SunLEARN - Traditional Life Insurance

Agency Licensure Training
Traditional Life Insurance

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Topics
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Life Insurance
A contract
It could be any cause
Life not excepted in the
An applicant/insured
Insurance contract
pays a consideration Policy
called premium
or upon surviving a
specified period of time
An Insurance
company pays a sum
of money in the event
of the insured’s death or otherwise contingent
on the continuance or
cessation of life.
Life Insurance
• Are contracts of indemnity, meaning it indemnifies those who

will be financially affected by the loss of the insured.
• The value of the insurance cover is established on the
economic worth/value of the insured.
• Economic Value - represents the amount that ensures a
family's standard of living does not get affected if the one who
earns for the family dies or is unable to continue earning
• If the insured passes away before the policy matures, the value
of the policy referring to the insurance coverage is paid to the
beneficiaries.
Cooperative Risk-Sharing
Accident Loss of Money

Illness Death
“If you can pass on that risk
to someone else, it is one
less worry from the many
INSURANCE things that we need to
worry about in life”.
provides economic protection against financial loss

(loss of money or decrease in financial value)
Two Types of Risk
Pure risk – a risk that involves no possibility of gain

Example :
➢ The threat of an employee theft ,burglary, and
robbery are pure risks to the business.
➢ Natural Disasters (such as floods, earthquakes,
and tornadoes) also consider as pure risks.
➢ The prospect of premature death caused by
accident or illness.
Speculative risk – a risk that involves three possible

outcomes: loss, gain, or no change.
RISK
Food for thought:
➢ Market Risk : Interest rate fluctuation, foreign
exchange volatility, stock prices “If you can pass on that risk to
➢ Reputational risk someone else, it is one less worry
➢ Brand risk from the many things that we
➢ Individual credit risk need to worry about in life”.
➢ Regulatory changes
➢ Accounting Risk
Function of Life Insurance
PRINCIPLE OF LOSS SHARING

Accident Loss of Money
➢ To distribute the risk of loss from perils
(immediate danger/risk) to which a Illness Death
person or his property may be exposed
among a large number of persons
exposed to the same perils and thus
diminish uncertainty. INSURANCE
➢ The fundamental advantage of the use of
life insurance as a means of meeting
economic losses is that through insurance
these losses are spread over a large
number of people.
Pop 1. The fundamental advantage of the use of life insurance as a means of
Quiz! meeting economic losses is that through insurance these losses are
a) Spread over a large number of people

b) Deferred over a specified period of time
c) Reduced for the group as a whole through the multiple effect
d) Met as they arise through savings accumulated on an assessment
basis
2. An insurance risk is classified as
a) Unacceptable and acceptable

b) Regular and irregular
c) Standard, Substandard and Declined
d) Complete and Incomplete
Pop 1. The fundamental advantage of the use of life insurance as a means of
Quiz! meeting economic losses is that through insurance these losses are
a) Spread over a large number of people

b) Deferred over a specified period of time
c) Reduced for the group as a whole through the multiple effect
d) Met as they arise through savings accumulated on an assessment
basis
2. An insurance risk is classified as
a) Unacceptable and acceptable

b) Regular and irregular
c) Standard, Substandard and Declined
d) Complete and Incomplete
Topics
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Types of Insurance
LIFE NON- LIFE HEALTH
Life insurance is a Health insurance is a

contract between an type of insurance
insurer and a Non-life insurance is any coverage that pays
policyholder in which type of insurance other for medical and
the insurer guarantees than life insurance. Some surgical expenses
payment of a death common examples of incurred by the
benefit to named non-life insurance insured.
beneficiaries upon the include: Auto, Property,
death of the insured. Travel Disaster Insurance
Insurance Companies and its value
STOCK MUTUAL
OWNERSHIP Stockholders Policyowners
Major Elected by policy
MANAGEMENT stockholders owners
PROFIT As declared by Based on
SHARING stockholders investment
➢ Life Insurance contain solutions to the problem of protecting human life values
against inevitable economic loss through death, disability and old age.
Basic Services of Life Insurance
THREATS SERVICE BENEFIT

Family Death
PREMATURE DEATH Protection Benefit
Retirement Maturity
Income Benefit
OLD AGE
Guaranteed Cash
Savings Values
DISABILITY
Basic Services of Life Insurance
PREMATURE DEATH
When the breadwinner dies to soon, life insurance can provide the service of family protection
this is a fund provided for by life insurance to the beneficiaries of the insured to take care of their
immediate and future needs. This service is given in the form of Death Benefit.
OLD AGE
When the breadwinner lives too long, life insurance can provide the service of Retirement Income.
This is the sum granted to the insured himself so that he may use said amount at the stage of
retirement or at a stage when he cannot work anymore. This service is provided in the form of
maturity benefits
DISABILITY
When the breadwinner meets disability, life insurance can provide Guaranteed Savings. This is an
amount made available to the insured should he want to make a policy loan, surrender the policy
cash values. This benefit is provided through Cash Values
Basic Life Insurance Terms
Insured - the person whose life is covered under a life

insurance policy or the person who is given the
insurance protection
Beneficiary - the person named to receive the life

insurance proceeds upon the death of the insured
Policy - the written contract between the insured and

the insurance company.
Applicant / Proposed Insured - the person who applies for

an insurance policy
Insurable Interest - is a stake in the value of an entity or

event for which a person or entity purchases an insurance
policy to mitigate the risk of loss.
Policy Owner - the person or party who owns an individual

insurance policy; often, the policy owner is also the person
whose life is insured except for a juvenile policy.
Juvenile Policy -is permanent life insurance that insures

the life of a child (generally under age 18).
Face Amount - The amount payable to the beneficiary upon

the death of the insured or to the policy owner or insured
upon surviving the protection period in the form of maturity
benefit
Premium - money that must be regularly paid to the insurance

company to keep the insurance policy in force
Premiums
Initial Premium Renewal Premiums

• First payment made by ➢ premiums paid after
the applicant for the the initial premium
insurance
Level Premiums
Natural Premiums
➢ premiums remain at a
➢ premiums increase
constant level
yearly with the rising
throughout the
rate of mortality
effectivity of the
insurance policy
Premiums
Single premium
➢ Only one premium payment is required
Policy fee
➢ A fixed amount added to the premium of a given
policy regardless of policy size
Pop
3. Fathers enters into a life insurance contract on behalf of his child. In this case ,
Quiz! the father is the
A. Insured
B. Beneficiary
C. Insurer
D. Applicant – Owner
4. A Single Premium policy means a policy

A. Requiring only a single premium each year
B. Under which only one premium payment is required
C. Only available to single individuals
D. On which no more than one premium can be paid in advance
5. A fixed amount added to the premium of a given policy regardless of policy size is
known as
A. Policy fee
B. Policy reserves
C. Policy Values
D. Extra Premium
Pop
3. Fathers enters into a life insurance contract on behalf of his child. In this case ,
Quiz! the father is the
A. Insured
B. Beneficiary
C. Insurer
D. Applicant – Owner
4. A Single Premium policy means a policy

A. Requiring only a single premium each year
B. Under which only one premium payment is required
C. Only available to single individuals
D. On which no more than one premium can be paid in advance
5. A fixed amount added to the premium of a given policy regardless of policy size is
known as
A. Policy fee
B. Policy reserves
C. Policy Values
D. Extra Premium
Topics
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Factors in Premium Rate Determination
1. MORTALITY RATE
2. INTERESTS ON INVESTMENTS
3. EXPENSES/LOADING
Mortality Rate
• Mortality Table - Statistics of life expectancy, expected

number of deaths per age group.
• Law of Large Numbers - the more figures there are to

study, the more figures approach the true probability of the
event.
• Actuary - sets the premium rates and develops life

insurance products.
Mortality Rate
This will show us that actuarial has a projected number of death for each
age group. Each age group will have their corresponding mortality rates
which become the basis of the computation.
Interests on Investment
• Premiums are invested to earn interest

