50

AIA Premier AcademyRev02 dated 01/10/2013

AIA confidential and proprietary information. Not for distribution. Rev02 dated 01/10/2013

MY BASICS Sales Compliance Training (Part 1)

AIA confidential and proprietary information. Not for distribution.

Rev02 dated 01/10/2013

AIA Premier Academy (APAc)SEED ProgramMY BASICS

IMPORTANT NOTICE

MY BASICS section is part of the 4 main modules in SEED program.

This is a facilitator-assisted program. Training using this participant guidebook

must only be conducted by facilitators certified by AIA Premier Academy.

The contents of this guidebook is meant to be used as individual reference during

and after the classroom training. It is not intended to be used as part of group

visual presentation aids. Where applicable, the contents shall not be the absolute

reference on any subject related herein.

Thank you.


Rev02 dated 01/10/2013

AIA Premier Academy (APAc)SEED ProgramMY BASICS

Modules cover for MY BASIC

Sales Compliance Training Part 1

Product Transparency and Disclosure

AIA Code of Ethics and Conduct

Anti Money Laundering and Counter Financing of Terrorism

Replacement of Policy (ROP)

Persistency


Rev02 dated 01/10/2013

AIA Premier Academy (APAc)SEED Program


Sales ComplianceProduct Transparency and Disclosure


Rev02 dated 01/10/2013


Objectives of Product Transparency and Disclosure Guidelines

To establish a consistent and comprehensive disclosure regime aimed

at improving information disclosure on products and services offered by

Agent

Objectives of Product Transparency and Disclosure Guidelines:-

Promote consumers awareness and understanding

Facilitate consistency in disclosure of essential information on financial

products and services to enable comparison

Minimize mis-selling of financial products and services and ensure that financialproducts and services sold are appropriate to the needs and resources of the

consumer

Promote informed decision-making by the consumer



Rev02 dated 01/10/2013


Product Disclosure for Ordinary

Life & Investment-Linked

Insurance Product

A


Rev02 dated 01/10/2013


Pre Contractual Stage

Disclosure by Agent to Customer

- licensed under the IA and regulated by Bank Negara Malaysia

- disclose the name and address of the intermediary and the Agent

- e.g Name of Agent, Name of Product & Date

Advising and Selling to Customer- importance of providing sufficient and accurate information to

propose products that suit customers needs



Rev02 dated 01/10/2013



Product Features

FSP should provide the customer with a description of the life

insurance product, including:-

- Types and Purpose of Life Insurance Policy

ALL is a Regular Whole Life Non Par Plan with Investment element

- Brief explanation of types of bonuses payable and show the illustration

- General explanation on how the bonuses are determined

- Nature of investment, objectives of the fund and investment strategy

- Availability of top-up facility

A- Basic insurance cover age for investment-linked products


Rev02 dated 01/10/2013



Benefits Payable and Exclusions

The following information should be disclosed to the customer:-

i) Benefits payable

E.g, ALL covers - Death: RMxx(e.g, basic sum assured plus investment value)

TPD : RMxx

Fund Chosen - AIA Equity Fund (xx%)

- AIA Fixed Fund (xx%)

(indicate any other additional cover provided such as rider)



Rev02 dated 01/10/2013



ii) Limitation on benefits and duration of the policy

ALL - maturing at age xx

iii) restrictions of benefits (including lien imposed on the policy)

and exclusions

iv) surrender value payable under the policy and whether it is

guaranteed or not guaranteed



Rev02 dated 01/10/2013



Premium Payments

Must provide customer the details of the premium payments

including:-

i) Amount of Premium

E.g, Estimated total premium : RM xx, annually/semi-annually/

quarterly/monthly

Premium duration : until age xx

Premium allocation : 1st year 40% allocated premium

(For investment-linked products only)



