Name: Dunan, Wennah P.

Date: October 20, 2022

Program & Year: BSBA FM 1B Semester: 1st Semester
Instructor: John Albert A. Alzate School Year: 2022-2023

Module 1
FOUNDATIONS OF FINANCIAL PLANNING
Summary and Learning Insights

LESSON 1: PERSONAL FINANCE PLANNING IN ACTION

Summary:
What is Personal Finance?
* Personal finance is the study personal and family resources considered important in
achieving financial success. It involves how people spend, save, protect, and invest their
financial resources.
* Financial literacy which is your knowledge of facts, concepts, principles, and
technological tools that are fundamental to being smart money.
* Financial well-being is a state of being wherein a person can fully meet current and
ongoing financial obligations, can feel secure in their financial future, and make choices
that allow them to enjoy life.
* Financially responsible means that you are accountable for your future financial
well-being and that you strive to make good decisions in personal finance.

Rewards of Sound Financial Planning:

1. Improving your standard of living
2. Spending money wisely

ACHIEVING PERSONAL FINANCIAL SUCCESS

1.1 The Five Fundamental Steps in the Financial Planning Process:

1. Evaluate your financial condition relative to your education and career choice;
2. Define your financial goals;
3. Develop a plan of action to achieve your goals;
4. Periodically develop and implement spending plans to monitor and control progress
toward goals; and
5. Review you financial progress and make changes as appropriate.

1.1a You Must Plan for Financial Success and Happiness

* Financial success is the achievement of financial aspirations that are desired, planned,
or attempted.
* Financial security which provided the comfortable feeling that your financial resources
will be adequate to fulfil any needs you have as well as most of your wants.
* Financial happiness encompasses a lot more than just making money. It is the
experience you have when you are satisfied with your money matters.

1.1b You Must Spend Less So You Can Save and Invest More
* consumption (spending on goods and services)
* savings (income not spent on current consumption)
* investments (asset purchased with the goal of providing additional future income from
the asset itself)
* standard of living is what an individual or group earnestly desires and seeks to attained,
include our wants and needs – as well as our comforts and luxuries too.
* level of living refers to the level of wealth, comfort, material goods and necessities one
is currently living.

1.1c What You Will Accomplish Studying Personal Finance

1. Recognize how to manage the unexpected and unplanned financial events.
2. Pay as little as possible in income taxes to the Internal Revenue Services (IRS).
3. Understand how to effectively comparison shop for vehicles and homes.
4. Protect what you own.
5. Invest wisely.
6. Accumulate and protect wealth that you may choose to spend during your non-working
years or donate it.

1.1d Replace Your Obsolete Knowledge

* Obsolete knowledge is that which we believe may have been valid at one time, if it ever
was true in the first place.

DEFINING YOUR FINANCIAL GOALS

* Financial goals are the results that an individual wants to attain. Your financial goals or
preferences must be stated in monetary terms because money, and the satisfaction it can
foster, is an integral part of financial planning.

Types of financial goals

* Long-term goals are those financial goals should indicate wants and desires for a
period covering about 6 years out to the next 30 or 40 years.
* Short-term financial goals are set each year and cover a 12-month period.
* Intermediate-financial goals bridge the gap between short and long term goals,
ranging from 2 to 5 years period of the goals.

How to Tell Where We Are in the Business Cycle?

* Economy is an economic and political system of managing the productive and
employment resources of a country, state, or community.
* Capitalism is a country economy, its trade and industry, are controlled by private owners
who see profit.
An economic cycle typically contains four stages: expansion, recession, depression
and recovery.
* Expansion is the phase of the economic cycle when levels of employment and
production are high and the economy is growing generally accompanied by rising prices
for goods and services.
* Recession is the phase of the economic cycle when levels of employment and
production fall and the growth of the economy slows.
* Depression is the phase of economic cycle when levels of employment and production
are low and economic growth is at virtual standstill or even negative.
* Recovery is the phase of the economic cycle when levels of employment and
production are improving the economy is growing

INFLATION, PRICES AND PLANNING

* Inflation is when the general level of prices increases over time.
* Consumer Price Index (CPI) is based on changes in the cost of consumer goods and
services.
* Inflation is of vital concern to financial planning. It affect not only what we pay for our
goods and services but also what we earn in our jobs.
* Purchasing power is the amount of goods and services each dollar buys at a given
time.

