Podcast
Questions and Answers
What is a key characteristic of variable life insurance premiums?
What is a key characteristic of variable life insurance premiums?
- They do not guarantee death benefits.
- They are typically variable and change based on market conditions.
- They are fixed regardless of market performance. (correct)
- They are usually lower than those of term life insurance.
Which of the following types of insurance specifically helps protect against personal liability?
Which of the following types of insurance specifically helps protect against personal liability?
- Credit life insurance
- Burial insurance
- Variable life insurance
- Casualty insurance (correct)
Which statement accurately defines burial insurance?
Which statement accurately defines burial insurance?
- It is a type of term insurance with no cash value.
- It is linked to investment accounts like bonds and mutual funds. (correct)
- It pays off a borrower's debts in case of death.
- It only provides coverage for home-related incidents.
What is a primary purpose of mortgage life insurance?
What is a primary purpose of mortgage life insurance?
Which type of insurance provides coverage for renters' belongings?
Which type of insurance provides coverage for renters' belongings?
What type of life insurance provides coverage for the entire life of the insured person?
What type of life insurance provides coverage for the entire life of the insured person?
Which institution is authorized to engage in underwriting functions and invest in equities of non-allied undertakings?
Which institution is authorized to engage in underwriting functions and invest in equities of non-allied undertakings?
Which type of insurance guarantees payment of death benefits to insured beneficiaries?
Which type of insurance guarantees payment of death benefits to insured beneficiaries?
Which of the following is NOT a type of life insurance mentioned?
Which of the following is NOT a type of life insurance mentioned?
What is the primary role of the Bangko Sentral ng Pilipinas (BSP)?
What is the primary role of the Bangko Sentral ng Pilipinas (BSP)?
Which option is a function of a Commercial Bank?
Which option is a function of a Commercial Bank?
What is characteristic of Universal Life Insurance?
What is characteristic of Universal Life Insurance?
Which of the following products is offered by an insurance company?
Which of the following products is offered by an insurance company?
What is a financial asset primarily characterized by?
What is a financial asset primarily characterized by?
Which component is NOT considered part of a financial system?
Which component is NOT considered part of a financial system?
What primary function does the financial system serve regarding surplus units (SUs)?
What primary function does the financial system serve regarding surplus units (SUs)?
Which of the following is an example of a debt instrument?
Which of the following is an example of a debt instrument?
What is a derivative instrument primarily based on?
What is a derivative instrument primarily based on?
What is the role of the central bank within the financial system?
What is the role of the central bank within the financial system?
Which economic function is NOT attributed to financial assets?
Which economic function is NOT attributed to financial assets?
What is a key reason for the globalization of financial assets?
What is a key reason for the globalization of financial assets?
What does accidental death and dismemberment insurance cover?
What does accidental death and dismemberment insurance cover?
Which type of insurance specifically protects directors and officers from personal liability?
Which type of insurance specifically protects directors and officers from personal liability?
What is the primary risk insurable under health insurance contracts?
What is the primary risk insurable under health insurance contracts?
Which type of health insurance is owned by the government in the Philippines?
Which type of health insurance is owned by the government in the Philippines?
What type of insurance covers income if a policyholder is unable to work due to disability?
What type of insurance covers income if a policyholder is unable to work due to disability?
Which of the following is NOT a type of liability insurance mentioned?
Which of the following is NOT a type of liability insurance mentioned?
What is the purpose of professional indemnity insurance?
What is the purpose of professional indemnity insurance?
Which insurance type provides coverage for businesses against claims related to product damage?
Which insurance type provides coverage for businesses against claims related to product damage?
What is trade credit insurance designed to protect businesses against?
What is trade credit insurance designed to protect businesses against?
Which type of insurance company is owned by its policyholders?
Which type of insurance company is owned by its policyholders?
What does demutualization refer to in the insurance industry?
What does demutualization refer to in the insurance industry?
How do insurance companies generate income and profit?
How do insurance companies generate income and profit?
What type of insurance provides coverage for long-term care and personal supervision?
What type of insurance provides coverage for long-term care and personal supervision?
What is a guaranteed investment contract (GIC)?
What is a guaranteed investment contract (GIC)?
Which of the following best describes a structured settlement?
Which of the following best describes a structured settlement?
Which investment-oriented product involves a major component of investments for policyholders?
Which investment-oriented product involves a major component of investments for policyholders?
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Study Notes
Capital Markets and Financial Assets
- Financial assets are liquid assets valued based on contractual rights or ownership claims.
- Future benefits of financial assets arise from claims to future cash flows.
- Financial instruments are intangible assets, including bank deposits, stocks, and bonds.
Financial System Components
- Comprises financial markets, participants, and instruments facilitating fund exchange.
- Includes institutions like banks, insurance companies, and stock exchanges.
- Functions to channel funds from surplus units (SUs) to deficit units (DUs), provide a medium of exchange, and allow central bank influence on the economy.
Equity vs. Debt Instruments
- Equity Instruments: Represent ownership in a company.
- Debt Instruments: Indicate the issuer's indebtedness to an investor.
- Derivative Instruments: Performance is based on an underlying asset's performance.
Globalization of Financial Assets
- Drives international trade expansion and attracts foreign investment.
- Promotes cross-border financial flows and a multinational financial system.
Economic Roles of Financial Assets
- Serve multiple roles, including risk sharing and facilitating investments.
- Pawnshops and various savings institutions are key participants in the financial system.
Banking Institutions
- Universal Banks: Engage in both banking and investment house functions.
- Commercial Banks: Accept deposits and offer drafts and credit facilities.
- Thrift Banks: Focus on savings and short-term working capital needs.
Financial Market Regulators
- BSP (Bangko Sentral ng Pilipinas): Central bank maintaining price stability for economic growth.
- SEC (Securities and Exchange Commission): Regulates securities market and protects against fraud.
Types of Life Insurance
- Term Life Insurance: Provides death benefit over a set term.
- Whole Life Insurance: Coverage lasts for the insured's life with a savings component.
- Universal Life Insurance: Flexible premiums with a cash value that grows with market interest rates.
- Variable Life Insurance: Tied to investment accounts; premium remains fixed.
- Burial Insurance: Tied to investment accounts for funeral expenses.
- Group and Mortgage Life Insurance: Lower cost and pays off mortgage debts, respectively.
Property and Casualty Insurance
- Protects against risks related to property and liability, covering homeowners, vehicles, and businesses.
- Types include homeowners, renters, car, and commercial liability insurance.
Types of Health Insurance in the Philippines
- Philhealth: Publicly owned health insurance.
- Health Maintenance Organization (HMO): Employer-provided group health insurance.
- Private Health Insurance: Individual coverage options.
Disability and Liability Insurance
- Disability Insurance: Provides income during work incapacitation.
- Liability Insurance: Covers legal responsibilities due to injuries or damages caused by the insured.
Insurance Companies Structure
- Mutual Insurance Companies: Owned by policyholders, limited in issuing stocks.
- Stock Insurance Companies: Corporations that can issue stock and are publicly traded.
Demutualization
- Process of converting a mutual insurance company into a stock insurance company.
Generating Income for Insurance Companies
- Collect premiums from policyholders which are then invested to generate revenue.
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