Rev02 dated 01/10/2013



ii) Premium rate is guaranteed or non guaranteed

iii) Fee and charges

E.g, Stamp Duty, Annual fund management charge, Fund

switching charge and etc

iv) Grace Period

Disclosure of Commission and Charges

- disclose and explain the nature, amount and frequency of the payment

- commission borne by the customer

- other fees and charges borne by customer which are not included in the premium


Rev02 dated 01/10/2013


At the Point of Entering Into a Contract

Contractual rights and obligations

- any significant condition or obligation which customer must meet

- duty of the customer to disclose all information material

- ensure the proposal form is completed accurately

- requirement for proof of age to be provided

- date of commencement, duration and maturity of policy

- consequences of failure to pay premiums



Rev02 dated 01/10/2013



Free-look Period

- 15 days cooling-off period

- return the premiums paid after deducted all the expenses incurred

Replacement of Policy

- warn customer the disadvantages of switching policy from one type

of life policy or from one FSP to another FSP



Rev02 dated 01/10/2013


During the Term of the Contract

Non-forfeiture OptionsMust inform customer within 30 calendar days after the premium due

date :-

- Automatic Premium Loan (APL) that has been applied to keep the

policy in-force

- Loan amount will be deducted from the cash value

- Various non-forfeiture options available for customer

Cash/surrender value

Reduced Paid Up

Extended Term Insurance



Rev02 dated 01/10/2013


Product Disclosure for Medical

and Health Insurance (MHI)

A


Rev02 dated 01/10/2013



Disclosure by Agent to Customer

- licensed under the IA and regulated by Bank Negara Malaysia

- disclose the name and address of the intermediary and the Agent

- e.g Name of Agent, Name of Product & Date

Advising and Selling to Customer- importance of providing sufficient and accurate information to

propose products that suit customers needs



Rev02 dated 01/10/2013



Product Features

FSP should provide the customer with a description of the life

insurance product, including:-

- Types and Purpose of MHI

E.g, ECP/MCP is for hospitalization and surgical expenses

- Details of benefits covered under MHI policy

E.g, HIS covers hospital accommodation and nursing expenses,

surgical

expenses and etc

- Details of riders attached



Rev02 dated 01/10/2013



Exclusions and Limitations of Benefits

- benefit exclusions and limitations, pre-existing conditions, specified

illnesses and qualifying/waiting period must be adequately disclosed

- inform the customer whether any cover ceases at pre-determined age

or policy anniversary



Rev02 dated 01/10/2013



Premium Payments

Must provide customer the details of the premium payments

including:-

i) Amount of Premium

E.g, Standard cover : RM xx, annually/semi-annually/

quarterly/monthly

Additional cover : RM xx

Total Estimated Premium : RM xx

Premium duration : until age xx



Rev02 dated 01/10/2013



ii) Possible conditions that would lead to the following

scenarios on policy renewals:

Renewed with a level premium

Renewed with an increased premium

Not renewed

iii) Agents right to revise the premiums on policy renewal

Disclosure of Commission and Charges

- commission borne by the customer

- other fees and charges borne by customer which are not includedin the premiums



Rev02 dated 01/10/2013



Contractual rights and obligations

- any significant condition or obligation which customer must meet

- duty of the customer to disclose all information material

- ensure the proposal form is completed accurately

- requirement for proof of age to be provided

- period of coverage

- consequences of failure to pay premiums



Rev02 dated 01/10/2013



Free-look Period

- 15 days cooling-off period

- return the premiums paid after deducted all the expenses incurred

Replacement of Policy

- warn customer the disadvantages of switching policy from one type

of life policy or from one Agent to another Agent



Rev02 dated 01/10/2013


During the Term of the Contract

Termination of Coverage

- issue a notice of the expiry of the existing policy to the customer,

at least 30 calendar days before the expiry date

Change to Benefits and Premiums- notify the customer in writing of all changes to critical benefits and

premiums, at least 30 calendar days before the change is made

Change to Panel Hospitals/Clinics

- ensure that customer is informed of any change in its panel

hospitals/clinics at least of 30 calendar days prior to the effective

date of the change



Rev02 dated 01/10/2013



Sales ComplianceAIA Code of Ethics and Conduct



Rev02 dated 01/10/2013


23

An AIA Agent is

Productive

Participative

Professional

Positive



Rev02 dated 01/10/2013


24

Duties & Responsibilities

Obedience

Care and Skill

Personal Performance

Good Faith

Accounting for MoneyReceived



Rev02 dated 01/10/2013


25

Insurance Act 1996

Section 151

1. A person who is authorized by a licensed insurer to be its

insurance agent and who solicits or negotiates a contract of

insurance in that capacity shall be deemed, for the purpose of

the formation of the contract of insurance, to be the agent of

the licensed insurer and the knowledge of that insurance

agent shall be deemed to be the knowledge of the licensed

insurer



Rev02 dated 01/10/2013


26

Insurance Act 1996

Section 151

2. A statement made, or an act done, by the insurance agent

shall be deemed for the purpose of the formation of the

contract of insurance, to be a statement made, or act done, by

the licensed insurer notwithstanding the insurance agentscontravention of subsection 150(4) or any other provision of