Insights:

These are my thoughts on this lesson: It is very important to grasp personal

finance problems, especially if we are enrolling in a degree connected to
business, as it gives us a great chance of success in dealing with the financial
challenges.

This topic will assist me as a student, increase my financial literacy; it also

enhances my capacity to handle day-to-day financial concerns, helps me avoid
the obstacles, obligations, and possibilities of life;
Making knowledgeable and prudent financial decisions can help me avoid
long-term effects of poor choices.

Additionally, this lesson teaches me how to do or construct a summary of my

personal financial goals, how to compute percentage change and real income,
and helps me make more confident personal financial judgments that make me
more financially responsible. Lastly, this helps me in planning my career well in
the near future.
LESSON 2: FINANCIAL STATEMENTS, TOOLS, AND BUDGET
Summary:
The Role of Financial Statements in Financial Planning
* Personal financial statements are planning tools that provide an up to date evaluation
of your financial well-being, help you identify potential financial problems, and help you
make better informed financial decisions.
* Balance sheet describes your financial position- the assets you hold, less the debt you
owe, equal your net worth (general level of wealth)- at a given point of time.

The Balance Sheet: How much Are you Worth Today?

A balance sheet has three parts that, taken together, summarize your financial picture:
• Asset: What you own
• Liabilities, or debts: What you owe
• Net Worth: The difference between your asset and liabilities

The accounting relationship among these three categories is called the balance sheet
equation and is expressed as follows:
Total Assets = Total liabilities + Net Worth
or Net Worth = Total asset – Total Liabilities

Asset: The thing You Own

* Assets are the items you own.
* Liquid Asset: Low-risk financial assets held in the form of cash or instruments that can
readily be converted to cash with little or no loss in value.
* Investments: Asset acquired to earn a return rather than provide a service.
* Real and personal property: Tangible assets that we use in our everyday lives.
• Real property refers to immovable property: land, and anything fixed to it, such as a
house.
• Personal property is movable property, such as automobiles, recreational equipment,
household furnishings, and similar items.

LIABILITIES: The Money You Owe

* Liabilities represent an individual’s or family’s debts.

Liabilities are generally classified according to maturity:

• Current or short-term liabilities: Any debt currently owed and due within 1 year of the
date of the balance sheet.
• Long-term liabilities: Debt due 1 year or more from the date of the balance sheet.

NET WORTH: A Measure of Your Financial Worth

* Net worth is the amount of actual wealth.

THE INCOME AND EXPENSE STATEMENT: WHAT WE EARN AND WHERE IT GOES
The income and expense statement has three major parts: income, expenses and cash
surplus (or deficit).
• Income: Cash In include earnings received as wages, salaries, self-employment
income, bonuses and commissions; interest and dividends received from savings and
investments; and proceeds from the sale of asset such as stocks and bonds or an auto.
• Expenses: Cash Out represent money used for outlays.
• Cash Surplus (or Deficit) subtracting total expenses from total income gives you the
cash surplus (or deficit) for the period. At a glance, you can see how you did financially
over the period. A positive figure indicates the expenses were less than income, resulting
in a cash surplus. A value of zero indicates that expenses were exactly equal to income for
the period, while a negative value means that your expenses exceeded income and you
have a cash deficit.

TRACKING FINANCIAL PROGRESS: RATIO ANALYSIS

Balance Sheet Ratios:
1. Solvency ratio it measures the degree of exposure to insolvency.
2. Liquidity it measures the ability to pay current debts.
Income and expense Statement Ratios:
3. Savings ratio indicates of cash surplus achieved during a given period.
4. Debt Service ratio provides a measure of the ability to pay debt promptly.

