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IC Circular Letter 2015 - 20
IC Circular Letter 2015 - 20
Department of Finance
INSURAI\CE COMMISSION
I
Manila
2a15-2C
27 AprU
None
zt'I,
CIRCULAR LETTER
TO
SUBJECT
As used herein, and unless the context otherwise requires, the following terms
have the respective meanings hereinafier set forth or indicated:
c)
Fund.- The type of underlying investment chosen by the VUL policyholder upon
which the separate investment accounts are placed, and may include a Bond
Fund, Equity Fund, Money Market Fund, Balanced Fund, or such other
lnsurance Commission-approved Funds.
Head OIIice: P.O. Box 3J89 Manila FAX No.522-14-34 Tel. Nos. 523.84-61 to 70 Wcbsite: *r*'rv.insurancc.gov.ph
Variable Life or Variable Unit-Linked (VUL) lnsurance Contractor Policy.Any insurance policy or contract on either a group or on an individual basis
issued by an insurance company providing for benefits or other contractual
payments or values there under to vary so as to reflect investment results of
any segregated portfolio of investments or of a designated separate account in
which amounts received in connection with such contracts shall have been
placed and accounted for separately and apart from other investments and
accounts. This contract may also provide benefits or values incidental thereto
payable in fixed or variable amounts, or both. lt shall not be deemed to be a
security or securities as defined in The Securities Act, as amended, or in the
lnvestment Company Act, as amended, nor subject to regulations under said
Acts.
b) Role
c)
an
exception, bank employees who have been specifically trained and qualified by
lhe insurance company to make presentation of its insurance products and
discuss the financial needs of the bank clients, may preliminarily present and
discuss product features of insurance products with bank clients as part of
his/her tasks of presenting product option,to bank clients. Bank empioyees
should be duly certified as having undergone such training. The lnsurance
commission shall prescribe and approve such training pr-ograms for bank
bank
i.
ii.
iii.
company;
v.
and such other activities thal may be required to obtain the clients' consent to
employees may not conclude any contract and must refer such conclusion to
the insurance agent. The conclusion of a contract shall refer to any agreement
or the amount of investment or premium to be paid.
who sell insurance products and bank employees. Bank employees authorized
to market and/or sell insurance products shall be clearly identified.
g) Distinct Areas.-
to
Sections 3751 and 3772 of the Amended lnsurance Code, Bancassurance
Arrangements or Agreements entered into by and behveen the insurance
company and the bank shall be submitted to the lnsurance Commission for its
conduct
authorized
approval. The contracting parties shall
Bancassurance activities only upon the review and approval by the lnsurance
Commission of the Bancassurance Arrangements or Agreements.
be
to
b) Mandatory provisions
of
i)
That the insurance company must comply with all requirements of the
lnsurance Commission regarding bancassurance activities;
ii) That a mechanism will be in place to address any complaints that may
arise from bancassurance transactions;
iii) That aread within the bank premises where bancassurance activities are
conducted must be distinct and clearly marked to differentiate them from
areas where bank products are being sold;
Section 375. x x x No insurance company shall enter into a bancassurance arrangement unless tt
possesses all the requirements as may be prescrrbed by the Commissioner x x x.
2 Section 377. The
Commissioner x x x shall promulgate rules and regulations to effectively supervtse
the business of bancassurance.
provisions shall not be divulged to other persons other than the concerned
officers of the lnsurance Commission.
to address any and all complaints that may arise from the conduct of
Bancassurance or cross-selling activities. The role of insurance companies
and bank personnel in addressing all queries and resolving problems, claims
and other concerns of the insuring public should likewise be clearly provided
therein.
a) PromotionalMaterials.- Brochures,
i)
ii) No actual
iv) Any and all insurance products offered or cross-sold in bank premises
by duly licensed persons shall always bear the prior approval of the
lnsurance Commissioner.
vi)
products,
the
authorized
representatives of the concerned insurance company must consider the
bank client's financial objectives, financial condition and protection
needs. The personal and financial inlerests of the insurance company
representative must always be secondary to that of the client's interests.
vii) lnsofar
c) Violation
of
remain valid and binding upon the parties thereto, unless clearly in conflict with
this Circular, and other rules 'and regulalions issued by the lnsurance
Commission at the Bangko Sentral ng Pilipinas.
a) Product Highlight Sheet.- All potential clients shall be provided with a Product
Highlight Sheet (PHS) that summarizes the key information of the Variable Life
lnsurance product which will be material to the proper understanding by the
client of the product, its features and the risks the client is exposed to. The PHS
should at least be a separate document but shall be deemed to form part of the
product proposal and the policy contract.