this Act



Rev02 dated 01/10/2013


27

Insurance Act 1996

Section 151

3. Subsection (1) shall not apply :

a) where there is collusion or connivance between the

insurance agent and the proposer in the formation of the

contract, or

b) where a person has ceased being to be an insurance agent

of a licensed insurer and it has taken all reasonable steps to

inform, or bring to the knowledge of, potential policy owners

and the public in general of the fact of such cessation



Rev02 dated 01/10/2013


28

Insurance Act 1996

Section 150 (4)

No licensed insurer or insurance agent, in order to induce a person to enter into

or offer to enter into a contract of insurance with it or through him :

a) Shall make a statement which is misleading, false or deceptive, whether

fraudulent or otherwise;

b) Shall fraudulently conceal a material fact; or

c) In the case of an insurance agent, use sales brochure or sales illustration

not authorized by the licensed insurer

Penalty : RM1,000,000



Rev02 dated 01/10/2013


29

Insurance Act 1996

Section 148

1. A policy owner, within 15 days after the delivery of a life policy of any

description to him or to a person who resides at his residence, may

return the life policy to the licensed life insurer and it shall

immediately refund any premium which has been paid in respect of

the life policy and the life policy shall be cancelled subject only to the

deduction of expenses incurred for the medical examination of the

life insured

Penalty : RM500,000



Rev02 dated 01/10/2013


30

Insurance Act 1996

Section 148

2. Subsection (1) shall not apply to a life policy insuring 3 or more

persons

3. For the purpose of subsection (1), a life policy shall be deemed to

be returned to a licensed life insurer on the date the life policy is

received by it or posted to it by registered post



Rev02 dated 01/10/2013


31

Ethics

Ethical traits:

Integrity

Competency

Personal Responsibility

Continuous Service



Rev02 dated 01/10/2013


32

Agents/Prospect Communication

Truthful

avoid misrepresentation

use needs analysis

Complete

give all information

present pluses & minus

Straight forward

communicate clearly

make sure they understand

repeat major points



Rev02 dated 01/10/2013


33

Agents/Prospect Communication

Use Plain Language

Educate & help client tounderstand what is

insurance

Use proper terms. Avoidjargons



Rev02 dated 01/10/2013


34

Code Of Ethics

Rebating

Practice of sharing an agentscommission with the policyholder.

Constitutes discrimination.

Twisting

Persuading a policyholder to

discontinue or lapse a present

policy in order to buy a new policy



Rev02 dated 01/10/2013


35

Code Of Ethics

Misrepresentation

Telling something that is not true

Insurer Agent Prospect

Prospect Company



Rev02 dated 01/10/2013


36

Code Of Ethics

Attitude Towards Competition

Enthusiastic

Open-mind



Rev02 dated 01/10/2013


37

Compliance & Market Conduct

The agent shall :

1) Make known to prospective policyholder that he is an agent ofAIA and produce his Registered Intermediary Authorization

Card to identify himself

2) Ensure that the policy proposed is suitable to the needs and

affordability of the client

3) Give advice only on those matters in which he is competent todeal with



Rev02 dated 01/10/2013


38

Compliance & Market Conduct - cont.

4) Treat all information of prospective policyholder as completely

confidential to himself

5) If comparison is being carried out, make clear the different

characteristics of each policy / investment



Rev02 dated 01/10/2013


39


6) Policy

Explain all the essential provisions of the contract

Draw attention to any restrictions

Draw attention to the long term nature of the

policy and to the consequent effects of early

discontinuance and surrender



Rev02 dated 01/10/2013


40


6.1) Policy Explanations

For participating policy, descriptions of the benefits shall

distinguish between fixed and projected benefits

Any assumption in the projected benefits should be made clear

Shall use the whole illustration in respect of the contract whichhe is discussing with the prospective policyholder



Rev02 dated 01/10/2013


41


7) Disclosure of Underwriting Information

Answers and statements are the proposers own responsibility

Consequences of non-disclosure and inaccuracies are pointedout



Rev02 dated 01/10/2013


42


8) Maintain Proper Account

All monies received by agents in connection with an insurance

policy shall be distinguished from the premium from any other

payment included in the monies

Agent should forward to the company without delay any moneyreceived for life insurance

