reinstatement allows a previously
terminated policy to resume effective coverage. In case of nonpayment, the insurer may require evidence of eligibility, such as an
updated medical examination for life insurance, and full payment of outstanding premiums.
BREAKING DOWN Reinstatement
Reinstatement of a life insurance policy occurs after the end of a grace period and when the contract is no longer in force.
Reinstatement requirements may vary among life insurance providers. There is no guarantee by law for reinstatement terms. The
reinstatement process may depend on how much time passed since the policy lapse and the type of insurance policy. Sometimes
applying for a new policy may be less expensive than reinstating an old policy.
Reinstatement Within 30 Days of Lapse
After nonpayment of a life insurance premium, a policy enters its grace period. During the grace period, the insurance company
remains responsible for paying death benefits on valid death claims. If the insurance company does not receive a premium payment
during the grace period, the policy will lapse. At this point, the insurance company is no longer responsible for paying a claim. A life
insurance policy may typically be reinstated within 30 days of a lapse without additional paperwork, underwriting, or attestations of
health. Insureds often pay a reinstatement premium, which is larger than the original premium. Insurance companies add the
additional reinstatement premium to the accumulated cash value of the policy and pay administrative expenses incurred from the
lapse
Reinstatement After 30 Days of Lapse
After the grace period ends, the life insurance company may still permit the reinstatement of a policy. The insured may be required
to make legally binding statements about his health. For example, the insured may have to identify significant, potentially harmful
changes in health that occurred after the policy lapsed. If the insured developed a major health condition during that time, the
insurance company might decline reinstatement. Also, if the insured provides fraudulent information when applying for
reinstatement, the insurance company has grounds to deny a death claim.
Irrevocable and Revocable Designation of Policy
Life insurance policies can have either a revocable or irrevocable beneficiary designation.

A revocable beneficiary can be changed by the owner of the policy without the signature of the beneficiary. Most life insurance
policies in Canada have Revocable beneficiary designations.

An irrevocable beneficiary requires the beneficiary to sign off on any policy changes. Therefore, should the policy owner wish to
change the beneficiary on a policy where an irrevocable beneficiary exists, both the policy owner and the irrevocable beneficiary
must sign off on it.

Irrevocable beneficiary designations are often given as part of a separation agreement or a divorce settlement. Because irrevocable
beneficiaries have extraordinary powers, it is crucial that the policy owner be made aware of these powers should such a
designation be made.

The type of policy does not impact a beneficiary designation. Whole Life Insurance, Universal Life Insurance, or Term Life
Insurance policies can have the beneficiary as Revocable or Irrevocable or vice versa. Life Insurance beneficiaries can be 1 person
or multiple persons.
Assignment of Insurance Policy
1. A collateral assignment of life insurance is a conditional assignment appointing a lender as the primary beneficiary of a
death benefit to use as collateral for a loan. If the borrower is unable to pay, the lender can cash in the life insurance
policy and recover what is owed. Businesses readily accept life insurance as collateral due to the guarantee of funds if the
borrower dies or defaults. In the event of the borrower's death before the loan's repayment, the lender receives the
amount owed through the death benefit, and the remaining balance is then directed to other listed beneficiaries.

2. Absolute Assignment

What Is a Rider?
Riders are the additional benefits that can be bought and added to a basic insurance policy. These options allow you to increase or
limit the insurance coverage of a policy. Buying a rider means paying extra for this supplementary benefit, but generally the
additional premium is low because relatively little underwriting is required.
Here are the most common life insurance riders:
Guaranteed Insurability Rider (a.k.a Renewal Provision) ...
Accidental Death or Double Indemnity Rider. ...
Waiver of Premium Rider. ...
Family Income Benefit Rider. ...
Accelerated Death Benefit Rider. ...
Child Term Rider. ...
Long-Term Care Rider. ...
Return of Premium Rider.

What is automatic premium loan provision?

An automatic premium loan is an insurance policy provision that allows the insurer to deduct the amount of an outstanding premium
from the value of the policy when the premium is due.

What is Insurable Interest?

A person or entity has an insurable interest in an item, event or action when the damage or loss of the object would cause a
financial loss or other hardships. To have an insurable interest a person or entity would take out an insurance policy protecting the
person, item or event in question. The insurance policy mitigates the risk of loss should something beset the asset.

What is Incontestability Clause?

Incontestability Clause. A provision in a life or Health Insurance policy that precludes the insurer from alleging that the policy, after it
has been in effect for a stated period (typically two or three years), is void because of misrepresentations made by the insured in the
application for it.

