CMFAS M9 Life Insurance And Investment Linked Policies

Transcription

1 CMFAS M9 Life Insurance And Investment Linked Policies Module Description: The objectives of this module are to provide candidates with the knowledge on and understanding of traditional life insurance products; investment linked policies; annuities; the various types of riders; the sales and underwriting processes; after sales service; as well as the impact of law and taxation on life insurance. Syllabus: Understand the concepts, characteristics and types of risk, as well as the uses of life insurance. Chapter 1 Risks And Insurance 1. Risks And Insurance Avoiding Risk Controlling Risk Accepting Risk Transferring Risk 2 Characteristics Of Insurable Risks The Loss Must Occur By Chance The Loss Must Be Definite The Loss Must Be Significant The Loss Rate Must Be Predictable The Loss Must Not Be Catastrophic To The Insurer 3 Types Of Personal Risks That Can Be Insured Risk Of Premature Death Risk Of Outliving Resources Risk Of Poor Health 4 What Is Life Insurance? 5 Uses Of Life Insurance Financial Protection Against Premature Death Financial Protection Against Outliving Resources Financial Protection Against Ill Health Other Uses Of Life Insurance By Individuals Business Uses Of Life Insurance Understand the basic life insurance principles, such as law of large numbers, utmost good faith and insurable interest. Chapter 2 Understand the Basic Life Insurance Principles 1. Law Of Large Numbers 2. Principle Of Utmost Good Faith And Life Insurance Contracts What Are Material Facts? Breach Of Utmost Good Faith Contractual Duty Of Utmost Good Faith 3. Insurable Interest When Must Insurable Interest Exist? Contract Of Indemnity And Valued Contract Classes Of Relationship In Which Insurable Interest Need Not Be Proven Trustees & Beneficiaries As Applicants Of Life Insurance Policies Summary Of Insurable Interest Requirement Classes Of Relationship Where Insurable Interest Need To Be Proven CMFAS M9 Updated as at 11 May

2 Understand the financial markets, types investments and the concepts of risk and return. Chapter 3 Understand the Financial Markets And Investments 1. Introduction 2. Financial Markets Classification Of Financial Markets 3. Types Of Investments Money Market Securities Fixed Income Securities Equity Investments Unit Trusts Life Insurance Annuities Property 4. Relationship Between Risk And Return Measures Of Return Measure Of Risk Required Rate Of Return Understand the factors that affect life insurance premium. Chapter 4 Setting Life Insurance Premium 1. Pricing Considerations Mortality And Morbidity Rates Investment Income Expenses Gender Smoking Status Sum Assured Frequency Of Premium Payments PART 2 BENEFIT DESIGN Understand the different ways to classification of life insurance products. Chapter 5 Classification Of Life Insurance Products 1. Ways Of Classifying Life Insurance Products 2. Classification By Statutory Insurance Fund Non Participating Policies Participating Policies Investment Linked Life Insurance Policies 3. Classification By Product Type 4. Classification By Premium Type Single Premium Policy Recurring Single Premium Policy Regular Premium Policy Yearly Renewable Premium Policy Limited Payment Policy 5. Classification By Ownership Single Life Policy Joint Life Policy CMFAS M9 Updated as at 11 May

3 Third Party (Life Of Another) Policy Group Policy Understand how non participating insurance products works and list the various types of non participating products and its benefits. Chapter 6 Non Participating Insurance Products 1. What Is Meant By Non Participating Insurance? Cash Value 2. How Do Non Participating Insurance Products Work? Policies That Do Not Acquire Cash Value Policies That Acquire Cash Value 3. Types Of Non Participating Products Whole Life Insurance Endowment Insurance Term Insurance Riders 4. Frequency Of Premium Payment 5. Benefits And Limitations Of Non Participating Policies Understand how participating insurance products works and list the various types of participating products and its benefits. Chapter 7 Participating Insurance Products 1. What Is Meant By Participating Insurance? 2. How Do Participating Insurance Products Work? Methods Of Bonus Distribution Death, Surrender And Paid Up Values Determination Of Bonuses 3. Types Of Participating Policies Whole Life Insurance Endowment Insurance 4. Frequency Of Premium Payment 5. Benefits And Limitations Of Participating Insurance Products 6. Internal Governance Policy On Participating Fund Management Enhancements In Disclosure Standards Internal Governance Policy On Management Of Participating Fund Understand how annuities works and list the various types of annuities. Chapter 8 Annuities 1. What Are Annuities? 2. How Do Annuities Work? 3. Types Of Annuities Immediate Annuities Deferred Annuities 4. Variations Of Annuities Policies Distribution Of Benefits Bonus Entitlement Number Of Lives Covered Increasing Rate Annuity CMFAS M9 Updated as at 11 May