CASH IN AND CASH OUT: PREPARING AND USING BUDGET

* The Budgeting Process
The cash budget preparation process has three stages: (1) estimating income, (2)
estimating expenses and (3) finalizing the cash budget.
* Estimating Income
The first step in preparing your cash budget is to estimate your income for the coming
year. Include all income expected for the year: the take home pay of both spouses,
expected bonuses and commissions, pension or annuity income, and investment income
– interest, dividend, rental and asset sale income.
* Estimating Expenses
The second step in the cash budgeting process is by far the most difficult: preparing
schedules of estimated expenses for the coming year.
* Finalizing the Cash Budget
After estimating the income and expenses, finalize your budget by comparing
projected income to projected expenses.

PERFORM TIME VALUE OF MONEY CALCULATIONS

* The time value of money (TVM) is perhaps the single most important concept in
personal finance.
* TVM is the cost of money that is borrowed or lent and it is commonly referred to as
interest.

Simple Interest. The calculations of interest involves (1) peso amount, called the principal,
(2) the rate of interest earned on the principal, and (3) the amount of time the principal is
invested.

Compound interest. It arises when interest is added to the principal, so that from that
moment on the interest that has been added also itself earns interest.

Calculating Future Values

* Future values (FV) is the valuation of an asset projected to the end of a particular time
period in the future. You can calculate the future value of a lump sum or the future value of
series of deposits. Future Value of a Lump Sum Equation can be used to calculate the
furniture value of a lump sum:
FV = (Present value of sum of money) (𝟏 + i) n
* Present Value (or discounted value) is the current value of an asset (or stream of
assets) that will be received in the future.
* Present Value of a Single Lump Sum is the current worth of an asset to be received in
the future.
* A simple formula for figuring the number of years it takes a double the principal using
compound interest is the Rule of 72. Simply divide the interest rate that the money will
earn into the number 72.

Insights:

This lesson teaches me how to budget my allowance accurately and how to properly save
money and manage my expenditures, which is very helpful now that I'm in college. This
helps me create financial plans, manage my money well, and set attainable goals.

Then, I was just familiar with the terms assets and liabilities. But as of right now, I am
aware of what these phrases represent, how they connect to one another in business, and
how to compute them together with net worth.

This lesson also helps me understand how to create a balanced balance sheet, in which
the entire assets should equal the whole liabilities and net value.

Additionally, I learned how to compute simple interest, compound interest, future value,
and rule of 72.
 Module 2
MANAGING BASIC ASSETS
Summary and Learning Insights