What is Conditional Binding Receipt?

A conditional binding receipt is involved in life, health and certain property insurance contracts; if the insured is deemed to be
covered by the insurer, the coverage begins on the date the insured receives the conditional binding receipt. Typically, a premium
payment must be received by the insurer along with a completed acceptable application in order for the insured to obtain the receipt.
This may also be called a "conditional receipt" or a "binding receipt," depending on the type of insurance.
What is Substandard Life Insurance?
Substandard life insurance refers to a type of life insurance issued to individuals considered uninsurable at standard rates due to
their below standard physical condition; medical history of serious illness, such as heart disease; or other similar factors.

What is extended term life insurance?

Extended term insurance is a nonforfeiture option which may be included with insurance to extend the coverage for a limited period
of time upon the failure of a policy-holder to pay the premiums.

VUL REVIEWER

What is VUL?
Variable universal life (VUL) is a permanent life insurance policy with a built-in savings component. The plan allows for the
investment of the cash value. Like standard universal life insurance, the premium is flexible.
If you’re considering a VUL plan to beef up your portfolio, these features of the VUL may convince you:

1) Flexible premiums

With a VUL plan, a policyholder has the option of putting in more than the regular premium. Any amount in excess of the regular
premium becomes additional investment or top-up. In effect, the fund value accumulates faster for the policyholder. This is great for
those who are looking for investment options for their bonuses or windfalls.

On the flip side, in the event of unforeseen financial catastrophe, a VUL plan allows the policyholder to paying the charges only,
thereby keeping the policy in-force. Furthermore, as long as there is enough fund value to cover the charges, a VUL policy will not
lapse.

2) Potential higher returns

Since the underlying assets are linked to stocks and bonds, the returns of the VUL plan –may exceed that of other types of
insurance policies. Since its inception 10 years ago, the average returns for an equity and bond fund are 16.6% and 7.8%
respectively* according to the Historical Investment Performance of Investment Funds of Sun Life's Variable Life Insurance
Products. In contrast, dividends and accumulation rate are now down to just four percent. And with present economic conditions, all
signs point to even lower rates in the future.

Although a VUL plan entails higher risk, the higher returns allows the policyholder to realize his goals faster. Or better yet, achieve a
bigger fund than he initially set out for.

3) Liquidity

Just like Rod, a VUL policyholder can access the fund value in case of financial need. Unlike in traditional policies, this is treated as
a withdrawal rather than a loan. Thus, the amount withdrawn does not incur any interest. Better yet, the amount withdrawn is not
deducted from the face amount. However, it is highly encouraged that whatever amount was withdrawn be reinvested again so that
the policyholder remains on track with his financial goals.
All told, VULs have helped Filipinos become savers and investors. Now, our financial dreams become much easier to achieve with
the help of the VUL plan.

Cash Value of Variable Life Insurance

Every time you make a premium payment, a portion of it goes towards the cost of insurance and insurer’s fees. This is the money
that essentially pays to keep the death benefit in place. The remainder of the premium goes towards the policy’s cash value, which
is similar in structure to a brokerage account. The cash value can be invested in certain securities (often called sub-accounts) which
resemble mutual funds.

If the cash value performs well, it can be used to increase the death benefit, withdrawn as cash or used as collateral for a loan. The
cash value is also the amount of money you would receive if you decided to give up your coverage to the insurer, or surrender it
Fixed income securities are a type of debt instrument that provides returns in the form of regular, or fixed, interest payments and
repayments of the principal when the security reaches maturity. The instruments are issued by governments, corporations, and
other entities to finance their operations.
A unit trust is a form of collective investment constituted under a trust deed. A unit trust pools investors' money into a single fund,
which is managed by a fund manager.

An implicit cost is any cost that has already occurred but not necessarily shown or reported as a separate expense. It represents
an opportunity cost that arises when a company uses internal resources toward a project without any explicit compensation for the
utilization of resources.
Rebating is the practice of returning the broker's commission, or a portion of it, to the insured with the desire of assuring an
insurance sale for the insurer. This practice is considered illegal in many states.
Single-premium life (SPL) is a type of insurance in which a lump sum of money is paid into the policy in return for a death benefit
that is guaranteed until you die. ... The size of the death benefit depends on the amount invested and the age and health of the
insured.

Insurance twisting is fraud, and in most states it's a crime. When an insurer twists your policy, he convinces you to replace it with
one from another company that's actually worse. Twisting hurts you financially, but it's a sweet deal for the agent who pulls it off.