• Company assumes that investments earn a specific
rate of interest
• A Life insurance company earns income from 2
sources:
– Premium income
– Investment income/revenue
Expenses and Loading
Operating Expenses
– rent, salaries, equipment, utilities, agents’
commissions, etc.
Loading
– The factor of expense is computed and built into
the policy owner’s premium rate
Pop 5. The term loading means
Quiz! a)The difference between the gross and net premiums for the purpose of paying the
insurance overhead expenses including commissions and taxes
b)The amount which the company will lend to the policyholder with the policy as a
security
c) The amount payable in the event of the occurrence of a loss which renders him
unfit for insurance
d)None of the above.
Pop 5. The term loading means
Quiz! a)The difference between the gross and net premiums for the purpose of paying the
insurance overhead expenses including commissions and taxes
b)The amount which the company will lend to the policyholder with the policy as a
security
c) The amount payable in the event of the occurrence of a loss which renders him
unfit for insurance
d)None of the above.
Topics
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Life Insurance Plans
Basic plans
Permanent Term
Whole Life Endowment Level Decreasing
Ordinary Regular
Limited Pay Life Limited Pay

2 CLASSIFICATIONS ACCORDING TO PLANS

PERMANENT AND TERM
PERMANENT PLAN
➢ WHOLE LIFE PLAN - which provides insurance coverage to the policyholder for
the whole life i.e. up to 100 years of age, provided the policyholder pays the
premiums of the policy on time
• at a level premium rate

• it contains a savings element (cash
values)
• Provides lifetime protection (age 100
or 99)
• matures at age 100 or 99 of the
insured.
Whole Life Plan
Protection Period
Policy Effectivity Date Until AGE 99/100 Years Old
Premium Paying Period

Policy Effectivity Date Maturity Benefit (99/100 years
old) = Face Amount
Payment of Proceeds
Policy Effectivity Date Death Benefit (Before Age 99 or
100 years old) = Face Amount
▪ Ordinary Life is a type of life insurance in which policyholders pay

premiums for their whole lives at a set price and interval. However, ordinary life
insurance policies are often considered paid up if the policyholder reaches 100
years of age.
➢ Payable up to age 100 or 99
➢ It can give the longest protection
▪ 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.
➢ Payable up to a certain number of years only (i.e. 5

yrs to pay, 10 yrs to pay, or single pay)
Classification of Life Insurance
Ordinary/Straight Life
A plan which provides insurance coverage for life at a level premium.
Premiums are payable for life.
Limited Pay Life Plan
Protection Period
Policy Effectivity Date Until AGE 99/100 Years Old
Premium Paying Period 5 YEARS TO PAY
Policy Effectivity Date Maturity Benefit (99/100 years

old) = Face Amount
Payment of Proceeds
Policy Effectivity Date Death Benefit (Before Age 99 or
100 years old) = Face Amount
Limited-Payment Whole Life Plan
 A plan which provides lifetime protection with

premiums payable for a limited period.
➢ ENDOWMENT - life insurance policy which provides you with a combination

of both i.e.: an insurance cover, as well as an savings plan. It helps you in saving
regularly over a specific period of time, so that you are able to get a lump sum
amount on policy maturity, if the policyholder survives the policy term
• Provides protection at a specified future time or age
• endows at the end of the coverage period (before age 100)
• Rapid build up of cash values.

Regular Pay Endowment money paid to buy insurance

coverage in installments at particular time intervals, such as monthly or
annually (payable throughout the coverage period)
Protection Period
Policy Effectivity Date 20-Year Endowment

Policy Effectivity Date Maturity Benefit (20th year) =
Face Amount
Payment of Proceeds
Policy Effectivity Date Death Benefit (Before the 20th
year) = Face Amount
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.
Protection Period
Policy Effectivity Date 20-Year Endowment Policy
Policy Effectivity Date Maturity Benefit (20th year) =
Face Amount
Payment of Proceeds
Death Benefit (Before the 20th
Policy Effectivity Date
year) = Face Amount
Endowment Plan (TIME Based)

Permanent Plans may also be…

Participating Policies
– an extra charge to cover unexpected contingencies is built into the
premiums of participating policies
– when there is divisible surplus resulting from a company’s profitable
operations, the company refunds part of the premium by way of
Dividends (Dividends are not guaranteed)
Non-Participating Policies
- there is NO extra charge built into the premiums

- Policy owners are not entitled to receive dividends
Term Plans
• Provides a death benefit if the insured dies during a specified period or age,
it does not accumulate cash values.
• Gives maximum protection for moderate means
• Renewable and Convertible features
1. Renewable - the policy owner can renew the policy for another
period of time without submitting evidence of insurability at end of
the term period.
2. Convertible - the policy owner can convert it to any permanent plan

without evidence of insurability before the end of the allowable
period.
Kinds of Term Plans

Level Term
Provides a death benefit that remains the same over the period of
coverage
The sum assured and premiums remain the same over the term of the
policy.
Decreasing Term Provides a policy benefit that decreases in amount over the
term of coverage. The policy benefit begins as a set sum assured and then
decreases over the policy term according to a stated method in the policy. This is
usually used for mortgage redemption.
SUM
YEAR PREMIUM BANK LOAN
ASSURED
1 5,000 1,000,000 1,000,000

2 5,000 800,000 800,000
3 5,000 600,000 600,000
4 5,000 400,000 400,000
5 5,000 200,000 200,000
6 0 Terminated Paid
Group Insurance
➢ Type of insurance that provides protection for a
group of individuals that was not formed for the
purpose of obtaining insurance, there is only one
master policy which is with the employer
insurance certificates are given to individual
members.
➢ Group can be employees within a company and may be classified

according to location, salary, duties, department or length of service.
– minimum number
– minimum amount of premium
– generally issued without proof of insurability
– It may be term or permanent
Conversion Privilege - upon termination from group

insurance, the employee has 31 days to convert his
coverage to an individual policy without evidence of
insurability
Pop 6. The main difference between a term plan and a permanent plan is
Quiz! a)Permanent plan provides both protection and savings while term plans offer
protection only
b)Permanent plan provides savings and dividends while term plans provides
savings only
c) Permanent plans can be converted and renewed while term plans cannot
d)All of the above
7. Which of the following can give the longest protection?
a)20 Yr Endowment
b)Endowment at 65
c) Ordinary Life
d)20 Yr Term
8. When explaining dividends, the following information must be supplied
a)That they are not guaranteed

b)The dividends paid up in the previous years
c) The anticipated dividends
d)The relation to the cost of the policy
Pop 6. The main difference between a term plan and a permanent plan is
Quiz! a)Permanent plan provides both protection and savings while term plans offer
protection only
b)Permanent plan provides savings and dividends while term plans provides
savings only
c) Permanent plans can be converted and renewed while term plans cannot
d)All of the above
7. Which of the following can give the longest protection?
a)20 Yr Endowment
b)Endowment at 65
c) Ordinary Life
d)20 Yr Term
8. When explaining dividends, the following information must be supplied
a)That they are not guaranteed

b)The dividends paid up in the previous years
c) The anticipated dividends
d)The relation to the cost of the policy
Pop 9. Mr. Juan Valdez wants a policy which will entitle him to receive dividends yearly.
Quiz! What will you recommend to Mr. Valdez?
a)Participating Plans
b)Non Participating Plans
c) Term Insurance
d)None of the Above
10. When the proceeds of a life insurance policy are left with the company to earn
interest
a)Income tax is levied on the proceeds

b)Income tax is levied on the interest earnings of the proceeds
c) Estate tax is levied on the proceeds
d)Donor’s tax is levied on the proceeds
11. The convertible feature of a term insurance policy provides that the policy may
be
a)Changed to a permanent insurance policy without evidence of insurability
b)Changed to another life
c) Changed for guaranteed sum
d)Change to permanent insurance with evidence of insurability
Pop 9. Mr. Juan Valdez wants a policy which will entitle him to receive dividends yearly.
Quiz! What will you recommend to Mr. Valdez?
a)Participating Plans
b)Non Participating Plans
c) Term Insurance
d)None of the Above
10. When the proceeds of a life insurance policy are left with the company to earn
interest
a)Income tax is levied on the proceeds

b)Income tax is levied on the interest earnings of the proceeds
c) Estate tax is levied on the proceeds
d)Donor’s tax is levied on the proceeds
11. The convertible feature of a term insurance policy provides that the policy may
be
a)Changed to a permanent insurance policy without evidence of insurability
b)Changed to another life
c) Changed for guaranteed sum
d)Change to permanent insurance with evidence of insurability
Pop 12. In the event an employee leaves the company in which he is a member of its
Quiz! group insurance policy, his group coverage can be changed to an individual
policy using the
a)Policy exchange facility

b)Conversion privilege
c) Change of plan provision
d)Policy change form
Pop 12. In the event an employee leaves the company in which he is a member of its
Quiz! group insurance policy, his group coverage can be changed to an individual
policy using the
a)Policy exchange facility

b)Conversion privilege
c) Change of plan provision
d)Policy change form
Topics
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Riders and Annuities
Riders
• Also known as supplementary contracts, riders are

attached to a basic policy to provide additional benefits
not offered by the basic policy
• Coverage is up to a specified age or upon policy’s full

payment
Riders
WAIVER OF PREMIUM DUE TO DISABILITY
• Premiums due are waived upon insured’s total and

permanent disability
• Total and Permanent Disability – prevents the insured

from performing any gainful occupation, employment or
business for which he is fitted by education or training.
• Requires a waiting period of 6 months

