Life Insurance Non-Forfeiture Options

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Questions and Answers

What is the minimum sum assured (SA) for this life insurance policy?

PhP 100,000.00

PhP 500,000.00

PhP 1,000,000.00

PhP 250,000.00 (correct)

Which payment methods are applicable for renewal only?

Bills Payment/Bayad Centers (correct)

Checks

Mobile wallet/GCash

Credit/Debit Card

What type of premium remains constant throughout the premium-paying period?

Flexible Premium

Decreasing Premium

Level Premium (correct)

Variable Premium

Which of the following is NOT listed as a rider or optional benefit?

Health and Wellness Benefit Signup and view all the answers

What is the annual policy fee for this life insurance policy?

PhP 400 Signup and view all the answers

What is the modal factor for semi-annual payments?

0.525 Signup and view all the answers

What type of rider allows the insured to waive premiums if they become totally and permanently disabled?

Waiver of Premium on TPD Signup and view all the answers

Which option represents an allowable payment method for this policy?

Mobile wallet/GCash Signup and view all the answers

What happens to a premium that remains unpaid at the end of the grace period?

It is automatically deducted from the cash value. Signup and view all the answers

What must the Policyowner provide for reinstatement of a policy that terminated due to non-payment?

Satisfactory evidence of the health of the Life Insured. Signup and view all the answers

How long does the Policyowner have to reinstate a policy after it lapses due to overloan?

3 years. Signup and view all the answers

What is the grace period given to the Policyowner after failing to pay the premium?

31 days. Signup and view all the answers

Which of the following is NOT a consequence of a policy terminating due to overloan?

The policy cannot be reinstated. Signup and view all the answers

What will happen if no payment is received after the grace period?

The selected Non-Forfeiture Option and Dividend option will apply. Signup and view all the answers

What is considered satisfactory evidence for reinstatement if a policy lapsed due to non-payment?

A medical examination report. Signup and view all the answers

What is automatically applied if no specific option is elected after the grace period expiration?

Extended Term Insurance. Signup and view all the answers

What is the maximum payout for the death benefit under Reduced Paid-Up Insurance?

200% of the RPU Sum Assured Signup and view all the answers

How does the sum assured under Extended Term Insurance compare to the original Sum Assured?

It is 200% of the original Sum Assured less any outstanding loans Signup and view all the answers

What happens to excess cash values upon converting to Reduced Paid-Up Insurance?

They are refunded Signup and view all the answers

What is the primary condition for both Reduced Paid-Up Insurance and Extended Term Insurance?

They can be continued without further premiums Signup and view all the answers

What is the duration of coverage for Extended Term Insurance based on?

Cash value less outstanding loan and interest Signup and view all the answers

When do guaranteed payouts cease after conversion to Extended Term Insurance?

Immediately after conversion Signup and view all the answers

What influences the amount of Reduced Paid-Up Insurance's Sum Assured?

The cash value minus outstanding loans at the policyholder's age Signup and view all the answers

Which of the following is true about the nature of the insurance coverage offered by both options?

Both options are non-participating types of insurance Signup and view all the answers

What are the possible ways dividends can be used according to the policy?

Left to accumulate with an interest rate set by the policyholder Signup and view all the answers

What is the current Dividend Accumulation Rate set by the company?

4.00% Signup and view all the answers

How soon does the policy begin to accumulate cash values?

Starting on the second policy year Signup and view all the answers

What percentage of the cash value can a policyholder potentially borrow?

80% Signup and view all the answers

What happens if the policy loan is unpaid by the next policy anniversary?

The loan and interest accrue as a new loan Signup and view all the answers

What is payable to the Policyowner upon surrendering the policy?

The cash value plus surrendered dividends and payouts Signup and view all the answers

What is the maturity benefit if the Life Insured survives to age 100?

200% of the Sum Assured plus accumulated dividends Signup and view all the answers

Which of the following statements regarding cash values is correct?

Cash values accumulate beginning in the second policy year. Signup and view all the answers

What is the expiry age for the Accidental Death and Disablement Rider?

The life insured's age at 60 Signup and view all the answers

Up to what age can a life insured benefit from the Payor Waiver of Premium Benefit?

25 years old Signup and view all the answers

What happens to the policy upon surrender when a non-forfeiture option is elected?

The policy will terminate upon surrender Signup and view all the answers

What is the maximum age for the payor to be eligible under the Payor Waiver of Premium Benefit?

65 years old Signup and view all the answers

Which of the following riders does NOT have cash values?

Total and Permanent Disability Plus Signup and view all the answers

What is one of the criteria for waiving future regular premiums under the Payor Waiver of Premium Benefit?

Total and permanent disability of the payor Signup and view all the answers

Which of the following is NOT included in the benefits waived under the Payor Waiver of Premium Benefit?

