REAL LIFE

APPLICATION
OF
LIFE INSURANCE
PRODUCTS
 APPLICATION #1
FAMILY PROTECTION
 #1 Family Protection
Statement of the Problem:
Loss of Income by 1 or 2 Breadwinners

Case Study
Husband is the Breadwinner
Take Home Pay of Php 100,000 a month
No Existing Life Insurance
 #1 Family Protection
Solution:
Create a Lump Sum Fund that will Generate the
required Monthy Income.

Assume – 5% Rate of Return of Investment

Php 100K x 12 Months = 1.2M Divided by 5%

Recommended Sum Assured

Php 24,000,000
 #1 Family Protection
Solution:
Wife receives the Php 24,000,000 Life Insurance Claim.
Invests it in a Instrument yielding 5% per annum
Gives them Php 100,000 a month

What about Funeral Costs?

Recommend Php 25M SA
 APPLICATION #2
INCOME PROTECTION
 #2 Income Protection
Statement of the Problem:
Loss of Income when diagnosed with a Critical Illness.
Cost of Treatment until Full Recovery
On Top of Usual Monthly Expenses

Case Study
Married Woman earning Php 100K/mo
Diagnosed with Stage 2 Breast Cancer
Treatment Cost Php 1,000,000
 #2 Income Protection
Other Facts of the Case:
Recovery period estimated at 1 Year

Recommendation
1M Treatment + 1.2M Loss Income
Plus Medications and other incidentals

Php 3M to Php 4M Life Care Benefit

 APPLICATION #3
RETIREMENT PLANNING
 #3 Retirement Planning
Statement of the Problem:
Cost of Retirement

Factors Affecting Retirement:

Current Lifestyle
Inflation Rate
Age of Retirement
Sources of Income After Retirement
Years to Withdraw
 #3 Retirement Planning
Case Study:
Office Manager earning Php 100K a month Age 40
Retiring at age 60.
Assuming 5% Salary Increase

Computation:
Adjusted Monthly Income @ 60
Php 265,330 or Php 3.2M Per Annum
 #3 Retirement Planning
Computation:
Adjusted Monthly Income @ 60
Php 265,330 or Php 3.2M Per Annum

Assuming Years to Withdraw

Until Age 75 (15 Years of Php 3.2M)
Php 48,000,000 in Fund Value @ Age 60
 APPLICATION #4
EDUCATION FUNDING
 #4 Education Funding
Statement of the Problem:
Rising Cost of Education

Factors Affecting Computation:

Current Age of Parent and Child
Tuition Fee Today of Preferred University
Inflation Rate
Other Expenses Related to
Schooling
 #4 Education Funding
Statement of the Problem:
Cost of Sending Your Child to DLSU or Ateneo in 15
years is Php 3M – 4M
FEU, St. Scho and UST, around Php 1.5M – 2M

Plus Allowance, Project Fees and other Misc.

 APPLICATION #5
MORTGAGE REDEMPTION
INSURANCE
 #5 Mortgage Redemption Insurance
Statement of the Problem:
Property Value – Php 10,000,000
Downpayment – Php 2,000,000
Bank Loan – Php 8,000,000 payable in X Years

Requirement by Bank:
MRI – Php 8M (Bank as Beneficiary)
 #5 Mortgage Redemption Insurance
Process:
Have a policy of Php 8M In Force
Beneficiary Initially is Family
Accomplish Assignment of Policy Form, duly notarized
Pru will provide an Assignment to the Bank

Note: Initial Premium MUST be

Annually Paid
TERM vs Investment Linked
 APPLICATION #6
ESTATE PLANNING
 #6 Estate Planning
Statement of the Problem:
Liquidity during the settlement of the Estate Taxes as
required by law.
1. Must be paid in CASH
2. Within 6 months from death
3. 25% Civil Penatly of Non Payment
4. 20% Interest Per Annum of Non Payment
5. Not Time Bound for BIR to run after the heirs
 ESTATE TAX
Schedule of Rates
Over But Not The Tax Plus Of the Excess
Over Shall be Over
200,000 Exempt

200,000 500,000 0 5% 200,00

500,000 2,000,000 15,000 8% 500,000

2,000,000 5,000,000 135,000 11% 2,000,000

5,000,000 10,000,000 465,000 15% 5,000,000

10,000,000 And Over 1,215,000 20% 10,000,000

 #6 Estate Planning
Sample Estate:
Php 30,000,000 worth of Properties, Cash in Bank and
Investments
First 10M – Php 1,215,000
Excess (20M) – 20% - Php 4,000,000

Total Payable Estate Tax – Php 5,215,000

Recommend Sum Assured – Not Less than Php 6M
 APPLICATION #7
LEGACY PLANNING
 #7 Legacy Planning
Statement of the Problem:
Grandparents wanting to be remembered by their
grandchildren even after their life on earth.

Recommend:
Prulink Exact Plus – 5 Years or 7 Years
For the Grandchildren
Younger Grandparents – Pru Mil
 APPLICATION #8
BUSINESS SUCCESSION
 #8 Business Succession
Statement of the Problem:
1st Generation Exit Fund Upon Retirement
2nd Generation Capital Infusion Upon Early Demise of
the 1st Generation
Equalizer Fund Among Siblings / Family Members
Involve in the Business

Offer:
Keyman Insurance Concept
#8 Business Succession
 APPLICATION #9
BUY – SELL AGREEMENT
 #9 Buy – Sell Agreement
Statement of the Problem:
Protection of the Interest of the Heirs of Each Business
Partners
PARTNER 2
Php 50,000,000
Worth of Shares

PARTNER 1 PARTNER 3
Php 20,000,000 Php 10,000,000
Worth of Shares Worth of Shares
 #9 Buy – Sell Agreement
Recommend:
PARTNER 2
Php 50,000,000
Worth of Insurance

PARTNER 1 PARTNER 3
Php 20,000,000 Php 10,000,000
Worth of Insurance Worth of Insurance
 #10 Employee Benefits
Opportunities in this Niche Market:
1. Personal Accident Insurance
2. Pru Wellness Hospitalization Benefit Insurance
3. Term Insurance
4. Retirement Benefits
5. Executive Benefits
6. Keyman Insurance
7. Institutional Investment
8. Financial Seminar Opportunity