Riders
WAIVER OF PREMIUM DUE TO DISABILITY
Premiums to be paid on the second up to the tenth year

will be waived for as long as the disability is present
Riders
PAYORS RIDER
• In the event of the payor-owner’s death or disability, premiums due
will be waived up to policy maturity or up to age 25 of the child
whichever comes first;
• Attached to a juvenile policy.
Contingency Covered: Death of Payor

Benefit Given: Waiver of Premium during the RT
Riders
ACCIDENTAL DEATH BENEFIT

• Pays an additional amount if the insured dies due to accident;
• Death must occur within 180 days from date of accident;
Exclusions:
➢ Sickness
➢ Poisoning
➢ Suicide
➢ Combat/warlike activities
➢ Committing a Crime
➢ Some Aviation Activities
Riders
ACCIDENTAL DEATH BENEFIT
Death Benefits:
Basic Policy 1M
ADB 1M
Total Death Benefits 2M
Riders
TERM INSURANCE RIDER

• Usually a 5-year plan attached to a permanent policy;
• Greatly increases the benefit or coverage with minimal additional
premium.
Death Benefit:
Whole Life 1M
Term Rider 4M
Total Death Benefits 5M
Riders
FAMILY INCOME RIDER
• A modified decreasing term insurance
• Guarantees monthly installments in addition to the
face amount;
Contingency Covered: Insured’s Death

Benefit Given: Monthly Income for the family from the date of death
till duration of rider term
Annuities
• A purchaser of income
• a form of insurance or investment entitling the investor to

a series of annual sums.
• a fixed sum of money paid to someone each year, typically

for the rest of their life.
• Proceeds from an Annuity plan are given to its Annuitants.

Topics
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Risk Selection
• is a systematic evaluation of an insurance applicant for

the purpose of determining the classification of risk for
possible coverage;
• a standard practice in all insurance companies to

maintain quality business and prevent anti-selection
Risk Classification
A. STANDARD
– mortality is normal
– average life expectancy
B. SUB-STANDARD (RATED)
– higher mortality risk
– shorter than average life expectancy
– due to occupational hazards, illnesses, or unwise habits
C. DECLINED
– unacceptable risk
– due to poor health, extremely hazardous occupations
Anti-Selection
The high predisposition of those with impaired

health or those with hazardous occupations
and/or avocations to purchase life insurance
Factors that affect Underwriting’s decision
• P HYSICAL (BMI of an applicant)

• O CCUPATION (Exposure to risk)
• F INANCIAL (‘of paying of premiums; though income has the
least effect)
• M ORAL HAZARDS (Moral character)
• A VOCATION (Leisure activities)
• R ESIDENCE & TRAVEL (Certain standards of public and
health sanitation, political and economic conditions)
Hazardous Occupation
• a risk accepted as a consequence of a

particular occupation.
• an occupation which exposes a person to

social hazards
Pop 13. A person wanting a greater coverage for the least amount of
Quiz! premium has an option of attaching what rider in his permanent life
policy?
a)A waiver of premium

b)Term insurance rider
c) Guaranteed insurability rider
d)Accidental death rider
14. An Annuity plan
a)Offers life insurance protection

b)Offers the waiver of premium benefit
c) Is the same as an endowment plan
d)Is a purchaser of income
15. A hazardous occupation could be defined

a)An occupation the duties of which expose the insured to a degree of
danger of sustaining injury
b)An occupation with unhealthy conditions exposing the insured to
elements which can cause sickness
c) An occupation which exposes the insured to social hazards
d)All of the above
Pop 13. A person wanting a greater coverage for the least amount of
Quiz! premium has an option of attaching what rider in his permanent life
policy?
a)A waiver of premium

b)Term insurance rider
c) Guaranteed insurability rider
d)Accidental death rider
14. An Annuity plan
a)Offers life insurance protection

b)Offers the waiver of premium benefit
c) Is the same as an endowment plan
d)Is a purchaser of income
15. A hazardous occupation could be defined

a)An occupation the duties of which expose the insured to a degree of
danger of sustaining injury
b)An occupation with unhealthy conditions exposing the insured to
elements which can cause sickness
c) An occupation which exposes the insured to social hazards
d)All of the above
Pop 16. A risk is considered substandard based on any or all of the following
Quiz! criteria
a)Death, occupation, and normal character

b)Occupation, moral character, and family health history
c) Income, educational attainment and occupation
d)Death, income and educational background
17. Since the purchaser of life insurance is a voluntary choice, the individual
must meet
a)Comprehensive inspection report

b)Certain standards of health and occupation
c) Minimum income requirement
d)All of the above
18. Which of the following factors would have the least effect on the
premium charged for life insurance?
a)Age
b)Occupation
c) Income
d)All of the above
Pop 16. A risk is considered substandard based on any or all of the following
Quiz! criteria
a)Death, occupation, and normal character

b)Occupation, moral character, and family health history
c) Income, educational attainment and occupation
d)Death, income and educational background
17. Since the purchaser of life insurance is a voluntary choice, the individual
must meet
a)Comprehensive inspection report

b)Certain standards of health and occupation
c) Minimum income requirement
d)All of the above
18. Which of the following factors would have the least effect on the
premium charged for life insurance?
a)Age
b)Occupation
c) Income
d)All of the above
Topics
Choose one topic.

Sources of Information
• Application Form
• Agent’s Confidential Report
• Medical Report
• Attending Physician Statement
• Inspection Report
• Medical Impairment Bureau (MIB)
1. Application Form
➢ written request for insurance
➢ contains basic information on the proposed insured regarding the factors
in risk selection.
2. Agent’s Confidential Report

➢tells the company what the agent knows about the applicant.
➢contains information on agent’s knowledge on the insurability of the
proposed insured as well as his relationship with this person.
3. Medical Report
➢prepared by the insurer’s appointed medical examiner after conducting a
series of medical examinations on the proposed insured.
4. Attending Physician’s Statement

➢ Company sends inquiry to the physician who diagnosed or treated the
applicant.
5. Inspection Report
➢ contains information about the
➢ applicant’s lifestyle, finances, habits
➢ it is done by an independent investigating firm
➢ authenticates the validity of information submitted by the proposed
insured.
6. Medical Impairment Bureau
A database regulated by the Philippine Life
Insurance Association (PLIA). Applicants rated or
declined are in this database.
Topics
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Legal Considerations
PARTIES TO A CONTRACT
a. Policyowner
• must be at least 18 years old
• must have sound mind/legally competent (Insurable
Interest)
b. Insurance Company
• Registered with the Insurance Commission
CONDITIONAL RECEIPT
Once an application is signed and the premium paid, the
insurance applicant’s coverage takes into effect upon
certain conditions.
Conditions:
• Insurance application must have been submitted
to the insurance company
• At least one quarter premium must be paid
• Must have undergone a medical examination
already and result is satisfactory
STATEMENTS
a. Warranties
• must be literally true
• Example: color of the car being insured is red with plate
number HAM 108
b. Representations
• Substantially true like the statements in the application
form for life insurance
• Examples: all statements in the life insurance application
form
Pop 19. For a contract to be legal and binding
Quiz! a)Parties to the contract must be members of the bar

b)Parties to the contract must legally competent
c) Parties of the contract must be above 21
d)Parties to the contract must possess blood relationship
20. A person has insurable interest in the life of
a)His child or grand child

b)Any person upon who he is wholly or in part dependent on, or from whom he is
receiving support or education
c) Any person whom he has pecuniary interest
d)All of the above
21. Why is it important that the application is the basis of the policy
a)Because the completed application is the basis of the policy contract and the
company may accept or reject an application based on the information given in
the application
b)For the agent to have the available data of his prospect in connection with future
sales
c) To avoid the necessity of the insurer putting all the relevant details in the contract
d)None of the above
Pop 19. For a contract to be legal and binding
Quiz! a)Parties to the contract must be members of the bar

b)Parties to the contract must legally competent
c) Parties of the contract must be above 21
d)Parties to the contract must possess blood relationship
20. A person has insurable interest in the life of
a)His child or grand child

b)Any person upon who he is wholly or in part dependent on, or from whom he is
receiving support or education
c) Any person whom he has pecuniary interest
d)All of the above
21. Why is it important that the application is the basis of the policy
a)Because the completed application is the basis of the policy contract and the
company may accept or reject an application based on the information given in
the application
b)For the agent to have the available data of his prospect in connection with future
sales
c) To avoid the necessity of the insurer putting all the relevant details in the contract
d)None of the above
Pop
Quiz! 22. Choose the correct statement:
The entire contract between the policyowner and the insurance company include
a)The application and the policy

b)Any verbal statement made by the agent to the applicant
c) Any document attached to the policy when issued
d)Any subsequent written amendments to the contract
Pop
Quiz! 22. Choose the correct statement
The entire contract between the policyowner and the insurance company include
a)The application and the policy

b)Any verbal statement made by the agent to the applicant
c) Any document attached to the policy when issued
d)Any subsequent written amendments to the contract
Topics
Choose one topic.