Health Insurance Signup and view all the answers

What is the benefit term for the Cash Values rider?

This rider has no cash values Signup and view all the answers

Study Notes

Non-Forfeiture Options

Automatic Premium Loan: Policy premiums are automatically paid from cash value if it is due at the end of the grace period.
Option 2: Reduced Paid-Up Insurance: The policy continues without premiums, but the sum assured is reduced to the value that the cash value would buy at the life insured's attained age. The death benefit is 200% of the RPU Sum Assured. The future payouts are based on this RPU sum assured.
Option 3: Extended Term Insurance: The policy continues without premiums as a non-participating Extended Term Insurance with a level ETI Sum Assured equal to 200% of the original Sum Assured less any outstanding policy loan and interest under this Policy. The duration of the ETI corresponds to the period of insurance coverage that would have been purchased by the cash value less any outstanding policy loan and interest at the attained age of the Life Insured at the time of the application of this option.
Net Surrender Value: Upon termination of the policy the policyholder receives the cash value plus any accumulated non-guaranteed dividends and payouts less any indebtedness.

Reinstatement

If the policy terminates due to non-payment of premiums or overloan, the policyholder may apply to reinstate it within three years.
The policyholder must give satisfactory evidence of the Life Insured's health. They must also pay all premiums in arrears and any loan balance, with interest.

Grace Period

A 31-day grace period is given to pay premiums.
If no payment is received after the grace period, the selected Non-Forfeiture Option and Dividend option (if the selected option is used to pay a portion of the premium) shall apply.

Dividends

Dividends may be paid to the policyholder in cash, applied to a due premium, or left to accumulate with interest at a rate set by the Company.
The current Dividend Accumulation Rate is 4.00%.
Dividends are not guaranteed.

Cash Values and Policy Loans

Cash values start accumulating from the second policy year.
Policyholders may apply for policy loans up to 80% of the cash value, charged interest at a rate set by the Company.
Loans are payable on or before the next policy anniversary; if unpaid, they become a new loan with interest.

Surrender Benefit

Upon surrender of the policy, the policyholder receives the available cash value plus any accumulated non-guaranteed dividends and payouts less any outstanding policy loans and interest.

Maturity Benefit

If the Life Insured survives the policy maturity at age 100, they receive 200% of the Sum Assured plus any accumulated non-guaranteed dividends and accumulated payouts less any outstanding policy loans and interest.

Optional Riders

Accident and Disability:
- Total and Permanent Disability Plus
- Accidental Death and Disablement Benefit
- Personal Accident Rider
Waiver of Premium:
- Waiver of Premium on TPD
- Payor Waiver of Premium Benefit

Premium and Sum Assured Information

Premium Type: Level Premium.
Allowable Sum Assured: There is no limit but subject to underwriting and reinsurer’s approval.
Minimum Sum Assured: PhP 250,000.00
Policy Fee: PhP 400 per year.
Premium is Inclusive of the policy fee.
Mode of Payments: Annual/Semi-Annual/Quarterly/Monthly.
Modal Factors:
- Annual: 1
- Semi-Annual: 0.525
- Quarterly: 0.285
- Monthly: 0.0975
Method of Payment: Credit/Debit Card, Mobile wallet/GCash, Checks, Bank Transfer/Fund, Bills Payment/Bayad Centers (applicable only for renewal/recurring payments)

Rider Information

Accidental Death and Disablement Rider:
- Available for individuals aged 18 to 59
- Premium Payment Term: Either premium payment term chosen for the base plan or Expiry age (60) – life insured’s age; whichever is shorter
- Benefit term: Up to age 60 of the life insured.
- Cash Values: This rider has no cash values.
Personal Accident Benefit Rider: This rider has no cash values.
Payor Waiver of Premium Benefit:
- Issue age: Life insured: 0 to 17, Payor: 18 to 59
- Premium Payment Term: Either the premium payment term chosen for the base plan, Expiry age for Life Insured (25) – life insured’s age, or Expiry age for Payor (65) – life insured’s age; whichever is shorter
- Benefit term: Up to age 25 of the life insured; or Up to age 65 of the Payor, whichever comes first.
- Cash Values: This rider has no cash values.
Issue age: 18 to 59
Premium Payment Term: either the premium payment term chosen for the base plan or Expiry age (60) – life insured’s age; whichever is shorter
Benefit term: Up to age 60 of the life insured.
Cash Values: This rider has no cash values.

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Description

This quiz covers the various non-forfeiture options available in life insurance policies, including Automatic Premium Loan, Reduced Paid-Up Insurance, and Extended Term Insurance. It provides an overview of each option's implications on policy coverage and benefits. Test your knowledge on how these options work and their impact on the insured's financial planning.