LESSON 1: MANAGING CHECKING AND SAVINGS ACCOUNT

Summary:
* Monetary asset management is the task of maximizing interest earnings and
minimizing fees on all of your funds kept readily available for day-to-day living expenses,
emergencies, and savings and investment opportunities.
* Liquidity refers to the speed and ease with which an asset can be converted to cash.
* Safety means that your funds are free from financial risk.
* The financial services industry comprises companies that provide checking savings,
and money market accounts and possibly credit, insurance, investment, and financial
planning services.
* Depository institutions are financial institutions that are legally allowed to offer
checking and savings accounts to individuals and businesses as well as provide loans.
* Nondepository institutions are financial institutions that offer banking services, but
don’t accept deposits like traditional banks.
* Commercial banks are a type of bank that accepts deposits in checking and savings
accounts and provides transactional services such as accepting deposits, making
business loans, and offering basic investment products.
* Community banks are a type of commercial bank that focuses on providing traditional
banking services in their local communities, where they obtain most of their core deposits
locally and make many of their loans to local businesses.
* Mutual savings banks are a types of thrift institution that also accept deposits and
make housing and consumer loans.
* Savings Institutions (also called thrift institutions) accept deposits and provide
mortgage and personal loans to individuals. They focus less on commercial loans than
banks.
* Online banks are regulated just like any other bank, even those that operate entirely
over the Internet.
* Savings and loan associations (S&Ls) focus primarily on accepting savings and
providing mortgage and consumer loans. They offer checking services through
interest-earning NOW accounts.
* Credit Unions also accept deposits and make loans, and they operate on a not-for-profit
basis.
* PDIC protects your deposits. Philippine Deposit Insurance Corporation or
PDIC is a government instrumentality created in 1963 by virtue of Republic Act 3591 to
insure the deposits of all banks which are entitled to the benefits of insurance. The PDIC
now has the authority to help depositors have quicker access to their insured deposits
should their bank close; resolve problem banks while still open; hasten the liquidation
process for closed banks; and mete out stiffer sanctions and penalties against those who
engage in unsafe and unsound banking practices. The maximum insurance on all of your
single-ownership (individual) accounts (held in your name) is ₱ 500,000 per depositor per
bank. It covers all types of bank deposits in banks whether denominated in local or foreign
currencies.
* Mutual funds are investment companies that raise money by selling shares to the public
and then invest that money in a diversified portfolio of investments.
* Stock brokerage firms are licensed financial institutions that specialize in selling and
buying stocks, bonds, and other investments and providing advice to investors.
* Insurance companies provide property, liability, health, life, and other insurance
products. Many offer monetary asset services, such as money market accounts.

Checking accounts
* A checking account is a deposit account held at a financial institution that performs
transactions that allow for withdrawals and deposits by the account depositor. It
sometimes called a transaction account.
* Demand-deposit accounts are checking accounts that typically pay no interest.
* An interest-bearing checking account is any account upon which you can write check
that pays interest.
* An overdraft, or bounced check, occurs any time once writes a check or uses a debit
card when there are insufficient funds in the account.

Money Market Accounts

* A money market accounts (MMA) is any of a variety of interest-earning accounts that
pays slightly higher interest rates (compared with regular savings accounts), and they
offer some check-writing privileges. MMAs are offered by depository institutions and
others.

Savings Accounts
* Savings accounts or sometimes called a statement savings accounts are deposit
accounts held at a bank or other financial institution that provides principal security and a
modest interest rate.
* Funds on deposit in a savings account are considered time deposits (rather than
demand deposits).
* A money market deposit account (MMDA) is a deposit account that requires a fairly
large initial deposit to open, and it requires a minimum balance to be maintained, checks
must be written for a minimum amount, and it only allows a limited number of checking
transactions per month.
* The Truth in Lending Act or Republic Act No. 3765 which requires the disclosure of
finance charges in connection with extensions of credit in order to protect the depositor
from a lack of awareness of the true cost of credit to the user by assuring a full disclosure
of such cost with a view of preventing the uninformed use of credit to the detriment of the
national economy. This rate, called the annual percentage yield (APY), is a percentage
based on the total interest that would be received for a 365-day period given the
institution’s annual rate of simple interest and frequency of compounding. The more
frequent the compounding, the greater the effective return for the saver.
* A grace period is the time in days during which deposits or withdrawals can be made
and still earn interest from a given day of the interest period.

Certificates of Deposit
* Some time deposits, such as a certificate of deposit, are classified as a fixed-time
deposit.
* A certificate of deposit (CD) is an interest-earning savings instrument purchased for a
fixed period of time, such as 6 months or 1, 2, or even 5 years.
* Variable rate (or adjustable-rate) certificates of deposit pay an interest rate that is
adjusted (up or down) periodically.
* Interest rate risk is the risk that an investment’s value will change due to a change in the
absolute level of interest rates.

Factors influence the rise and fall in interest rates:

• Inflation rate
• Fiscal policy stance
• Intermediation cost

Earning Interest on Your Money

* Interest earned is the reward for putting your money in a savings account or short-term
investment vehicle.