Among the kef questions that must be covered in the PHS are:
i)
What are you investing in and who are you investing with?
ii) What are the key risks of this investment?
iii) What are the fees and charges for this investment?
iv) How often the valuations of the product are made available?
v) How can you exit from this investment and what are the risks and
costs in doing so?
vi) How do you contact us?
vii)What other important information should you know before you
invest?
Copies of the sample PHS and the Definitions of Risks page are provided in
ANNEXES A and A-1, respectively.
(CSA), Client
Profile Questionnaire (CPO) or Risk Profile Questionnaire (RPa) for each client
shall be undertaken prior to the acquisition of a variable life insurance contract.
The CSA/CPQ/RPQ should determine the client's understanding of, tolerance
for and capacity in managing various risks.
description of the funds together with the client's signature. The fund allocation
indicated in the IPS may be different from the risk profile of the client as shown
in the CSA/CPQ/RPQ as long as the client's signature is affixed.
'Ihis
licensed
. Make sure you fully
representative of (name of insurance
understand this product before you purchase or invest in it. Should
you need furlher information, please contact the lnsurancei
Commission or (name of insurance co
numbed."
com
This Disclosure Statement shall be placed in the front cover of any material
used within bank premises for tlre purposes of cross-selling VUL policies. The
text should be in bold print with a minimum font size of 12. The insurance
company may prescribe an alternate wording to the above disclosure statement
as long as it is consistent with the above-quoted statements, and subject to the
review and approval of the lnsurance Commission.
b) contents of the summary Report.- The summary Report shall indicate the
following:
i)
ii)
The names of the bank personnel and the authorized representatives of the
insurance company who are engaged in the presentation and selling of
insurance products therein ;
iii) The list of all complaints and claims filed at the concerned bank and its
branches relative to the conduct of the Bancassurance activities
contemplated herein;
iv) The names of the complainants and the nature of their claims;
v) The actions taken by the concerned insurance company, shall also be
stated in the said list.
This Circular Letter shall take effect immediately. All existing Bancassurance
Arrangements or Agreements must comply with the provisions of this issuance.
All concerned should be'guided accordingly.
EMMAN
lnsura
F.
Comm rssroner
,fr\
10
Irl
r?
PRODUCT HIGHLIGHTS
TIT.TTIIE
Co
Page/s
No'twithstanding ine investment aspect forming an integral part thereof, this VUL
policy remains essentially to be an insurance product.
Pursuant to the provisions of the R.A. No. 10607 (the lnsurance Code, as amended),
<Da4e-sfJn$,urance_CompgDP is under the supervision and regulation of the
tnr]@Allinsurancepolicies,includinganyrider,clause,
product,thepolicyholdermustunderstandand
realize that the product is subject to certain risks, such as, but not limited to
investment, credit, currencyr interest rate, liquidity, mark-to-market,
regulatory, and taxation risks which could affect the account or fund value of the
whole VUL policy.
The insurance iompany is guided by the investment policies approved by the lC,
inclqding the lC-issueO "OuiOetines on Variable Life lnsurance Contracts". The
supervis-ion and regulation by the lC, however, does not guarantee the investment
returns nor protection of the VUL policy against capital loss.
ffiESSMENT
of the Product
The performance of the investment funds associated with this insurance product
>.
valued every <Drovide frequencv of fu
is
Net Asset Values Per Unit (NAVPUs) are published in <provide name of
every <provide.
hpadsLe* or wehsite where= PUs
t4quengp
51
The VUL policy can be sunendered at the discietion of the policyholder which will
result to the termination of the said VUL policy.
Please be notified, however, that corresponding surrender charges may be applied,
on'the policv vear when the surrender transaction occurs.
The VUL policy may also terminate in the event that the available Fund values are
no longer sufficienf to cover for the applicable policy charges. Depending on the
provisi6ns contained in the VUL policy, the policyholder may reinstate the same
wltt',in g years, provided that the poticy's fund value has not been fully withdrawn, the
reinstatement documents have been submitted, and the necessary charges are fully
paid,.including such other requirements as may be provided in the insurance policy'
ffiATtoN
<NaasdW
ailii-asEffind
AND
coNTAa, oElAlLS
is a life insurance product and not a depqsit product. Earningsthe principal amount of investment may be exposed to risk of
loss.
For an informed and conscientious purchase decision, it is important that you fully
understand the features, benefits and accompanying risks of this product.