Policy Provisions
WHILE THE INSURED LIVES
OWNERSHIP PROVISION
Policy owner has the right to

• To assign
• To amend
• To change beneficiaries with written consent of
irrevocable beneficiary
• To collect cash values / dividends
• To exercise all allowed options
Policy Provisions
PREMIUM PAYMENT
Policyowner binds the insurance company to its promise – to pay upon
death of the insured, the face amount of the policy as a death benefit to
a named beneficiary – through the payment of premiums.
MODES OF PREMIUM PAYMENT

• Annual
• Semi-Annual
• Quarterly
• Monthly
• Single-Pay (Lump Sum)
Policy Provisions

MODAL FACTOR – a multiplying factor to determine the premiums charged
for each mode of payment.
Example: Annual Premium is P10,000 modal factor for quarterly
mode of payment is 0.27, when multiplied with the annual premium, the
result is P2,700.00
GRACE PERIOD
the insured has 31 days from due date to pay his premium; he remains
insured within the period.
When the insured dies during the grace period:
Face Amount – Unpaid premium – loans if any = Net FA
1M - 10,000 - 10,000 = 980,000
Policy Provisions
AUTOMATIC PREMIUM LOAN (APL)
• Premiums not paid beyond the grace period, will be automatically be paid
by making a loan against the cash value of the policy provided there is
enough cash value to pay for the premium due.
• This option has to be chosen by the policyowner.
• Loans taken against the policy’s cash values are subject to interest to
replace investment income.
Policy Provisions

POLICY LOAN
• Policy owner may be allowed to make a policy loan
• The amount of the loan should not exceed the cash value.
• Dividends if any will not be affected.
Example:
• If client was able to pay the premium for a considerable number of years she will
have a significant amount of Cash Values.
• Assuming on the 5th policy year her cash value is 45,978.00, she can make a
policy loan and use the money which ever way she pleases.
• She must take note however, that it is still a loan. It can be left unpaid however it
will eat up the cash values of your policy and if unpaid till the death of the
insured, the amount of unpaid loan will be deducted from the death proceeds.
Policy Provisions
ASSIGNMENT OF POLICY
• Collateral Assignment – transfer of some rights usually
the right to receive the proceeds
• Absolute Assignment – transfer of all rights of the policy
Company must be notified in writing through the
submission of the copy of the Deed of Absolute
Assignment.
Example:
This happens when the original policy owner surrenders all his rights over
the policy to the assignee.
What are some rights over a policy?
Policy Provisions

• Making a loan
• Assigning the policy
• Adding beneficiary
Some banks uses a life insurance policies as a form of collateral to meet the
unpaid obligations. Here the banks requires a percentage of the death proceeds
that is commensurate to what the policy owner owes the bank.
The usual example of absolute assignment is Keyman Insurance. The basic

principles behind keyman insurance is that the company buys a policy and
designates their keyman as the insured. When the keyman retires, the company
can assign the policy to him. The keyman is now the policy owner and the
insured.
Policy Provisions

DIVIDEND OPTIONS
1. Paid in Cash- Dividends are paid in cash to the
Policyowner
2. Apply to premium- Earned dividends are applied against
premium due
3. Accumulate at interest- Earned dividends are left to the
company to earn interest
4. Purchase paid-up insurance bonus additions- Earned
dividend is used to purchase paid-up insurance
5. Buy yearly renewable term insurance- Dividends are
used to buy yearly renewable term insurance
Policy Provisions

BENEFICIARIES
Insurable Interest is required. It exists when a beneficiary is
likely to suffer financial loss if the person who is insured dies.
It should exist upon the inception of the policy. Some examples:

immediate family members, business relationship, creditor-
debtor relationships and keyman insurance.
Policy Provisions
BENEFICIARY DESIGNATION according to PRIORITY
Primary – first priority to receive death proceeds
Contingent – secondary beneficiary, will only receive if

primary beneficiary predeceased the insured and no
other primary beneficiary was designated anew
Policy Provisions
BENEFICIARY DESIGNATION according to RIGHTS
Revocable – can be changed anytime, no need for a written

consent; proceeds received are subject to estate tax
Irrevocable – can only be changed with the written consent

of said beneficiary; proceeds are not subject to estate
tax
Pop 23. To calculate the premiums for the other modes of premium payment the
Quiz! annual premium is
a)Divided by the desired number of premium payments

b)Divided by a conversion factor for the mode of payment desired
c) Multiplied by the conversion factor for the mode of payment desired
d)Multiplied by a constant conversion factor
24. If a policyowner does not pay a premium on the due date , the policy will
immediately
a)Lapse
b)Be converted to a paid up policy for a lesser amount
c) Go into automatic premium loan
d)Continue in full force for a period of grace
25. Which one of the following provisions in a permanent life insurance policy may
lapse for non payment of premium
a)Guaranteed insurability
b)Automatic premium loan
c) Settlement options
d)Reinstatement provisions

b)Divided by a conversion factor for the mode of payment desired
24. If a policyowner does not pay a premium on the due date , the policy will
immediately
a)Lapse
25. Which one of the following provisions in a permanent life insurance policy may
lapse for non payment of premium
a)Guaranteed insurability
b)Automatic premium loan
c) Settlement options
d)Reinstatement provisions
Pop
26. Under the law pertaining to life insurance
Quiz!
a)Only minor children can be named irrevocable beneficiaries
b)Only the wife can be named irrevocable beneficiary
c) On the wife and the children can be named irrevocable beneficiaries
d)Any person with insurable interest can be named irrevocable beneficiaries
27. According to insurance law, a common law spouse cannot be designated a

beneficiary
a)Since there is no benefit of marriage in the relationship

b)If his/her legal partner is still living and the previous marriage has not been
legally dissolved
c) Since the common-law relationship is an immoral relationship
d)All of the above
Pop
26. Under the law pertaining to life insurance
Quiz!
a)Only minor children can be named irrevocable beneficiaries
b)Only the wife can be named irrevocable beneficiary
d)Any person with insurable interest can be named irrevocable beneficiaries
27. According to insurance law, a common law spouse cannot be designated a

beneficiary

b)If his/her legal partner is still living and the previous marriage has not been
legally dissolved
d)All of the above
Topics
Choose one topic.

