GROUP 4

Life
Insurance
Table of Contents
What is Life Insurance?
a contract between an individual (the policyholder) and
an insurance company, where the insurer agrees to pay a
specified sum of money (the death benefit) to
designated beneficiaries upon the death of the insured
person or other event such as terminal illness, critical
illness or maturity of the policy. In exchange, the
policyholder pays regular premiums to maintain the
policy.
History of Life Insurance
Ancient Rome (100-200 BC): 1762:
Burial clubs formed among Romans to cover The Society for Equitable Assurances on
funeral expenses for members. This is Lives and Survivorships (the Equitable Life)
considered one of the earliest forms of life was established in London, creating more
insurance. structured life insurance policies and
14th Century (Italy and England): actuarial calculations.
Marine insurance evolved, covering 9th Century:
merchant ships and goods. This was an early Life insurance became widely popular in the
precursor to modern life insurance. U.S. with companies like The Pennsylvania
1536: Company for Insurance on Lives and The
The first recorded life insurance policy was Mutual Life Insurance Company of New
issued in London, covering the life of a ship’s York.
captain. Civil War Era:
Late 17th Century (England): Life insurance grew rapidly during the
Life insurance as we know it today began in American Civil War, as people sought
England with the founding of the Amicable financial protection for their families during
Society for a Perpetual Assurance Office in times of uncertainty.
1706, the first life insurance company.
History of Life Insurance
Post-War Period (20th
Century):
Life insurance policies expanded Modern Life Insurance
globally, and companies (21st Century):
introduced new product types Is a global industry offering
such as whole life and universal diverse products, including
life insurance. term, whole, and universal life
Technological policies, supported by advanced
Advancements: digital tools and personalized
The 20th century saw financial planning.
automation, online services, and
improved actuarial science that
transformed the life insurance
industry.
 R.A No. 10607
Insurance Code
Section 181. Life insurance is insurance on
human lives and insurance appertaining
thereto or connected therewith
Every contract or undertaking for the payment of
annuities including contracts for the payment of lump
sums under a retirement program where a life
insurance company manages or acts as a trustee for
such retirement program shall be considered a life
insurance contract for purposes of this Code.
Section 182. An insurance upon life may be made payable on the death
of the person, or on his surviving a specified period, or otherwise
contingently on the continuance or cessation of life.
Every contract or pledge for the payment of endowments or annuities shall be
considered a life insurance contract for purposes of this Code.
In the absence of a judicial guardian, the father, or in the latter’s absence or incapacity,
the mother, of any minor, who is an insured or a beneficiary under a contract of life,
health, or accident insurance, may exercise, in behalf of said minor, any right under the
policy, without necessity of court authority or the giving of a bond, where the interest
of the minor in the particular act involved does not exceed Five hundred thousand
pesos (P500,000.00) or in such reasonable amount as may be determined by the
Commissioner. Such right may include, but shall not be limited to, obtaining a policy
loan, surrendering the policy, receiving the proceeds of the Policy, and giving the
minor’s consent to any transaction on the policy.
 In the absence or in case of the incapacity of the father or mother, the grandparent, the
eldest brother or sister at least eighteen (18) years of age, or any relative who has actual
custody of the minor insured or beneficiary, shall act as a guardian without need of a court
order or judicial appointment as such guardian, as long as such person is not otherwise
disqualified or incapacitated. Payment made by the insurer pursuant to this section shall
relieve such insurer of any liability under the contract.
Section 183. The insurer in a life insurance contract shall be liable in case of suicide only when
it is committed after the policy has been in force for a period of two (2) years from the date of
its issue or of its last reinstatement, unless the policy provides a shorter period: Provided,
however, That suicide committed in the state of insanity shall be compensable regardless of
the date of commission.
Section 184. A policy of insurance upon life or health may pass by transfer, will or succession
to any person, whether he has an insurable interest or not, and such person may recover upon
it whatever the insured might have recovered.
Section 185. Notice to an insurer of a transfer or bequest thereof is not
necessary to preserve the validity of a policy of insurance upon life or
health, unless thereby expressly required.

Section 186. Unless the interest of a person insured is susceptible of

exact pecuniary measurement, the measure of indemnity under a policy
of insurance upon life or health is the sum fixed in the policy
1. Term Life Insurance
Provides coverage for a specific period, such as 10, 20,
or 30 years.
Pays out a death benefit if the insured passes away
during the term.
Typically has lower premiums compared to
permanent policies.
No cash value or savings component.

