[-]Question 1: What is life insurance?
Life insurance can be understood in 2 aspects: technical and legal understandings.
Technically, life insurance is a type of insurance that has commits which will be bounded based on people’s life. There are two major commits in life insurance, the commit to pay insurance premium by the policy owner, and the commit to pay insurance benefit or periodic allowance by the insurance company. Usually, the contract period of an insurance policy is very long, therefore, the policy owner commits to make several premium payments. Normally, if the policy owner dies before he pays out the premium, the next premium payments will be waived, i.e. no one from the buyer side has to pay for him. If the insured dies or still lives until a certain time specified in the insurance policy, the insurance company has to fulfill its commitment to pay an amount of money or allowances to one or several beneficiaries.
Legally, life insurance includes the insurance policy which is signed between the isurance company and the policy owner. Accordingly, to receive the insurance premium from the policy owner, the insurance company must commit to pay an amount of money or allowance to one or several beneficieries in case the insured lives until a certain time or dies before a certain time specified in the policy.
Besides, according to the Law on Insurance Business of The Social Republic of Vietnam dated April 1st, 2001, “life insurance is a type of insurance that provides insurance to people when they are alive or dead.”
[-]Question 2:What are the good things that life insurance brings to people and their family?
Like other types of insurance, life insurance exists to solve financial difficulty when risk happens. When a key person in the family has an accident that makes him disabled or died, he and his dependants will have financial difficulty. More than anything else, they need a prompt fiancial support to compensate the loss, help them get back stable and balanced financial situation. Life insurance is to meet this demand quickly.
Moreover, far beyond the “money”, life insurance brings peace of mind to and reduces unsecured situations of the insureds.
Life insurance also helps the insureds to accumulate for their future plans, such as saving for their children’s education, saving for buying car, house, or retirement, etc.
[-]Question 3:What is the best life insurance product?
Every life insurance product is good because it not only makes the clients feel secured before many risks in life, but also helps them fulfill their financial plan in the future. However, to determine which the best product is, we need to take into consideration the fact and need of each client at each period. That means this product can be the best for this one, but not the best for others; and with each client, this product can be the best at this time, but not at other time.
[-]Question 4: What is utmost good faith principle in life insurance?
In general principles, when participating in an insurance policy, the participant mus declare fully and precisely all related information.
Important information must be declared: health history of the insured, health record of other family members, etc.
Declaration time: Normally, people who request to buy an insurance policy must declare all important information. The declaration must be completed before the policy is signed. In return, insurance company must publish the information of its the scope of work, policy terms and financial ability.
If the participant intentionally does not declare all important information, he/she will violate the utmost good faith principle and the insurance policy shall be partially canceled (reduces the insurance interests) or fully canceled (terminated).
[-]Question 5:For whom does the policy owner can buy insurance?
If the policy owner buys life insurance for other people, he/she must have theInsurable interest.
According to item 2, articles 31, the Law on Insurance Business, the policy owner can only buy life insurance for the following people:
- For himself/herself;
- For his/her spouse, children, parents;
- Siblings and who have raising or sponsoring relationship with him/her;
- Others if the policy owner has Insurable interest with them.
[-]Question 6:How does the policy owner pay insurance premium?
Depending on the financial ability, the client can choose to pay one time or monthly, quarterly, semi – annually, or annually.
[-]Question 7:What happen if there is misstatement of age?
Misstatement of age can cause 3 circumstances:
- If the insured’s age is not in the insurable age group, the insurance company has the right to cancel the insurance policy and reimburse the paid premium to the policy owner after deducting reasonable related expense. If the policy has been effective for 2 years already, the insurance company has to pay the policy owner the surrender value of the insurance policy.
- If the misstatement of age results in reducing the premium and the true age is still in the insurable group, the insurance company has the right to:
+ Ask the policy owner to pay the additional premium which is correlative with the premium in the policy;
+ Reduce the premium in the policy to match with the paid premium;
- If the misstatement of age results in increasing the premium, and the true age is still in insurable age group, the insurance company has to pay the policy owner the excess paid premium or increase the insurance coverage in the policy to match with the paid premium.