Policy Provisions
WHEN THE INSURED DIES

MISSTATEMENT OF AGE
If the insured has given an incorrect age, the company may adjust
the policy benefit using the formula
Premium based
on declared age Adjusted
X FA = Liability
Premium based On
real age
Policy Provisions

INCONTESTABLE CLAUSE
• This provision states that after TWO YEARS from policy
issue date or date of last reinstatement , the insurance
company cannot anymore oppose, contest or question a
claim arising from the policy.
Policy Provisions

CONTESTABLE CLAUSE/PERIOD
Within the first two years, the company can oppose,
question, annul, or refuse to pay a claim arising from the
policy based on the following grounds:
Non-payment of premium
1. Death due to excluded risk
2. Non-compliance of claim requirements
3. Lack of insurable interest
Policy Provisions

SUICIDE CLAUSE
If an insured takes his own life, after the policy has been in
force more than 2 years, the company will pay the full
proceeds, however;
If suicide takes place within the first 2 years that the policy is
in force the company will only refund all the premiums paid
by the policyowner except in cases of suicide due to insanity.
Policy Provisions

SETTLEMENT OPTIONS
• Lump Sum-A method of settlement whereby the
beneficiary receives the entire proceeds of a policy at once
rather than in installments
• Interest Option-The proceeds plus interest shall be paid in
installments for a specified number of years
• Fixed Period Option-Equal installments are paid to the
beneficiary
• Fixed Amount Option-The company holds the principal
proceeds and pays the guaranteed rate of interest at
regular intervals
• Life Annuity Option -Proceeds and interests are paid to the
beneficiaries for life.
Policy Provisions

NON-FORFEITURE OPTIONS
1. Cash Surrender Value – policyowner gets the cash
surrender value and policy will terminate, thus no more life
insurance protection.
2. Reduced Paid-Up Insurance – cash values are used to
purchase paid-up insurance (exactly same kind as the
original) but with a reduced face amount.
3. Extended Term Insurance – purchase term insurance with
the same coverage but length of insurance protection is
shortened.
Reinstatement Provisions
• If premiums remain unpaid after the grace period and there

are no available cash values, the policy will lapse
• Policy owner may reinstate his lapsed policy within 3 years
from the date of lapsation.
• Proof of insurability will be required and contestability
period will start anew.
Reinstatement Provisions
Methods of Reinstatement
➢ Back Premium – policy owner pays back all past due

premiums plus interest due
➢ Redating – a new premium will be charged to the policy

owner based on the new policy effectivity year
Insurance Provisions
Insurance Commission
• A government agency that executes all laws pertaining to

insurance, insurance companies and other insurance
matters
• Regulates all life insurance companies because it affects
public interest
• Adjucative Power of Php100,000

b)Divided by the conversion factor for the mode of payment desired
29. If a policy owner does not pay a premium on the due date, the policy
will immediately
a)Lapse
30. Which one of the following provisions in a permanent life insurance

policy may lapse for non payment of premium
a)Guaranteed Insurability Offer

b)Automatic Premium Loan
c) Settlement Options
d)Reinstatement Provisions

b)Divided by the conversion factor for the mode of payment desired
29. If a policy owner does not pay a premium on the due date, the policy
will immediately
a)Lapse
30. Which one of the following provisions in a permanent life insurance

policy may lapse for non payment of premium
a)Guaranteed Insurability Offer

b)Automatic Premium Loan
c) Settlement Options
d)Reinstatement Provisions
Pop 31. Under the law pertaining to life insurance
Quiz! a)Only minor children can be named irrevocable beneficiaries
b)Only the wife can be named irrevocably beneficiary
d)Any person with insurable interest can be named irrevocable
beneficiaries
32. According to insurance law , a common-law spouse cannot be

designated a beneficiary

b)If his/her legal partner is still living and the previous marriage has not
been legally dissolved
d)All of the above
33. The insurance industry is under government regulations because
a)It is required to account for money spent in company operations

b)It pays high taxes
c) It affects public interest
d)Its charitable institution
Pop 31. Under the law pertaining to life insurance
Quiz! a)Only minor children can be named irrevocable beneficiaries
b)Only the wife can be named irrevocably beneficiary
d)Any person with insurable interest can be named irrevocable
beneficiaries
32. According to insurance law , a common-law spouse cannot be

designated a beneficiary

b)If his/her legal partner is still living and the previous marriage has not
been legally dissolved
d)All of the above
33. The insurance industry is under government regulations because
a)It is required to account for money spent in company operations

b)It pays high taxes
c) It affects public interest
d)Its charitable institution
Topics
Choose one topic.

Quality Business
An insurance agent’s license will be granted / renewed when

the Commissioner is satisfied that the information in the
application is accurate and all requirements are met:
• good moral character
• not convicted of crime involving moral turpitude
• satisfactorily trained in the kind of insurance contemplated
in the license applied for.
Unethical Practices
➢ Rebating
• offering part of the commission to client
• accepting a smaller premium than the one stipulated in the
policy or;
• offering anything of value to influence the prospect to buy
the policy.
➢ Twisting or Replacement
• is persuading the person to lapse or surrender a policy in
order to purchase a new one
Unethical Practices
➢ Knocking
• making derogatory remarks about a competing policy, agent
or company
➢ Misrepresentation
• is the making of any false or misleading statements in the
selling of life insurance
➢ Overloading
• when an agent sells more than what the client needs and
afford
Pop 34. An agent is prohibited from doing all of the following except;
Quiz! a)Alter an application without the applicants prior written approval

b)Convince a prospective client to cancel his policy in one insurance company
in order to buy a policy in the insurance company represented by the agent
c) Refund some of his commission to his client
d)Make complete comparisons of policies he sells and those offered by
competing insurance companies
35. Which of the following statement is correct?
a)Advertising by life insurance agents is prohibited

b)All information about a client or a prospective client has to be treated as
confidential
c) The agents should always recommend the amount and type of policy to a
prospective client which would be profitable for the company
d)When the agent advertises his services in the press, he is not allowed to
state the name of his company
36. Which one of the following statement is correct
a)An agent is allowed to share commissions when selling a whole life policy
but not when selling a term policy
b)An agent is allowed to share commissions with another license agent or
agents but with no one else
c) Sharing the commission with any other person is called twisting
d)An agent is not allowed to share commissions with any person
Pop 34. An agent is prohibited from doing all of the following except;
Quiz! a)Alter an application without the applicants prior written approval

b)Convince a prospective client to cancel his policy in one insurance company
in order to buy a policy in the insurance company represented by the agent
c) Refund some of his commission to his client
d)Make complete comparisons of policies he sells and those offered by
competing insurance companies
35. Which of the following statement is correct?
a)Advertising by life insurance agents is prohibited

b)All information about a client or a prospective client has to be treated as
confidential
c) The agents should always recommend the amount and type of policy to a
prospective client which would be profitable for the company
d)When the agent advertises his services in the press, he is not allowed to
state the name of his company
36. Which one of the following statement is correct
a)An agent is allowed to share commissions when selling a whole life policy
but not when selling a term policy
b)An agent is allowed to share commissions with another license agent or
agents but with no one else
c) Sharing the commission with any other person is called twisting
d)An agent is not allowed to share commissions with any person
Pop 37. Inducing an insured to lapse or forfeit his insurance
Quiz! a)Is not allowed by the conditions of the contract
b)Is always to the advantage of the policyholder
c) Is an offense in the great majority of cases
d)Is a manner left entirely to the discretion of the agent
38. The following are unethical practices in the solicitation and procurement
of insurance except
a)Misleading estimates of the dividends or shares of surplus to be received

thereon
b)Inducing a policyholder to lapse, forfeit or surrender a policy he holds for
another company
c) Misrepresenting the terms of any policies issued by any insurance
company or the benefits or advantages promise thereon
d)Obtaining or attempting to obtain a license by fraud or misrepresentation
Pop 37. Inducing an insured to lapse or forfeit his insurance
Quiz! a)Is not allowed by the conditions of the contract
b)Is always to the advantage of the policyholder
c) Is an offense in the great majority of cases
d)Is a manner left entirely to the discretion of the agent
38. The following are unethical practices in the solicitation and procurement
of insurance except
a)Misleading estimates of the dividends or shares of surplus to be received

thereon
b)Inducing a policyholder to lapse, forfeit or surrender a policy he holds for
another company
c) Misrepresenting the terms of any policies issued by any insurance
company or the benefits or advantages promise thereon
d)Obtaining or attempting to obtain a license by fraud or misrepresentation
Topics
Choose one topic.