4 Benefits And Limitations Of Annuities Understand the characteristics and types of group life insurance. Chapter 9 Group Life Insurance 1. Characteristics Of Group Life Insurance 2. Types Of Group Life Insurance Group Term Life Insurance Introduction to the purposes and types of investment linked insurance products, as well as to highlight the differences between investment linked life insurance products and traditional life insurance plans. Chapter 10 Introduction, Purposes And Types Of Investment Linked Insurance Products 1. Introduction 2. Definition 3. Purpose Of Investment Linked Products Investment Savings Protection 4. Types Of Investment Linked Products By Frequency Of Premium Payment By Product Feature 5. Differences Between Investment Linked Life Insurance Products And Traditional Life Insurance Plans Bonus Risk Disclosure Investment Mix Understand and define the features of investment linked insurance products, as well as the type of charges. Chapter 11 Definitions, Features And Charges Of Investment Linked Insurance Products 1. Definitions Offer Price Bid Price Bid Offer Spread Single Pricing Premium Allocation Reduced Allocation Period Front End / Back End Loading Single / Different Accounts Forward Pricing Deduction Of Units 2. Features Of Investment Linked Insurance Products Protection Top Ups Fund Switch CMFAS M9 Updated as at 11 May

5 Partial / Full Surrender Premium Holiday Riders 3. Types Of Charges Initial Sales Charge Or Bid Offer Spread Fund Management Fee Benefit / Insurance Charges Policy Fees Administrative Charges Surrender Charges Premium Holiday Charges Fund Switching Charges Understand how Single Premium and Regular Premium Investment Linked Insurance Products work? Chapter 12 How Do Investment Linked Insurance Products Work? 1. Interpreting The Time Line 2. How Do Single Premium Investment Linked Insurance Products Work? Calculation Of Policy Value For A Single Premium Plan Possible Variations 3. How Do Regular Premium Investment Linked Insurance Products Work? Other Charges Application Of Premiums, Deduction Of Policy Fees And Administrative Fees And Mortality Charges Characteristics Of Regular Premium Investment Linked Whole Life Policies Understand the structure and types of investment linked funds. Chapter 13 Investment Linked Funds 1. Structures Of Investment Linked Funds 2. Definitions Of Investment Linked Funds 3. Types Of Investment Linked Funds 4. Investment Strategy Or Policy 5. Switching Understand the benefits and risks of investment linked insurance products. Chapter 14 Benefits And Risks Of Investment Linked Insurance Products 1. Benefits Of Investing In Investment Linked Policies Pooling Or Diversification Flexibility Dollar Cost Averaging Professional Management Affordability Ease Of Administration 2. Risks Of Investing In Investment Linked Policies 3. Comparison With Unit Trusts CMFAS M9 Updated as at 11 May

