1. Cash Value – is the savings element that builds up in permanent insurance plans
  2. Cash Surrender Value – the sum of money an insurance company pays to a policyholder or an annuity contract owner if their policy is voluntarily terminated before its maturity or an insured event occurs.
  3. Extended term insurance option – allows the policy owner to use the cash value to purchase a term insurance policy with a death benefit equal to that of the original whole-life policy. 
  4. Non-Forfeiture Option – an option for whole life or endowment policies while such policies are kept in force but the policy owner discontinues premium payments.
  5. If this option is chosen, the guaranteed policy values will no longer be assured to the policy owner, even if premium payments are discounted.
  6. If there are misstatements, death claims will still be granted.
  7. If another beneficiary is added to the policy, the premium will still be the same. 
  8. If the insured’s health become impaired, the face amount will still be the same.
  9. Policy Loan – money that is borrowed against future benefits payable under a life insurance policy. How much can you loan against your life insurance policy? It is limited to the amount of your cash value. The amount includes the interest.
  10. Paid-up insurance option – if the policy owner chooses this option, the premiums cease and the protection continues with a reduced amount of coverage. 
  11. The following is an example only and not an exact illustration of products: Pedro signed up for a life insurance at age 40 with a face amount of 2 million. The policy allows paid up insurance option when he reaches age 60. At age 60, he chose paid-up insurance option until age 90. This means he stops paying premiums, but at age 61, his face amount is no already lower than 2 million. Perhaps, 1.95M. At age 62, 1.90M. At age 63, 1.85M. At age 64, 1.80M… until the face amount becomes zero or is withdrawn
  12. Paid-up addition – is one of the features in a participating policy where the death benefit will be maximized.
  13. This addition affects the cash value of the policy.
  14. Extended Term Insurance – a provision in a permanent life insurance policy that grants that if premiums are discontinued, full insurance will be maintained for a specific period.
  15. A retirement annuity is a kind of regular annual savings arrangement to provide a pension for life with no life coverage.

Conditional premium and settlement date

After you sign-up and pay, us advisors will usually issue conditional premium receipt. The purpose of this are to acknowledge payment of your initial premium or payment for life insurance, and (2) provide insurance coverage earlier than the policy delivery date if certain requirements are met. This date of completion is called “settlement date”.

Loans and Claims

In practice, most claims for the death benefits of life insurance policies are paid promptly as soon as forms are properly completed and received by the insurance company.

Under the law (Section 248 of IC), insurance companies are required to pay the proceeds of a life insurance policy within 60 days from the presentation of claim and proof of death of the insured. Failure to release the claim within the said period will entitle the beneficiary to collect interest.

As a policy owner, when time comes that your beneficiary will claim your life insurance proceeds, what are the basic settlement options?

  1. Fixed amount until exhausted. For example, the death benefit is P1M. The beneficiary opted that he will be given 100,000 per month. So, he will receive 100,000 per month for 10 months.
  2. Fixed period – payment of the proceeds to the beneficiary over a fixed period. For example, the death benefit is P2,000,000. The beneficiary may opt that it will be paid over a period of 5 years. So, P2M divided by 5 yrs = 400,000 per year. 
  3. Life income
  4. Interest on deposit
  5. Life Annuity – when the beneficiary does not want a lump sum payment, but want to receive a monthly allowance for the rest of her natural life instead, this claim option is life annuity.
  6. Interest option for an entity – an option for endowment policy owners who want to provide an organization or church with monthly donation as long as it exists. Provided, no legal impediments exist.

Question: What happens when the actual age of the insured is older than what was stated in the insurance policy, and such insured person dies?

The face amount to be received by the beneficiaries will be adjusted for misstatement of age.

Borrowing or Loaning against the policy

Question: What is the best insurance policy for a client who is 65 years old and only wants to pay the minimum? Term policy