Traditional Life Insurance
Review Questions
Review Questions
1.In a policy where an irrevocable beneficiary has been designated by the insured,
without the beneficiary’s permission, can
a) Avail of a non-forfeiture option

b) Discontinue premium payments
c) Borrow minimal cash loan
d) Alter the dividend option presently in effect
2.Indicate which of the following is not a function of an application for life insurance
policy
a) To give details pertaining to non-forfeiture options

b) To furnish information on which contract of life insurance may be written
c) To furnish initial information as to insurability
d) To convey to the company the desire of the applicant to obtain insurance
3. Both endowment and term life insurance policies provide that
a) No cash value is available to the policy owner during the term of the policy
b) Renewal and conversion privileges are available
c) A benefit will be paid at the end of the period of coverage if the person insured is
then alive
d) Insurance protection will be limited to a specified period
Review Questions
1.In a policy where an irrevocable beneficiary has been designated by the insured,
without the beneficiary’s permission, can
a) Avail of a non-forfeiture option

b) Discontinue premium payments
c) Borrow minimal cash loan
d) Alter the dividend option presently in effect
2.Indicate which of the following is not a function of an application for life insurance
policy
a) To give details pertaining to non-forfeiture options

b) To furnish information on which contract of life insurance may be written
c) To furnish initial information as to insurability
d) To convey to the company the desire of the applicant to obtain insurance
3. Both endowment and term life insurance policies provide that
a) No cash value is available to the policy owner during the term of the policy
b) Renewal and conversion privileges are available
c) A benefit will be paid at the end of the period of coverage if the person insured is
then alive
d) Insurance protection will be limited to a specified period
Review Questions
4. A father has his present life insurance payable to his estate and because he
has now retired he wants to pass the policy on to his son who will assume the
premium payments. Which of the following will he have to appoint his son to
achieve his desire and protect the son from Estate Tax Liability?
a) Irrevocable primary beneficiary

b) Absolute assignee
c) Irrevocable secondary beneficiary
d) Revocable primary beneficiary
5. Which of the following is the least important reason for requiring that the
insurance agents be licensed?
a) To establish and maintain high professional and ethical standards

b) To protect the public
c) To give the government adequate control over the conduct of the agents
d) To provide additional income to the government through license fees
Review Questions
4. A father has his present life insurance payable to his estate and because he
has now retired he wants to pass the policy on to his son who will assume the
premium payments. Which of the following will he have to appoint his son to
achieve his desire and protect the son from Estate Tax Liability?
a) Irrevocable primary beneficiary

b) Absolute assignee
c) Irrevocable secondary beneficiary
d) Revocable primary beneficiary
5. Which of the following is the least important reason for requiring that the
insurance agents be licensed?
a) To establish and maintain high professional and ethical standards

b) To protect the public
c) To give the government adequate control over the conduct of the agents
d) To provide additional income to the government through license fees
Review Questions
6. An insurance company generally has the right to rescind a life insurance
policy if
a) Company discovers at any time that the policy owner was actually a minor
at the time of application
b) Insured person intentionally kills himself during the suicide exclusion period
specified in the policy
c) Insured person is killed in military action during the contestability period of
the policy
d) Company discovers during the contestability period that the application
contains a material statement
7. In the event that a policy owner elects the paid-up insurance option
a) The premiums stop and the policy continues for the full face amount until
age 65
b) The insurance continues at a reduced amount and with a reduced premium
c) The policy will automatically terminate
d) The premiums cease and protection continues with a reduced amount of
coverage
Review Questions
6. An insurance company generally has the right to rescind a life insurance
policy if
a) Company discovers at any time that the policy owner was actually a minor
at the time of application
b) Insured person intentionally kills himself during the suicide exclusion period
specified in the policy
c) Insured person is killed in military action during the contestability period of
the policy
d) Company discovers during the contestability period that the application
contains a material statement
7. In the event that a policy owner elects the paid-up insurance option
a) The premiums stop and the policy continues for the full face amount until
age 65
b) The insurance continues at a reduced amount and with a reduced premium
c) The policy will automatically terminate
d) The premiums cease and protection continues with a reduced amount of
coverage
Review Questions
8. The company will allow a policy change from a higher premium to a lower
premium provided the insured
a) Buys a new plan altogether

b) Presents satisfactory evidence of insurability
c) Momentarily assigns the policy to the company
d) Obtains written consent from his or her spouse
9. What are the basic settlement options?
a) Policy loan, guaranteed insurability

b) Cash surrender values, automatic premium loans
c) Fixed amount, fixed period, life income, interest on deposit
d) Double indemnity, total and permanent disability waiver
Review Questions
8. The company will allow a policy change from a higher premium to a lower
premium provided the insured
a) Buys a new plan altogether

b) Presents satisfactory evidence of insurability
c) Momentarily assigns the policy to the company
d) Obtains written consent from his or her spouse
9. What are the basic settlement options?
a) Policy loan, guaranteed insurability

b) Cash surrender values, automatic premium loans
c) Fixed amount, fixed period, life income, interest on deposit
d) Double indemnity, total and permanent disability waiver
Review Questions
10. Paid-up additions:
a) Affect both cash and loan value of the policy

b) Don’t affect the cash value of the policy
c) Don’t affect the loan or cash value of the policy
d) Only affect the cash value of the policy
11. In most life insurance applications, the largest amount of information

requested is data which
a) Identifies the applicant

b) Describes the type of insurance applied for
c) Relates to the insurability of the applicant
d) Describes the desired benefits and mode of payment
12.The total life coverage of a permanent basic policy can be greatly increased
through the use of
a) An accidental death benefit rider

b) An interim term rider
c) A supplemental term rider
d) None of the above
Review Questions
10. Paid-up additions:
a) Affect both cash and loan value of the policy

b) Don’t affect the cash value of the policy
c) Don’t affect the loan or cash value of the policy
d) Only affect the cash value of the policy
11. In most life insurance applications, the largest amount of information

requested is data which
a) Identifies the applicant

b) Describes the type of insurance applied for
c) Relates to the insurability of the applicant
d) Describes the desired benefits and mode of payment
12.The total life coverage of a permanent basic policy can be greatly increased
through the use of
a) An accidental death benefit rider

b) An interim term rider
c) A supplemental term rider
Review Questions
13. A policy which permits the policyholder to vary the level of the premium
or the sum insured, and has its cash values dependent upon the investment
performance and the level of premium paid is known as _______ policy
a) Participating whole life policy

b) Participating endowment
c) Universal life
14. Which of the following statements about “Disability Waiver of Premium

Rider” is false?
a) Disability must occur before a stated date

b) The insured has to die while disabled
c) There is a waiting period
d) It has to be attached to a life insurance policy
Review Questions
13. A policy which permits the policyholder to vary the level of the premium
or the sum insured, and has its cash values dependent upon the investment
performance and the level of premium paid is known as _______ policy
a) Participating whole life policy

b) Participating endowment
c) Universal life
14. Which of the following statements about “Disability Waiver of Premium

Rider” is false?
a) Disability must occur before a stated date

b) The insured has to die while disabled
c) There is a waiting period
d) It has to be attached to a life insurance policy
Review Questions
15. A man applied for a P20,000 whole life policy and paid the full initial
premium to the soliciting agent. The agent issued a binding receipt. Under such
a receipt, the insurance company,
a) Offers permanent insurance coverage effective as of the date of the

application
b) Promises that the insurance coverage will become effective as of the date
the application is approved
c) Guarantees that policy will be issued as applied for
d) Immediately provides interim insurance that remains in effect until the
policy is issued or the application is declined.
16. In case of renewable term insurance, the policyowner may
a) Renew the coverage based on a higher premium

b) Change the life insured at renewal date
c) Renew providing the insurance company agrees to continue coverage
d) Renew at the same premium for further period of years
Review Questions
15. A man applied for a P20,000 whole life policy and paid the full initial
premium to the soliciting agent. The agent issued a binding receipt. Under such
a receipt, the insurance company,
a) Offers permanent insurance coverage effective as of the date of the

application
b) Promises that the insurance coverage will become effective as of the date
the application is approved
c) Guarantees that policy will be issued as applied for
d) Immediately provides interim insurance that remains in effect until the
policy is issued or the application is declined.
16. In case of renewable term insurance, the policyowner may
a) Renew the coverage based on a higher premium

b) Change the life insured at renewal date
c) Renew providing the insurance company agrees to continue coverage
d) Renew at the same premium for further period of years
Review Questions
17. Life insurance companies make use of the laws of probability in order to
a) Estimate future death rates among members of a given group

b) Predict when an individual insured will die
c) Develop statistics of past death among the general population
d) Determine the experienced death rate among the insured persons
18. Endowment life insurance and term life insurance are similar in that both
plans
a) Build up cash value rapidly in the early policy years

b) Provide for payment of the face amount if the insured is alive at the end of
the specified period
c) Provide life insurance protection for only the period of time specified in the
policy contract
d) Contain provisions for automatic continuation of the insurance protection
at the end of a specified period
Review Questions
17. Life insurance companies make use of the laws of probability in order to
a) Estimate future death rates among members of a given group

b) Predict when an individual insured will die
c) Develop statistics of past death among the general population
d) Determine the experienced death rate among the insured persons
18. Endowment life insurance and term life insurance are similar in that both
plans
a) Build up cash value rapidly in the early policy years