6 PART 3 DISCLOSURE AND SALES PROCESS Understand the need to have reasonable basis for recommendation to client. Chapter 15 Establish Client s Needs 1. Establish Client s Needs The Need To Have Reasonable Basis For Recommendation Sale And Marketing Of Listed And Unlisted Investment Products 2. Consideration For Life Insurance Does The Client Have A Liquidity Need? What Life Stage Is The Client At? What Is The Client s Occupation And Employment Status? What Is The Client s Objective As Stated In The Fact Find Form? What Is The Client s Risk Profile? Does The Client Have Any Existing Life Insurance Policies? What Assets And Liabilities Does The Client Have? Whose Life Should The Policy Be Issued On? Should The Policy Be Issued On An Individual Or Joint Life Basis? Should Any Riders Be Attached To The Policy? Is The Need On A Decreasing Term, Long Term Or Short Term Basis? Should The Client Pay For The Policy Using Cash Or Purchase It Through The CPF Investment Schemes (CPFIS) Or The Supplementary Retirement Scheme (SRS)? 3. Consideration For Annuities Does The Client Need The Benefit Payment To Start Immediately? Can The Client Pay His Premium In A Lump Sum? Determining The Payout Options Single Life Or Joint Life Policies? Participating Or Non Participating? Use Cash Or Purchase Through CPF Or SRS? Fixed Or Variable Annuity? Increasing Rate Or Fixed Rate Annuity? Understand the importance disclosure requirements. Chapter 16 Disclosure Requirements 1. Introduction 2. LIA Disclosure Guidelines 3. Your Guide To Life Insurance 4. Product Summary 5. Benefit Illustration Information To Be Included In The Benefit Illustrations Of The Different Life Insurance Products 6. Proposal Form 7. Policy Contract 8. Enhanced Disclosures On Participating Fund Business Your Guide To Participating Policies Revised Product Summary Revised Benefit Illustration Main Changes To Post Sales Disclosure Materials Annual Bonus Update CMFAS M9 Updated as at 11 May

7 PART 4 NEW BUSINESS AND UNDERWRITING Understand the importance of application form and basic principles of underwriting. Chapter 17 Application And Underwriting 1. Life Insurance Application Form Purposes And Importance Of The Insurance Application Form Correcting Applications 2. Basic Principles Of Underwriting Purpose Of Underwriting Factors That Affect The Risk 3. Medical And Non Medical Applications 4. Other Sources Of Underwriting Information Attending Physician s Report (APR) Specialist s Medical Tests Agent s Report Questionnaires 5. Underwriting Decision 6. Commencement Of Risk 7. Effecting The Annuity 8. General Underwriting Principles For Group Life Insurance Reason For Existence Group Stability Group Size The Nature Of The Group s Business Employee Classes Level Of Participation Age And Gender Within The Group Expected Persistency Previous Claims Experience PART 5 POLICY SERVICES AND CLAIMS Understand the concepts of premium payments, receipts and notice. Chapter 18 Premium Payments 1. Premium Payments Frequency Of Premium Payment Methods Of Premium Payment 2. Premium Receipt Conditional Receipt Binding Or Interim Receipt Official Receipt 3. Premium Notice 4. How Representatives Of Financial Advisers Can Help Their Clients Understand the types policy transactions such as alterations, duplicate policy, assignment of policy, policy loan and withdrawing cash bonous. Chapter 19 Policy Transactions 1. Why Are Policy Alterations Necessary? 2. Types Of Alteration CMFAS M9 Updated as at 11 May

8 Change Of Address Change Of Name Change In Frequency Of Premium Payment Reduction In Sum Assured Increase In Sum Assured Change In Type Of Policy Change In Term Of Insurance Removal Of Extra Premiums Extra Benefits (Riders) Change Of Insurance Nominees Or Beneficiaries 3. Duplicate Policy Conditions To Be Satisfied Before The Issuance Of A Duplicate Policy Requirements For The Issuance Of A Duplicate Policy 4. Assignment Of Policy What Is An Assignment? Types Of Assignment Statutory Provisions On Assignment Of Policy 5. Policy Loans Requirements For Application Of Policy Loans Implications On Policy Owners 6. Withdrawing Cash Bonus Requirements For Application Of Withdrawing Cash Bonus Implications On Policy Owners Understand the concepts of policy lapses and reinstatement of lapsed policies, as well as surrendering of policies and it s alternative. Chapter 20 Policy Lapses And Surrenders 1. Lapsing Of Policies Loss On Lapsation 2. Reinstatement Of Lapsed Policies Health Evidence Effects Of Reinstatement Of Policy 3. Surrendering Of Policy What Is Cash / Surrender Value? Why Is Cash Value Always Lower Than The Reserve For Non Investment linked Policies? 4. Alternatives To Surrendering Of Policies Documents Required For The Surrendering Of Policies Understand the concepts of various claims. Chapter 21 Claims 1. Death Claims Proof Of Death Proof Of Age Proof Of Title 2. Joint Ownership Types Of Joint Ownership 3. Claims Settlement Payment Of Claims Without Probate CMFAS M9 Updated as at 11 May