2. Permanent Life Insurance

Provides coverage for the insured's entire life, as
long as premiums are paid.
Includes a cash value component that grows over
time and can be borrowed against or withdrawn.
Premiums are generally higher but remain level
throughout the policyholder's life.
Types of Term Insurance
INCREASING TERM INSURANCE
The death benefit increases over time, often to keep up with inflation or rising financial
obligations.
Premiums may also increase as the coverage grows.
Useful for those wanting to ensure more protection in the future without purchasing additional
policies.
DECREASING TERM INSURANCE
The death benefit decreases over time, usually in line with a loan or mortgage.
Premiums typically remain level, but the coverage amount reduces.
Often used to cover debts that decrease over time, like a mortgage.

CONVERTIBLE TERM INSURANCE

Allows the policyholder to convert the term policy into a permanent life insurance policy (such
as whole or universal life) without undergoing a medical exam.
Conversion must occur within a specified period, usually before the end of the term.
Types of Term Insurance
LEVEL TERM INSURANCE
The most common form of term life insurance.
Provides coverage for a specific period, usually 10, 20, or 30 years.
The death benefit and premiums remain the same throughout the term

RENEWABLE TERM INSURANCE

Offers the option to renew the policy at the end of the term without a medical exam.
However, premiums typically increase with each renewal based on the policyholder’s age at the
time of renewal.

GROUP TERM INSURANCE

Often offered by employers or organizations as part of a benefits package.
Usually provides coverage at a lower cost because it insures a group of people under a single
policy.
The coverage is often limited and may not be portable if the individual leaves the organization.
Types of Permanent Life Insurance
WHOLE LIFE INSURANCE
Covers the where the premium and death benefit generally remain the same each year. It includes a cash value
component, which is similar to a savings account.
Cash-value life insurance allows the policyholder to use the cash value for many purposes, such as to take out
loans or to pay policy premiums.policyholder for their entire life.
It guarantees a death benefit payout to beneficiaries whenever the insured person passes away.

UNIVERSAL LIFE INSURANCE

With a cash value component that earns interest. Universal life features flexible premiums.
Unlike term and whole life, premiums can be adjusted over time.
Also lets the policyowner choose between level death benefit or increasing death benefit options.
INDEXED UNIVERSAL LIFE
type of universal life insurance that lets the policyholder earn a fixed or equity-indexed rate of return on the
cash value component.

VARIABLE LIFE INSURANCE

allows the policyholder to invest the policy’s cash value in an available separate account. It also has flexible
premiums and can be designed with a level or increasing death benefit.
 ensures that your family and dependents are financially supported after your death. It can cover living
Protection expenses, debts, education costs, and other financial needs, helping them maintain their standard of living.

to pay off personal debts, such as mortgages, loans, or credit card balances, preventing your loved
Debt Repayment ones from being burdened with your financial obligations.

If you are a primary earner, life insurance can replace your income,
Income Continuation ensuring your family can maintain their lifestyle and financial goals.

It can cover funeral and burial costs, which can be quite high, sparing your
Funeral Expenses family from financial stress during an emotionally difficult time.

Legacy Planning helping to ensure that wealth is passed on efficiently to your heirs and
that any estate taxes are covered.
 AGE
Younger individuals typically pay lower
premiums because they are considered less risky
to insure.

GENDER
Statistically, women tend to live longer than
men, so they often pay lower premiums.
SMOKING
Smoking puts you at a higher risk for many
health problems. So, life insurance companies
charge more to insure smokers

HEALTH
Pre-existing health conditions or a history of
serious illnesses may increase premiums.

LIFESTYLE
Risky behaviors like smoking, excessive drinking,
or dangerous hobbies can raise premiums.
MEDICAL HISTORY
A family history of certain hereditary diseases
can affect your premiums.

DRIVING RECORD
Many life insurance companies will look at your
driving record during the underwriting process.
Whether or not they ask about violations on the
application, they can access your Department of
Motor Vehicles records to find out if you have
any concerning violations.
 Determine How Much You Prepare your Application Compare your Policy
Need Quotes
Applications generally require personal and family You can gather multiple life insurance quotes
Determine why you need life insurance. medical history and beneficiary information. You from different providers based on your research.
Common reasons include income may need to take a medical exam and will need to Prices can differ markedly from company to
replacement, covering debts, supporting disclose any preexisting medical conditions, history company, so it's important to make the effort to
dependents, or paying for funeral expenses. of moving violations, and any dangerous hobbies find the best combination of policy, company
rating, and premium cost.
Benefits of Life Insurance

