Agent – An authorized representative of an insurance company who sells and services insurance contracts. First Life agents are referred to as “Financial Planners”.
Absolute Assignment – Complete transfer of all contractual rights to another person or party.
Beneficiary – The person of financial instrument named in the policy as the recipient of the insurance money in the event of the insured’s death. There are two (2) classifications of beneficiaries:
- Primary – first beneficiary or party designated to receive the policy proceeds following the death of the insured.
- Contingent – if the primary beneficiary should die before the insured, the contingent or secondary beneficiary shall receive the policy proceeds.
There are two (2) designations for beneficiaries:
- Revocable – a beneficiary who has no rights to the policy while the insured is living. Can be changed anytime by the policy owner.
- Irrevocable – a beneficiary who possesses a vested interest on the policy proceeds even during the lifetime of the insured. Any changes on the policy require the consent of the irrevocable beneficiary.
Cash Surrender Value – Any remaining cash value plus any accumulated dividends less any indebtedness.
Claim – A demand by a person or business who is seeking to recover for a loss. A claim may be made against an Insurance Company when an insured said company to pay for a loss that may be covered by the insurance policy.
Collateral Assignment – Temporary or partial transfer of some rights usually for the monetary value of the policy.
Death Claim – The amount paid to the beneficiary/ies when the insured dies. This amount is equal to the face amount less any adjustments due to outstanding policy loans, dividends, paid-up additions or outstanding premium dues.
Due Date – The due dates for annual modes coincide with the policy anniversary. The due dates for the other modes are on the same day of the calendar month as the policy date with equal intervals from the policy date.
Effective Date of Policy – The policy becomes effective only upon payment of its initial premium and approval by the Insurer.
Endorsement – A document attached to an insurance policy and forms part of the policy contract.
Evidence of Insurability – A statement or proof of physical condition and/or other factual information affecting a person’s eligibility for insurance.
Grace Period – A premium due must be paid not later than thirty-one (31) days after its due date. A policy is considered in-force during the grace period.
Insured – The person whose life the policy is issued.
Insured Age – Pertains to the age of the insured as of last birthday.
Insurer – Refers to the Insurance Company in particular. We usually use the term “Company” in our contract, attachments, endorsements and correspondences.
Lapse – Termination of coverage due to nonpayment of premium within a specified time period.
Maturity – The maturity benefit is the amount payable to a living insured at the end of an endowment period or to the owner of a whole life policy, if he lives past a certain age.
Maturity Date – The date on which an endowment insurance policy’s sum insured will be paid.
Mode of Payment – There are four (4) modes of payment available to the policy owner: Annual, Semi-Annual, Quarterly, and Monthly. For monthly payments, we require the submission of twelve (12) post-dated checks (PDCs).
Optional Conversion Privilege – In the case of a term policy, it may be converted without further evidence of insurability to a new policy subject to the conditions of the company.
Participating or Non-Participating Policy
- Participating Policy – a policy on which the policy owner is entitled to share in the surplus earnings of the company through policy dividends
- Non-Participating Policy – a policy on which no dividends are paid
Policy Contract – A legally enforceable agreement between the Insurer and the policy owner. It also refers to the printed document issued to the policy owner by the Insurer stating the terms of the insurance contract.
Policy Date – The Policy Date is the date of issue and is used to determine the premium due dates, policy years, and policy anniversaries.
Policy Duration – Pertains to the number of years and months the policy has been in-force.
Policy Owner – The person who owns the life insurance policy. He holds the contractual rights of the policy. Also known as the policyholder.
Premium – The payment, or one of the regular periodic payments that a policy owner makes payable to the Insurer to keep the insurance policy in force.
Premium Deposit Fund (PDF) – A fund wherein a policy owner may place deposits of at least PhP500 on each modal premium payment for the purpose of payment on future premiums. Interest shall be credited to this fund annually on each policy anniversary at a rate not less than the prevailing interest rate, net of tax on savings accounts in banks.
Rating – Pertains to the risk category of the insured.
Reinstatement – The policy may be reinstated at any time within three (3) years from the due date of the premium in default subject to the conditions and approval of the Insurer. Note that the contestable period of a reinstated policy runs anew for the same period after reinstatement.
Rider – A supplementary benefit attached to the principal policy in order to provide additional benefits or coverage.
Self-Liquidating Option (SLQ) – An option made available to policy owners whose policies have accumulated dividends sufficient to pay its future premiums automatically.
Sum Insured – The amount stated on the face of the insurance policy that will be paid in case of death or at maturity. Also known as the “Policy Amount”, sum insured or insurance coverage amount.
Termination – The cancellation of insurance coverage during the policy period.
Term Insurance – Plan of insurance that covers the insured for only a certain period of time (term) not for his entire life.
Trustee – A person who holds legal title to property for the benefit of another person.