Effective rate of interest formula:

Effective rate of interest = Amount of interest earned during the year / Amount of
money invested or deposited

Compound Interest Equals Future Value

* Compound interest is the same as the future value concept.
• Future Value= Amount deposited x Future value of factor
• Future Value= Amount deposited yearly x Future value annuity factor

Electronic Money Management

* Electronic money management occurs whenever transactions are conducted without
using paper documents.

The types of cards used to access your money include:

1. ATM cards
2. Debit cards
3. Prepaid cards
4. Stored-value cards
5. Credit cards
6. Electronic Benefit Transfer (EBT) cards
Other Bank Services
1. Safe-deposit box – is a rented drawer in a bank’s vault.
2. Trust services – bank trust departments provide investment and estate planning
advice.

Asset Management Accounts

* Asset management account (AMA), or central asset account is a comprehensive
deposit account that combines checking. Investing, and borrowing activities and is offered
primarily by brokerage houses and mutual funds. AMAs appeal to investors because they
can consolidate most of the financial transactions at one institution and on one account
statement.

ESTABLISH OWNERSHIP OF ASSET WISELY

* Accounts can be owned either individually or jointly.
* An individual account has one owner who is solely responsible for the account and its
activity. At the death of the individual owner, the account becomes part of his or her estate
and will go to heirs in accordance with the owner’s will. If desired, individual accounts can
be set up with a payable on death (POD). This is also known as Totten trust designation. A
POD is an arrangement between a bank or credit union whereby upon death of the client
the assets are immediately transferred to the designated beneficiaries. A POD does not
give the person any rights to the account while the owner is still alive
* A joint account has two or more owners, each of whom has legal rights to the funds in
the account. The form of joint ownership discussed here apply to all types of property,
including automobiles and homes, as well as checking and savings accounts.
Three types of joint ownership exist:
1. Joint tenancy with right of survivorship (also called simply joint tenancy) is the most
common form of joint ownership, especially for husbands and wives. In this case, each
person owns the whole of the asset and can dispose of it without the approval of the
other(s). with accounts at financial institutions, the financial institution will honor checks or
withdrawal slips possessing any of the owners’ signatures. An advantage of a joint
account is that in case of death of one of the owners, the property continues to be owned
by the surviving account holder(s).
2. Tenancy in common is a form of joint ownership in which two or more parties own the
asset, but each retains control over a separate piece of the property rights. In most states,
the ownership shares are presumed to be equal unless otherwise specified. When one
owner dies, his or her share in the asset is distributed to his or her heirs according to the
terms of a will (or if no will exists, according to the laws of the country) instead of going to
the other co-owners.
* Tenancy by the entirety is a type of shared ownership of property recognized in most
countries, available only to married couples. Much like in a joint tenancy, spouses who
own property as tenants by the entirety each own an undivided interest in the property,
each has full rights to occupy and use it and has a right of survivorship. Tenants by the
entirety also cannot transfer their interest in the property without the consent of the other
spouse.
Insights:

In this lesson, I am able to identify the different kinds of financial services and
the different kinds of banks. This also helps me analyze the various types of
accounts—what I should choose if I want to start opening an account as a
beginner. I learned what PDIC is and what its role is in the world of banking.

In computations, calculating the effective rate of interest and future value

annuity factor have been added to my knowledge.

Aside from ATM cards, debit cards, and credit cards, which I am familiar with,
there are other types of electronic money management used in banking that I
am unfamiliar with.