9 4. Total And Permanent Disability Claims 5. Maturity Claims Documents Required For The Settlement Of Maturity Claims 6 Critical Illness Rider Claims 7. Hospital Cash (Income) Rider Claims 8. Accidental Death Benefit Rider Claims 9. Accidental Death And Dismemberment Benefit Rider Claims 10 Settlement Options 11. Annuity Payout And Claims Procedure Annuity Payout Procedure Claims Procedure PART 6 LAW AND TAXATION AFFECTING LIFE INSURANCE Understand the elements in a life insurance contract. Chapter 22 Law Of Contract 1. What Is A Contract? 2. Elements Of A Valid Contract Intention To Create Legal Relationship Offer And Acceptance Consideration Capacity To Contract 3. Waiver And Estoppel 4. Life Insurance Contract The Policy Owner s Rights Heading And Operative Clause Policy Schedule General Provisions Endorsements 5. Common Contract Provisions In An Annuity Benefit Provision Death Benefit Provision Surrender Provision Free look Provision Understand the concepts of Law of Agency. Chapter 23 Law Of Agency 1. Agency, Agents And Principals 2. Creation Of An Agency 3. Duties Of An Agent 4. Agents Authority Actual Or Express Authority Implied Authority Usual Authority Apparent Or Ostensible Authority 5. Acts Outside Authority 6. Ratification Of A Contract Effects Of Ratification 7. Rights Of An Agent CMFAS M9 Updated as at 11 May

10 Remuneration Indemnity 8. Termination Of Agency 9. Role Of Agents In Claims Settlement Identify the tax assessable and chargeable income, as well as the personal reliefs and deductions. Chapter 24 Income Tax And Life Insurance 1. What Is Taxable? 2. Assessable Income And Chargeable Income Assessable Income Chargeable Income 3. Personal Reliefs And Deductions Earned Income Relief NSman (Self / Wife / Parent) Relief Spouse / Handicapped Spouse Relief Qualifying / Handicapped Child Relief Working Mother s Child Relief Handicapped Brother / Sister Relief Parent / Handicapped Parent Relief Grandparents Caregiver Relief Life Insurance Relief CPF / Provident Fund Relief For Employees Voluntary Contributions To CPF / Medisave Relief For Self Employed CPF Cash Top Up Relief Course Fees Relief Foreign Maid Levy Relief Supplementary Retirement Scheme (SRS) Relief 4. Income Tax Rates 5. Rebates 6. Who Will Benefit From Income Tax Relief By Taking Up An Insurance Policy? 7. Tax Benefit For SRS Participants On Withdrawal 8. Estate Duty Understanding the Nomination of insurance nominees, wills and trust. Chapter 25 Insurance Nominees, Wills And Trust 1. Nomination Of Insurance Nominees Introduction Application Of Insurance Nomination Law To Various Types Of Policies Trust Nomination Revocable Nomination Application To Other Types Of Policies 2. The Will Purpose Of A Will Who Can Make A Will? Grant Of Probate Who Is An Executor? What Happens If A Person Passes Away Without A Will? 3. What Is A Trust? CMFAS M9 Updated as at 11 May

11 How Can A Trust Be Created? 4. Policies Issued (Before 1 September 2009) Under Section 73 Of The Conveyancing And Law Of Property Act (CLPA) Of Singapore (Cap. 61) Purposes Of A Section 73 Policy Under CLPA How Can A Section 73 (Trust Policy) Be Created? Implications Of Having A Policy Under Section 73 Of CLPA CMFAS M9 Updated as at 11 May