TRADITIONAL LIFE INSURANCE LICENSING COURSE 2023 Actuary - person/team responsible for creating the table of

premiums from an insurance plan.

1) INSURANCE BASICS
Mortality Table - contains stats on death by age among a given
Life Insurance - device by which a large number of people group of people
protect themselves against economic loss.
- Females generally have better mortality than males
Purpose - ensures the continuance of income despite life's - females have higher morbidity rates because of health
risks such as die too soon, to be disabled, live too long risks due to pregnancy and child birth
Income - cash paid in exchange for goods & services rendered

Sources of Income

- Man at Work
- Money at Work
- Donation/Charity

Risks

 Speculative Risk - with a possibility of gain and loss;

gambling and business
 Pure Risk - no possibility of gain; death and old age
Life Expectancy - # of years that a person will live on the
average as shown in the mortality table

2) TOOLS AND CONCEPTS IN INSURANCE - females have longer life expectancy than men

Law of Probability - a stat method used to predict the likelihood

DYK!!  Metropolitan Bank & Trust Co. (Metrobank) - one of of a future outcome.
the Ph's largest financial institutions and is a joint venture
partner of AXA Ph. Ex. getting sick in remote areas has higher prob of
death than in the city.

How Life Insurance Works Compound Interest

The income needs addressed by life insurance proceeds - principle used in money transactions where the
include: interest earned on a principal for one year is
capitalized in the succeeding years.
 Clean-Up - pay certain obligation for person’s death - this principle allows the insurance company to provide
 Disability cash benefits to policyholders if they survive a certain
 Life Income for the Widow - subsist in her old age period.
 Education Fund - continue studies of children
 Retirement Fund
 Emergency Fund 3) TERMS IN INSURANCE
 Planned Insurance Estate - passed onto his heirs
Insurer - company that accepts the risk and makes a promise
Principle of Large Numbers to pay a policy benefit if a loss does occur.
- states that the more times we observe a particular Insured - the person whose life, health, or property is insured
event, the more likely it is that the observed results under the policy
will approximate the "true" probability that the event
will occur. Premium - consideration or amount given by the insured to the
- Insurance companies rely on this principle when they insurer in exchange for agreeing to pay a policy benefit when a
make predictions about the covered losses that a specified loss occurs.
given group of insured is likely to experience during a
given time period. Face Amount - aka Sum Insured, is the amount paid to the
beneficiary based on the policy upon death or for when the
Ex. infant death > deaths at age 18 identified risk happens

High risk | High disability rate Beneficiary - person who will receive the proceeds of an
insurance policy
numerous illnesses | people's age > 50
Maturity Date - future date when the insurer pays the insured
or fulfills what is stipulated in the policy

Policy - written contract between insured and insurer

4) PREMIUM 5) RISK SELECTION

Insurance Premium - amount of money an individual or Underwriting - process of identifying and classifying the degree
business pays for to an insurance company. of risk of a prospective insured. Dont to determine fair premium
charges to be paid by the insured. to also prevent anti-
Actuaries are financial specialists who is responsible in selection
calculating of premium rates
Anti-Selection - tendency of persons with higher-than-average
lkelihood of loss to apply for life insurance.

6) TYPES OF life INSURANCE PLANS

Premiums are determined through: Individual - issued to indiv clients
 Age - influences premium rates Group - is a process of insuring several indiv as a group (pic)
 Types of plan - some plans would have a higher
premium than others - Group Policy: group of indiv insured under one company (pic)
 Riders - adding riders and the type of rider selected (pic) (pic) (pic) (pic)
also contributes to a higher premium
- Documentation & Payment
 Amount of Coverage - some plans would have a
higher premium than others
 Sex - gender at times influences a higher or lower
premium rate Industrial - life insurance product provided under (pic)

Universal - coverage can vary depending on the amount of

premium and investment performance of the insurance
GROSS PREMIUMS COMPUTATION company (stocks, bonds, etc.)
gross prem = net prem + loading / operating cost Other Types:
Net Premium = mortality rate, safety margin, investment annuity - purchase of income; person who buys an annuity is
earnings called an Annuitant
PREMIUM TYPES life insurance - aka health insurance; it provides disability
income benefit, accidental death and dismemberment benefit,
 Single Premium - Insured only pays ONE TIME expense reimbursement benefit
 Natural Premium - starts small but increases as the
insured ages
 Level Premium - same amount of premium for the
entire paying period Traditional Life Insurance
 Graduated Premium - increases every year until the Permanent - offers protection, offers savings in the form od
5th year. then remains the same throughout the cash values & dividends
duration of the premium paying period
 Modified Premium - premium that increases only on - whole life: (pic) (pic)
the 5th year, then remains on that level throughout the
duration of the premium paying period. - limited-pay: (pic) (pic)
 Fractional Premium - a portion of the annual premium - endowment: (pic) (pic) (pic)
is paid to suit the cash flow of the insured.
Temorary - offers protection only for a limited period only; term
ex. Annual Premium x Conversion Factor = Modal Premium plans provide coverage for a specified period of time; length of
Desired (pic) the term varies, term may be a specified number of years, may
provide coverage until a certain age, it is the most low cost
plan since it only provides protection and no savings, the
PREMIUM RECEIPT benefit is usually payable only if: the insured dies during the
specified term and the policy is in force when the insured dies.
Binding Premium Receipt - makes the insurance coverage
immediate only until the insurer either accepts or rejects the types of term plans:
application. a coverage will be paid if the insured dies while the
policy application is being processed. (pic) Level Term (pic)

Conditional Premium Receipt - immediate coverage is given, Decreasing term (pic)

however should the client die, benefits of this arrangement will Features of Term Plans:
only be paid if the application would have been approved and
issued. (pic) Convertible Term (pic)

Renewable Term (pic)

receive dividends through:

cash, premium deductions, accumulate at interest, paid-up

additional insurance, buy renewable term insurance

Supplementary Contracys - commonly referred to as RIDERS;

need to 'ride on' a basic policy; they are Term insurance; they
are optional and enforced unitl the insured reaches a certain
age

7 common RIDERS

Waiver of Premium for Disability Benefit

- insurer waives premium payments of the insured when the

insured become totally disabled and permanently disabled

- total disability - insured is unable to engage in any business

or occupation he is suited to do by education, training or
experience.

- permanent disability - when the disability has continued for at

least 6 months.

Waiver of premiums is automatic when the disability involves:

loss of sight for both eyes, loss of both hands or feet, loss of
one hand and one foot.

Waiver of premiums will continue only up to age 60 of the

insured.

Payor's Clause - pic

Family income rider - pic

Accidental Death Benefit/Double Indemnity - pic, pic, pic

Family Maintenance Rider - pic

Guaranteed Insurability RIder - pic

7) LEGAL ASPECTS