Lastly, this lesson helps me establish ownership of assets wisely if I want to

open a new account sooner, whether I should do an individual account or a
joint account.
LESSON 2: INSURANCE: HEALTH & DISABILITY INCOME, HOME & MOTOR
VEHICLES, AND LIFE
Summary:

The Concept of Risk

* In insurance terms, risk is the chance of economic loss. Whenever you and your family
have a financial interest in something – your life, health, home, car, or business – there’s a
risk of financial loss. To protect against such losses, you must employ strategies such as
risk avoidance, risk retention, loss prevention and control, risk transfer, risk
reduction, and risk assumption.
• Risk Avoidance
- The simplest way to deal with risk is to avoid the act that creates it.
• Risk Retention
- You either to retain or accept risk.
• Loss Prevention and Control
- Loss prevention and control should be important parts of all risk management
programs.
• Loss Prevention is any activity that reduces the chance that a loss will occur
(such as driving within the speed limit to lessen the chance of being in a car accident).
• Loss control, in contrast, is any activity that lessens the severity of loss once it
occurs (such as wearing a safety belt or buying a car with air bags).
• Risk Transfer
- Another way to handle risk is to transfer it to an insurance company.
• Risk Reduction
- Reduce risk to an acceptable level.
• Risk Assumption
- Risk assumption involves bearing the risk of loss.
• Risk Management
- Risk management is the process of identifying and evaluating situations involving
pure risk to determine and implement the appropriate means for its management.

Risk management process involves five steps:

Step 1: Identify your risk exposures
Step 2: Estimate Your Risk and Potential Losses
Step 3: Choose How to Handle Your Risk Loss
Step 4: Implement Your Management Plan
Step 5: Evaluate and Adjust Your Program

Insurance
* An insurance policy is a contract between you (the insured) and an insurance company
(the insurer) under which the insurance company agrees to reimburse you for any losses
you suffer according to specified terms.

HEALTH INSURANCE
* The next best thing to good health is a good health insurance plan.
* Health insurance helps you pay both routine and major medical care costs.
* Health insurance coverage can be obtained from (1) private sources and (2)
government-sponsored programs.

Private Health Insurance Plans

* Group health insurance is a contract written between a group (such as an employer,
union, credit union, or other organization) and the health care provided: a private
insurance company or a managed care organization.
* Most private health insurance plans fall into one of two categories: traditional
indemnity (fee-for- service) plans and managed care plans.
1. Traditional Indemnity (Fee-for-Service) Plans – the health care provider is
separate from your insurer.
2. Managed Care Plans – subscribers/users contract with and make monthly payments
directly to the organization that provides the health care service.
a. Health Maintenance Organization (HMO) – is an organization of hospitals,
physicians, and other health care providers that provides comprehensive health care
services to its members.
b. Preferred Provider Organization (PPO) – is a managed care plan that has the
characteristics of both an individual practice association (IPA) and an indemnity plan.

Types of Medical Expense Coverage

1. Hospitalization insurance policy
2. Surgical Expense insurance
3. Physicians expense insurance
4. Major medical insurance plans
5. Comprehensive major medical insurance plan
6. Dental insurance

Insurance companies offer other options that provide limited protection against certain
types of perils:
• Accident policies that pay a specified sum to an insured injured in a certain type of
accident.
• Sickness policies, sometimes called dread disaster policies, that pay a specified sum
for a named
disease, such as cancer.
• Hospital income policies that guarantee a specific daily, weekly, or monthly amount as
long as the insured is hospitalized.

DISABILITY INCOME INSURANCE

* Disability income insurance provides families with weekly or monthly payments to
replace income when the insured is unable to work because of a covered illness, injury, or
disease.
* Security System in the Philippines offer disability benefits but there are some
conditions that should be met before one can avail those benefits.

Disability Income Insurance Provisions and Costs

• Definition of disability
• Benefit Amount and Duration
• Probationary Period
• Waiting Period
• Renewability

HOME INSURANCE
* The homeowner’s policy offers property protection, accompanying structures, and
personal property of homeowners and their families.

Factors Affecting Home Insurance Costs:

• Type of structure
• Location of home
• Other factors

Coverage: What Type, Who, and Where?