You can receive tax-free payouts from Life insurance doesn’t only offer death
your insurance company. Because life benefit but also coverage for a critical or
insurance payouts are not considered chronic illness. This is possible if the
income, the lump sum your insurance company you choose offers riders,
beneficiaries receive won't be taxed as most of them do. the insurance company
will give you a lump sum benefit if you're
by the government. diagnosed with a covered critical illness.
You can then use this money to cover your
medical expenses or make sure that your
loved ones are financially taken care of.
 Benefits of Life Insurance

Fortunately, with a life insurance plan, you Investing in a life insurance policy can
don't have to worry too much about the provide your family with economic benefits.
expenses you will incur while hospitalized. This In the event of your untimely death, your
is because most life insurance policies include a loved ones will receive a lump sum benefit
hospitalization benefit rider that will give you that they can use to cover their living
a certain amount of money for each day you're expenses, such as the mortgage, utility bills,
confined in the hospital, up to a maximum groceries, and other daily needs. This
limit. You can also use the payout from this benefit can help your family maintain their
rider to cover your hospital bills, medication, quality of life even when you're no longer
and other related expenses. around.
 Benefits of Life Insurance

Fortunately, with a life insurance policy, you can A life insurance policy is not only for protecting
leave your loved ones with a death benefit that your loved ones in case of death. You can also
they can use to cover your funeral and burial use it to ensure you can live a comfortable life
during your golden years.
expenses when you pass away. This way, you can
Aside from providing you with coverage, some
make sure that your final send-off will be taken
life insurance policies allow you to accumulate
care of, and your loved ones won't have to cash value over the years. You can then
shoulder the financial burden of your death or withdraw this cash value to pay for your
take out loans. expenses once you've retired. However,
remember that any withdrawals you make may
affect your death benefit amount.
 Those with preexisting medical
conditions
Parents with Minor Children Seniors who want to leave money to
Adult Children who provide their care
Parents with Special-Needs Adult
Young adults whose parents incurred
Children
private student loan debt or cosigned
Adults who Own Property Together a loan for them.
Children or young adults who want to Stay-at-home spouses
lock in low rates
Families who can’t afford burial and
Wealthy families who expect to owe
funeral expenses.
estate taxes.
Businesses with key employees. Married pensioners.
What to Do Before Buying
Life Insurance?
Research Policy Options and Company Review
Understand the Types of Life Insurance Consult an Insurance Agent
Available or Financial Advisor
Evaluate Your Needs and Budget Ask About the Claims Process
Research Insurance Providers
Check Company Reviews and Ratings
Compare Policy Benefits, Premiums,
By taking these steps, you can make an
and Fees informed decision that aligns with your
financial planning goals and provides
dependable coverage for you and your family
What to Do Before Buying
Life Insurance?
Consider How Much Death Benefit You Need
Income Replacement Assets and Other Sources of
Outstanding Debts and Liabilities Income
Education and Major Life Events
Emergency and Health Expenses
Final Expenses
Inflation and Future Cost of Living
Consulting with an insurance agent or financial
advisor is highly recommended. They can help
you assess your specific needs and provide
calculations based on factors unique to you
and your family’s situation.
What to Do Before Buying
Life Insurance?
Know Why You're Buying Life Insurance
Financial Security for Family Health and Medical Emergency
Debt Coverage Protection
Education Planning for Children Affordability and Accessibility of
Income Replacement Premiums
Inheritance or Estate Planning
Long-Term Investment and Savings Goals
By clearly identifying why you’re buying life
insurance, you can better tailor your policy to
meet your specific needs, offering peace of
mind for both you and your loved ones.
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 Types of Insurance Claims
Death Claim: This is the most common type and is filed upon the insured’s death. The
beneficiaries receive a lump-sum payment known as the death benefit.
Maturity Claim: For endowment policies, this claim is made when the policy reaches its maturity
date, allowing the policyholder to receive the insured amount if they are still alive.
Living Benefits Claim: Includes disability and critical illness claims, where the insured can access
benefits while alive due to certain conditions covered by riders.
Steps to File a Life Insurance Claim
Notify the Insurance Provider: Inform the Prepare Documentation: Essential documents include:
insurance company as soon as possible after Original insurance policy document.
the insured event (such as death or Claim form provided by the insurance company.
maturity). Death certificate (for death claims).
Proof of identity of both the claimant and the
insured.
Medical records (if applicable).
Steps to File a Life Insurance Claim
Submit the Claim: Submit the Wait for Processing: The insurance
completed claim form and provider will review the claim, which
required documents to the may take up to 30-60 days for
processing. Certain cases, such as death
insurer’s office or through online
due to accidents, may involve more
portals if available. scrutiny and verification.
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