Should you need further information, you may contact <provide contact defails
(3"1g. who to contact, location and contact numbeil>.
i'''t
DEFINITION OF RISKS
lnvestment Risk
ThElEk
Credit Risk
ffrislisfEters
fnis
'Liquidity Risk
ftrElisk
Mark-to-Market
Risk
l._
Rogulatory Risk
This risk refers to the probability that certain laws and regulations
applicable to investments, including income tax and securities law,
and the administrative policies and practices of regulatory
authorities may. change in a manner that adversely affects the
value of an investment.
Taxatiorr Risk
Questionnaire
ives
*'
.,I','li:,.:tJ,',T,,'iXTHiliII TiJ'i[?;
sta
es or ire'
I
(:r'en era I
nformation
E-mail address:
_DvestmentObjective
FliskTolerance ( ) Hign
HiSh
@
()
lncome
at this age?
l'low much have you set aside today lor your retirernent fund?
F lease
check all
that applv
I currently
have
I used to
have
Life lnsurance
Pre- Need Plan
Government Securities
Time Deposit
Foreig4 Cqqency and Bank Deposit
Comment or Private Trust Funds
Mutual Funds
Corporate Bonds
Stocks
Own Business
Real Estate
Commodities/ Futures/ Options
Do you lrave a plan for saving regularly? please choose orre.
[ ]No
[]
1--*---_*_..i
Bancassurance Sample Form No. 2
Client Profi le Questionnaire
Pag
12
of 7
Your Profile
To complete this questionnaire, please choose the statement that most closely defines your
needs or best describes.your situation. Check the circle in the left hand margin that
corresponds to your choice.
IMPORTANT: lf some of your choices bear. an asterisk* please note that a VUL policy may
ncrt be an appropriate investment for you.as they are designed for long-term investing.
Section 'l
Financial Goals
1.
(O)
(2)
( ) I am investing for the long-ierm (more than 7 years) but I need this investment
(6) ( ) I want an investment that will generate both income and long term capital
growth without specific emphasis on either
(8) ( ) | am looking primarily for long term growth. Although I have no need for income
from this investment now or over the next 10 years, I might appreciate that a small
portion be invested in fixed-income sbcurities for stability.
(10) ( ) I am looking for long-term growth only. I want to maximize my potential
return.
2. (0)
(2)
What percentage of this investment do you plan to spend in the next 7 years?
I
I
(4) I
(6) I
3. -
ln how many years will you withdraw all or majority of this investment?
(0)
(5)
I
I
years
years
Less than 7
Between 7 and 10
Page
13of 7
(2)
(4)
(6)
5.
ln 11 to 20 years
More than 20 years
tI
t1
- which
(2)
(2)
Over65
5'1 to65
(8)
(10)
il
I]
36 to 50
20 to 35
(4)
(5)
(8)
(10)
7.
(10)
(2)
(4)
6.
(8) t I
tI
I am retired
- Which of the following statements best describes your financial situation? please
consider your regular expenses and your ability to repay outstanding loans as well as
a saving for retirement and emergencies.
(2) t
(2) t
t1
(4)
I clo not currently need this investment to supplement my income however this
could change
[ ] I don't expect to use this investment to meet current income requirements.
However, should an expected situation arise, may I need to access these
funds.
income that are sufficient to meet my normal requirements.
(E) [ ] My flnancial situation is stable and I have sufficient cash flow to meet most of
my requirements.
(10) t I My financial situation is completely secure and I can meet emergency
requirements without withdrawing these funds.
(6)
8. - Which of the following statements best describes your investment situation? (lf you do
not currently have any investments, choose the response that best describes how do you
think you would manage your investment.)
(2)
I All of my investment to date have been in Treasury Bill because I need the
security of capital.
Page
l4of7
(5)
] Most of my investment were made to generate income and preserve capital but
I now need some capital groMh.
(6) [ ] Most of my investment tend to be mutual funds or common trust funds,
although they are generally not aggressive fund.
(8) [ ] Most of my investment tend to be moderately aggressive. My objectives are
long term, therefore I don't often make changes unless my reason for
investing have change.
(10) t I I tend to choose aggressive investment.funds for long term growth.
Which of the following statements best describes your attitude towards the level of risk
or volatility that you are prepared to live with during the time these assets will be invested?
(2)
tI
I am aware that the value of an investment fund fluctuates daily and to varying
degrees depending on the type of fund. I would feel most comfortable investing
in funds that tend to generate a more stable retum year-to-year, as opposed to
funds that fluctuate widely.
I am comfortable with the fact that the value of my investment will fluctuate daily.