• Types of Losses Covered
• Persons Covered
• Locations Covered

Limitations on Payment:
• Replacement Cost
• Deductibles

AUTOMOBILE INSURANCE
Types of Auto Insurance Coverage
* The personal automobile policy (PAP) is a comprehensive automobile insurance
policy designed to be easily understood by the “typical” insurance purchaser. Made up of
six parts, the policy’s first four parts identify the coverage provided.
• Part A: Liability coverage
• Part B: Medical payments coverage
• Part C: Uninsured motorists coverage
• Part D: Coverage for damage to your vehicle
Part E pertains to your duties and responsibilities if you’re involved in an accident, and
Part F defines basic provisions of the policy, including the policy coverage period and the
right of termination.

Part A: Liability Coverage

* Most countries require you to buy at least a minimum amount of liability insurance.
Under the typical PAP, the insurer agrees to:
1. Pay damages for bodily injury and/or property damage for which you are legally
responsible as a result of an automobile accident.
2. Settle or defend any claim or suit asking for such damages.

Part B: Medical Payments Coverage

* Medical payments coverage insured a covered individual for reasonable and
necessary medical expenses incurred within 3 years of an automobile accident in an
amount not to exceed the policy limits.

Part C: Uninsured Motorists Coverage

* Uninsured motorists coverage is available to meet the needs of “innocent” victims of
accidents who are negligently injured by uninsured, underinsured, or hit-and-run
motorists.

Part D: Coverage for Physical Damage to a Vehicle

* This part of the PAP provides coverage for damage to your auto.

Automobile Insurance Premiums

Factors Affecting Premiums
• Rating Territory
• Use of the automobile
• Driver’s personal characteristics
• Type of automobile
• Driving record

LIFE INSURANCE
* Life insurance helps replace lost income if premature death occurs, providing funds so
that your loved ones can keep their home, maintain an acceptable lifestyle, pay for
education, and meet other special needs. Health insurance covers medical costs when
you get sick or become disabled.

Why Buy Life Insurance

* Life insurance planning is an important part of every successful financial plan. Its
primary purpose is to protect your dependents from financial loss in the event of your
untimely death.

Benefits of life insurance

• Financial protection for dependents
• Protection from creditors
• Tax benefits
• Vehicle for savings

What Kind of Policy is Right for You?

The three major types of policies account for 90% to 95% of life insurance sales: term life,
whole life, and universal life.
 1. Term Life Insurance – provides a specified amount of insurance protection for a set
period, is the simplest type of insurance policy.
Types of Term Insurance
a. Straight term – is written for a set number of years during which the amount of
coverage remains unchanged.
b. Decreasing term – the amount of protection decreases over its life.

2. Whole Life Insurance – provides permanent insurance coverage during an

individual’s entire life.
Types of Whole Life Policies
a. Continuous Premium – commonly called straight life, under this policy,
individuals pay a level premium each year until they either fie or exercise a non-forfeiture
right.
b. Limited Payment – covers your entire life but the premium payment is based on
a specified period.
c. Single Premium – is purchased with one cash premium payment at the
inception of the contract, thus buying life insurance coverage for the rest of your life.

3. Universal Life Insurance – is permanent cash-value insurance that combines term

insurance, which provides death benefits, with a tax-sheltered savings/investment
account that pays interest, usually at a competitive money market tests.

Insights:

At first, I didn’t know how does concept of risk relate to this lesson. But as I
read this lesson and comprehend well, I realized that in everything we do and
have— our life, health, business, or even in cars- there’s always a risk of
financial loss accompanied. Thus, it is a great help to study and learn the
concept of risk in order to protect against such losses and employ strategies
such as avoidance, prevention, and etc.

I have learned in this lesson what are the types of insurance should be given or
offered in terms of health, disability income, home , automobile, and especially
life.

Moreover, I also learned how beneficial insurance plans is for us, to protect our
family, assets/property and oursleves from financial risk/losses: Insurance
plans will help us pay for medical emergencies, hospitalisation, contraction of
any illnesses and treatment, and medical care required in the future.