b) Provide for payment of the face amount if the insured is alive at the end of
the specified period
c) Provide life insurance protection for only the period of time specified in the
policy contract
d) Contain provisions for automatic continuation of the insurance protection
at the end of a specified period
Review Questions
19. An agent who determine a prospect’s complete financial requirements
preparatory to offering him a policy using the correct selling approach known
as
a) Counselor selling
b) Total needs selling
c) Planned selling
d) Multiple products selling
20. The conservation of a life insurance policy is dependent on all the

following except:
a) The level of first year commission

b) Agent’s service oriented attitude
c) Pressure selling
d) The use of effective needs selling
21. All of the following are sources of information to an insurance company

pertaining to the insurability of an applicant except.
a) The applicant’s personal appearance

b) Medical examination report
c) Agent’s inspection report
d) Government tax records
Review Questions
19. An agent who determine a prospect’s complete financial requirements
preparatory to offering him a policy using the correct selling approach known
as
a) Counselor selling
b) Total needs selling
c) Planned selling
d) Multiple products selling
20. The conservation of a life insurance policy is dependent on all the

following except:
a) The level of first year commission

b) Agent’s service oriented attitude
c) Pressure selling
d) The use of effective needs selling
21. All of the following are sources of information to an insurance company

pertaining to the insurability of an applicant except.
a) The applicant’s personal appearance

b) Medical examination report
c) Agent’s inspection report
d) Government tax records
Review Questions
22. Name the provision in a permanent life insurance policy under which premiums
are discontinued, full insurance will be maintained for a specified period:
a) Extended term insurance

b) Paid-up insurance additions
c) Life income option person
d) Reduced paid-up insurance
23. The extent of medical evidence required is determined by
a) The age of the applicant and the proposed sum to be insured

b) Occupation of the applicant
c) Financial condition of the applicant
d) Date of the last medical examination
24. Notwithstanding various possible legal impediments, if the owner of an

endowment at age 65 policy tells you that the maturity of the policy he wants to
provide his church with a monthly donation for as long as the church exists. Which
option do you recommend?
a) Fixed income option

b) Periodic annuity option
c) Interest option
d) Life annuity option
Review Questions
22. Name the provision in a permanent life insurance policy under which premiums
are discontinued, full insurance will be maintained for a specified period:
a) Extended term insurance

b) Paid-up insurance additions
c) Life income option person
d) Reduced paid-up insurance
23. The extent of medical evidence required is determined by
a) The age of the applicant and the proposed sum to be insured

b) Occupation of the applicant
c) Financial condition of the applicant
d) Date of the last medical examination
24. Notwithstanding various possible legal impediments, if the owner of an

endowment at age 65 policy tells you that the maturity of the policy he wants to
provide his church with a monthly donation for as long as the church exists. Which
option do you recommend?
a) Fixed income option

b) Periodic annuity option
c) Interest option
d) Life annuity option
Review Questions
25. The settlement options provision may provide all of the following except:
a) Payment of the proceeds for the life of the insured

b) Payment of the proceeds over a fixed period
c) Payment of the proceeds in fixed amounts until exhausted
d) Proceeds held by the company, with interest payable to the beneficiary on
request
26. If the applicant for life insurance fails to disclose or misrepresents a material fact,
the contract is
a) Valid if the insurer issues a policy which is delivered to the applicant

b) Void from the beginning
c) Voidable by the insurer if it has been in force for less than 2 years
d) Valid unless the insurer can prove fraud
27. In certain situations a company may file interpleader actions with a Court of Law.
This remedy is used to
a) Determine if the cause of the insured’s death was an excluded risk

b) Decide conflicting claims on the same insurance proceeds
c) Resolve the question of insurable interest
d) Recommend the best settlement options for the beneficiary
Review Questions
25. The settlement options provision may provide all of the following except:
a) Payment of the proceeds for the life of the insured

b) Payment of the proceeds over a fixed period
c) Payment of the proceeds in fixed amounts until exhausted
d) Proceeds held by the company, with interest payable to the beneficiary on
request
26. If the applicant for life insurance fails to disclose or misrepresents a material fact,
the contract is
a) Valid if the insurer issues a policy which is delivered to the applicant

b) Void from the beginning
c) Voidable by the insurer if it has been in force for less than 2 years
d) Valid unless the insurer can prove fraud
27. In certain situations a company may file interpleader actions with a Court of Law.
This remedy is used to
a) Determine if the cause of the insured’s death was an excluded risk

b) Decide conflicting claims on the same insurance proceeds
c) Resolve the question of insurable interest
d) Recommend the best settlement options for the beneficiary
Review Questions
28. Non-forfeiture provisions are included in a whole life and endowment policies to
assure the policyowner that certain minimum policy benefits shall remain with him
even under certain changed conditions. Non-forfeiture values guarantee to the
policyowner that
a) No death claim will be denied for any misstatement on the application

b) Any guaranteed policy values will belong to the policyowner even if premium
payments are discounted
c) The face amount of the policy will remain the same even if the insured’s health
becomes impaired
d) The premium on the policy will remain the same even when another beneficiary
is added to the policy
29. Purchasing a continuous-premium, whole life policy rather than a limited

payment, whole life policy gives the policy owner the advantage of
a) Concentration of premium payments during the period of highest earnings

b) Liberal risk selection procedures
c) More insurance protection for the same annual premiums outlay
d) More rapid accumulation of cash values
Review Questions
28. Non-forfeiture provisions are included in a whole life and endowment policies to
assure the policyowner that certain minimum policy benefits shall remain with him
even under certain changed conditions. Non-forfeiture values guarantee to the
policyowner that
a) No death claim will be denied for any misstatement on the application

b) Any guaranteed policy values will belong to the policyowner even if premium
payments are discounted
c) The face amount of the policy will remain the same even if the insured’s health
becomes impaired
d) The premium on the policy will remain the same even when another beneficiary
is added to the policy
29. Purchasing a continuous-premium, whole life policy rather than a limited

payment, whole life policy gives the policy owner the advantage of
a) Concentration of premium payments during the period of highest earnings

b) Liberal risk selection procedures
c) More insurance protection for the same annual premiums outlay
d) More rapid accumulation of cash values
Review Questions
30. Which of the following does not have a legitimate insurable interest?
a) An individual on the life of his mistress

b) An individual on his own life
c) An individual on the life of his spouse
d) A finance company on the life of its borrower
31. A non-forfeiture option would ordinarily be selected at the time a policyowner
a) Renews a term life policy

b) Converts a term policy to a whole life policy
c) Chooses a mode of settlement for the life proceeds
d) Discontinues premium payments for a whole life or endowment policy
32. Which of the following statements regarding insurance premiums is false?
a) Cash is required for all premiums paid in the grace period

b) A premium is the legal consideration needed to effectuate a life insurance policy
c) The grace period is usually 31 days
d) Premiums which are paid quarterly or semi-annually are higher than those paid
annually
Review Questions
30. Which of the following does not have a legitimate insurable interest?
a) An individual on the life of his mistress

b) An individual on his own life
c) An individual on the life of his spouse
d) A finance company on the life of its borrower
31. A non-forfeiture option would ordinarily be selected at the time a policyowner
a) Renews a term life policy

b) Converts a term policy to a whole life policy
c) Chooses a mode of settlement for the life proceeds
d) Discontinues premium payments for a whole life or endowment policy
32. Which of the following statements regarding insurance premiums is false?
a) Cash is required for all premiums paid in the grace period

b) A premium is the legal consideration needed to effectuate a life insurance policy
c) The grace period is usually 31 days
d) Premiums which are paid quarterly or semi-annually are higher than those paid
annually
Review Questions
33. If the interest on a policy loan is not paid at the policy anniversary the insurance
company may
a) Demand full settlement of the loan

b) Terminate the contract
c) Refuse to grant future additional loans
d) Increase the present loan by the interest
34. The basic coverage provided by life insurance policies may be supplemented by
separate provision that provide coverage for additional amounts or of a different
nature. Collectively, these provisions are known as
a) Riders
b) Deposit privileges
c) Dividends
d) Assignment
Review Questions
33. If the interest on a policy loan is not paid at the policy anniversary the insurance
company may
a) Demand full settlement of the loan

c) Refuse to grant future additional loans
d) Increase the present loan by the interest
34. The basic coverage provided by life insurance policies may be supplemented by
separate provision that provide coverage for additional amounts or of a different
nature. Collectively, these provisions are known as
a) Riders
b) Deposit privileges
c) Dividends
d) Assignment
Review Questions
35. Which of the following statement is false
a) The cash value of a whole life policy builds up at a slower rate than for a 20
year endowment
b) The cash value in a permanent policy is guaranteed by the company
c) The cash value of an endowment builds up faster than that for a limited
pay life policy of the same duration
d) Because of its very short duration the cash value of a yearly renewable
term policy grows very fast
36. If the interest on a policy loan is not paid at the policy anniversary the
insurance company may
a) Increase the present loan by the interest