However, I would prefer that roughly half of my assets be invested in less volatile
fixed income securities and that the balance be invested in equities, which tend
to be more volatile.
I am comfortable with volatility and seek more aggressive investments knowing
that in the short term, this strategy may result in declines in value, but that in thL
long term, I have a better chanbe of realizing capital gains. Nevertheless, I do
wony when the stock market drops significanfly
I I fully accept volatility and seek more aggressive investments knowing that in the
short-term, this strategy may result in declines in value but in the long term, I
have a better chance of realizing capital gains.
(5)
(8)
(10)
'
10. - How much of a temporary decline (i.e.one year) in the value of your investment could
you tolerate?
(0)[]Nodecline
decline
(2)1,
l% decline
(5)
t l% to 10o/o dectine
(S)
t l% to 11o/a
11.
(2)
l5 of 7
greater
(4)
. , .I I I understand that the opportunity for greater returns comes witn tafing
rist<s, but l am only prepared to do so with less than half my assets.
(6)
''t
(10)
greater
therefore, iivant to invest the majority or even all of my assets in the stock
markets, as this is the best way to ensure higher returns over the long term.
FinancialGoals
[]
)
+ Background lnformation
-
Total[
+ Risk Tolerance
Recomm6nded Fund
Your Profile
Less than 61
61 to 84
85 or more
conservative
moderate
Growth oriented
Bond Fund
Balanced Fund
Equity Fund
Note: We strongly recommend you review your view point about investment risk at least
once a y,:ar or when major change occurs in your personal situation to make sure your
investment decision continues to match your attitude to investment risk profile.
Conservative:
A Score of 60 points and less indicates that you are comfortable having your
assets
fixed-income
from
comes
that
stability
on
the
managed conservatively with'an emphasis
investirents, while generating some capital appreciation over time. Your investment
horizons is short to moderate and your tolerance towards volatility is moderate. You seek
capital preservation.
Moderate:
Scoring Detween 61 and 84 points indicates that you are seeking long term capital
appreclation and to a lesser extent, the stability that comes from fixed-income investments.
You are rnost comfortable with relatively stable year-to-year returns but will accept some
volatility as you understand that the capital growth you require cannot be achieved without
serme element of risk.
Growth -Oriented:
Page
lSof 7
l.
Scoring between 85 and 120 points indicates that you are seeking long{erm capital
appreciation with little or no requirement from additional income. You can tolerate greater
year-to-year volatility, as well as some moderate to strong fluctuations in the capital value
of your investment. You realize that oveitime, equity markets usually outperform other
investments.
By signing below, I acknowledge that (1) this questionnaire does not constitute abvice from
the company, as it only intended as reference to help me assess my risk appetite and
investment objectives based on the information I have provided; (2) I am responsible for my
investment decision, including my choice of fund, event if such varies with the results of
this questionnaire (3) my financial needs may change over time depending on my personal
situation and ob.lectives; and (4) he Company makes no guarantee as to the accuracy or
completeness of the results or recommendations provided above.
Signature of the Proposed Clients
Date (Day/MonthA/ear)
Agent Code
Signature of Agent
l7 of 7
Date(day/month/year)
OFFICES AND
BRANCHES
Main Office
ADDRESS
Makati City
Agreement
executed
<date
NAMES OF BANK
PERSONNEL
AUTHORIZED BY IC
AUTHORIZED
REPRESENTATIVE
OF <NAME OF
,NSURAA'CE
COMPANY>
1)
2) Pedro Santos
2) Pedro Reyes
on
of
execution>
UN Branch
UN Ave., Manila
1)
Juan Reyes
2) Pedro Cruz
2) XYZ Bank
Agreement
executed
<date
1)
Juan Cruz
2l Maria Santos
Juan Reyes
1) Juan Santos
2) Pedro Cruz
2) Maria Reyes
1)
on
of
execution>
NAME OF
BANK
BRANCH and
ADDRESS
1) ABC Bank
NAMES OF
CLAIMANTS oT
COMPLAINANTS
1)
DATE OF
RECEIPT OF
THE
COMPLAINT
BY THE BANK
RELEVANT
POLlCY
NUMBER/S
lnsufficient disclosure of
product features by the
authorized
representative of the
insurance company
UN Branch
UN Avenue,
Manila
2) XYZ Bank- 1)
BRIEF DESCRIPTION
OF THE NATURE OF
CLAIMS or
COMPLAINTS
Quezon
Ave. Branch
No.123
Quezon Ave.,
Quezon City
CERTIFIED TRUE AND GORRECT:
provided