c) Refuse to grant future additional loan
d) Demand full settlement of the loan
Review Questions
35. Which of the following statement is false
a) The cash value of a whole life policy builds up at a slower rate than for a 20
year endowment
b) The cash value in a permanent policy is guaranteed by the company
c) The cash value of an endowment builds up faster than that for a limited
pay life policy of the same duration
d) Because of its very short duration the cash value of a yearly renewable
term policy grows very fast
36. If the interest on a policy loan is not paid at the policy anniversary the
insurance company may
a) Increase the present loan by the interest

c) Refuse to grant future additional loan
d) Demand full settlement of the loan
Review Questions
37. When you bought an insurance policy on your wife’s life, you were 27 and she
was 26, but you stated that you were 26 and she was 27. Five years later your wife
died. The insurer will pay
a) Slightly less than the face amount

b) The face amount
c) The face amount adjusted for misstatement of age
d) The sum of the premium paid
38. The incontestability clause
a) Gives the company the right to rescind a policy at any time

b) Permits the company to pay claims within 2 years
c) Makes it necessary for the beneficiary to present proof of death in the event
of a death claim
d) Prevents the company from denying a claim after the policy has been in force
for 2 years
Review Questions
37. When you bought an insurance policy on your wife’s life, you were 27 and
she was 26, but you stated that you were 26 and she was 27. Five years later
your wife died. The insurer will pay
a) Slightly less than the face amount

b) The face amount
c) The face amount adjusted for misstatement of age
d) The sum of the premium paid
38. The incontestability clause
a) Gives the company the right to rescind a policy at any time

b) Permits the company to pay claims within 2 years
c) Makes it necessary for the beneficiary to present proof of death in the event
of a death claim
d) Prevents the company from denying a claim after the policy has been in
force for 2 years
Review Questions
39. The insured named a primary and secondary revocable beneficiary for P20,000
policy. Which of the following is correct?
a) The designation of a contingent beneficiary is subject to the primary

beneficiary’s approval
b) The insured can add a third beneficiary at any time
c) Any policy loan or assignment will require the primary beneficiary’s signature
d) Upon the insured’s death the primary and secondary beneficiaries shall each
receive P10,000.
40. A yearly renewable term life insurance policy generally specifies that
a) The policyowner may renew the policy only once

b) Premiums shall increase every time the policy is renewed
c) Evidence of insurability shall be required every renewal
d) Cash values will increase for as long as the policy is in force
Review Questions
39. The insured named a primary and secondary revocable beneficiary for P20,000
policy. Which of the following is correct?
a) The designation of a contingent beneficiary is subject to the primary

beneficiary’s approval
b) The insured can add a third beneficiary at any time
c) Any policy loan or assignment will require the primary beneficiary’s signature
d) Upon the insured’s death the primary and secondary beneficiaries shall each
receive P10,000.
40. A yearly renewable term life insurance policy generally specifies that
a) The policyowner may renew the policy only once

b) Premiums shall increase every time the policy is renewed
c) Evidence of insurability shall be required every renewal
d) Cash values will increase for as long as the policy is in force
Review Questions
DIRECTION:
Under Column A of your answer sheet, write T if the statement is TRUE and F if the
statement is FALSE.
41. In the case of misstatement of age, the amount of insurance is adjusted to

the amount which the premium paid at the correct age would have purchased.
42. In a case where the premium has not been paid and the cash value has been
exhausted, the policy can still avail of grace period.
43. A policy is not rendered void by reason of misstatement of age of the

assured’s death.
44. In a group insurance, it is assumed that every member of the group is

insurable, provided that every member of the group is working a minimum
number of (usually 50) each week.
45. A policy is still in force for the full face amount and will remain in force for a
further period of four years and 118 days without the payment of any premiums
if has availed of paid-up insurance option.
Review Questions
DIRECTION:
Under Column A of your answer sheet, write T if the statement is TRUE and F if the
statement is FALSE.
41. In the case of misstatement of age, the amount of insurance is adjusted to

the amount which the premium paid at the correct age would have purchased.
(T)
42. In a case where the premium has not been paid and the cash value has been
exhausted, the policy can still avail of grace period. (F)
43. A policy is not rendered void by reason of misstatement of age of the

assured’s death. (T)
44. In a group insurance, it is assumed that every member of the group is

insurable, provided that every member of the group is working a minimum
number of (usually 50) each week. (F)
45. A policy is still in force for the full face amount and will remain in force for a
further period of four years and 118 days without the payment of any premiums
if has availed of paid-up insurance option. (T)
Review Questions
46. In most life insurance application, the largest amount of information

requested is data which identifies the applicant.
47. A policy that provides guaranteed cash value plus extra annual distributions
and pays the insured after a specified time is known as participating endowment.
48. An endowment at age 65 policy with premium payable for a limited period of
20 years pays the full amount after 20 years.
49. Anti-selection occurs when persons in poor health wish to buy insurance.
50. According to the law of large numbers, events which happen seemingly by
chance will actually be found to follow a predictable pattern if enough such
happenings are observed.
Review Questions
46. In most life insurance application, the largest amount of information

requested is data which identifies the applicant. (F)
47. A policy that provides guaranteed cash value plus extra annual distributions
and pays the insured after a specified time is known as participating
endowment.(T)
48. An endowment at age 65 policy with premium payable for a limited period of
20 years pays the full amount after 20 years. (T)
49. Anti-selection occurs when persons in poor health wish to buy insurance. (T)
50. According to the law of large numbers, events which happen seemingly by
chance will actually be found to follow a predictable pattern if enough such
happenings are observed. (T)
The distribution of this document without
permission is a theft of the company’s intellectual
property. If you wish to seek permission to use
material from this document (other than learning
purposes), please contact your Agency Recruitment
and Activation Team.

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Agency Licensure Training

Traditional Life Insurance

1. Click on to navigate the eLearning material

Choose one topic.

• Are contracts of indemnity, meaning it indemnifies those who

Accident Loss of Money

provides economic protection against financial loss

Pure risk – a risk that involves no possibility of gain

Speculative risk – a risk that involves three possible

PRINCIPLE OF LOSS SHARING

a) Spread over a large number of people

2. An insurance risk is classified as

a) Unacceptable and acceptable

a) Spread over a large number of people

2. An insurance risk is classified as

a) Unacceptable and acceptable

Choose one topic.

LIFE NON- LIFE HEALTH

Life insurance is a Health insurance is a

THREATS SERVICE BENEFIT

Insured - the person whose life is covered under a life

Beneficiary - the person named to receive the life

Policy - the written contract between the insured and

Applicant / Proposed Insured - the person who applies for

Insurable Interest - is a stake in the value of an entity or

Policy Owner - the person or party who owns an individual

Juvenile Policy -is permanent life insurance that insures

Face Amount - The amount payable to the beneficiary upon

Premium - money that must be regularly paid to the insurance

Initial Premium Renewal Premiums

4. A Single Premium policy means a policy

4. A Single Premium policy means a policy

Choose one topic.

• Mortality Table - Statistics of life expectancy, expected

• Law of Large Numbers - the more figures there are to

• Actuary - sets the premium rates and develops life

• Premiums are invested to earn interest

Choose one topic.

Whole Life Endowment Level Decreasing

Limited Pay Life Limited Pay

2 CLASSIFICATIONS ACCORDING TO PLANS

• at a level premium rate

Premium Paying Period

▪ Ordinary Life is a type of life insurance in which policyholders pay

➢ Payable up to a certain number of years only (i.e. 5

Premium Paying Period 5 YEARS TO PAY

Policy Effectivity Date Maturity Benefit (99/100 years

 A plan which provides lifetime protection with

➢ ENDOWMENT - life insurance policy which provides you with a combination

• Provides protection at a specified future time or age

• endows at the end of the coverage period (before age 100)

• Rapid build up of cash values.

Regular Pay Endowment money paid to buy insurance

Premium Paying Period

Endowment Plan (TIME Based)

Permanent Plans may also be…

- there is NO extra charge built into the premiums

2. Convertible - the policy owner can convert it to any permanent plan

Kinds of Term Plans

1 5,000 1,000,000 1,000,000

➢ Group can be employees within a company and may be classified

Conversion Privilege - upon termination from group