9) Provide continuous service to the policyholder



Rev02 dated 01/10/2013



Sales ComplianceAnti Money Laundering &

Counter Financing of Terrorism 2001



Rev02 dated 01/10/2013


Anti-Money Laundering

Definition

Money laundering is any activity or procedure intended tochange the identity of illegally obtained money so that it

appears to have originated from legitimate source

105

AIA confidential and proprietary information. Not for distribution. 105


Rev02 dated 01/10/2013


106

Stages of Money Laundering

Step 1: Placement

The physical disposal of cash proceeds derived from illegal activity into

the financial system e.g. the payment of premium for policies, including

top-ups, especially for single premium policies

Step 2: Layering

Separate illicit proceeds from their source by creating complex layers of

financial transactions designed to disguise the audit trail and provide

anonymity. Layering can include: Borrowing against insurance policies,

termination of policies or sales of unit in investment-linked policies

Step3: Integration

The turning of criminally derived wealth into legitimate funds



Rev02 dated 01/10/2013


Counter Financing of Terrorism

Definition

Carrying out transaction involving funds that may or may not be owned by terrorist, or that have been, or are intended

to be, use to assist in the commission of terrorism

107

AIA confidential and proprietary information. Not for distribution. 107


Rev02 dated 01/10/2013


108

Financing of Terrorism

Includes:

a. Providing or collecting property for carrying out an act of terrorism;

b. Providing services for terrorism purposes;

c. Arranging for retention or control of terrorist property; or

d. Dealing with terrorist property.



Rev02 dated 01/10/2013


109

Know Your Customer Policy

What to verify ?The agent is required to verify details such as the customers name,place of residence, legal capacity, occupation or business purpose

How to verify?These may be obtained from the customer e.g. customers identitycard/passport/birth certificate or memorandum and articles of

association (where the customer is a company or trust deed ( where the

customer is a trustee)



Rev02 dated 01/10/2013


110

Know Your Customer Policy

When to verify?Details of a customer must be verified when:

- Establishing or conducting business relations e.g. accepting new

policy- Entering into any fiduciary transaction

- Performing any cash transaction of suspicious nature

Why verify?- To ensure the company does not authorize the acceptance of an

anonymous policyholder or a policyholder with a fictitious / false /

incorrect name



Rev02 dated 01/10/2013


111

Aliases

If a customer is known by more than one name,

no acceptance of another policy under such

other name unless such other name has

previously been disclosed



Rev02 dated 01/10/2013


112

Suspicious Transactions

- An unusual or disadvantageous early redemption of an insurance

policy

- An unusual employment of an intermediary in the course of some

usual transaction or financial activity. Such as payment of claims or

high commission to an unusual intermediary

- An unusual method of payment

- The customer attempts to purchase an insurance policy or to

make an investment in an amount that is beyond his apparent

means, that has no obvious purpose or where the source or

nature of the funds to be used is suspicious or unclear.

- The customer wishes to buy an insurance or investment product

but is less interested in long-terms.



Rev02 dated 01/10/2013


113

Suspicious Indicators

- The customers wishes to make purchases or investments using large

amounts of cash or by making top-up payments with cash

- The customer purchases an insurance policy and thereafter seeks to

borrow the maximum cash value

- The customer uses a check that has been withdrawn on an account

other that his own or pays with checks drawn on different accounts

- The customer makes a payment with numerous money orders, travels

checks or cashiers purchased from different selling locations or at

different times



Rev02 dated 01/10/2013


Offences under Anti Money Laundering &

Counter Financing of Terrorism Act 2001

LaunderingMoney

(RM 5 Mil max. &/or

114

Accepting Businessfrom A Designated

Terrorist Under the Act

(RM 1 Mil max &/or

Jail Max. 1 years)

Not Co-operatingwith Regulators

(RM 1mil max &/or

jail max. 1 year)

Jail Max. 5 years) Not Reporting

Suspicious Transactions

(RM 250k max)

Tipping off tomoney launderers(RM 1 Mil max &/or

Jail Max. 1 years)Not Comply with RecordRetention Requirements

(RM 1 Mil max &/or

Jail Max. years)


AIA confidential and proprietary information. Not for distribution. Rev02 dated 01/10/2013

Replacement of Policy (ROP)Sales Compliance


Rev02 dated 01/10/2013


My BasicsReplacement of Policy (ROP)BNMs Definition of Policy Replacement

Your client purchase new policy from you

Today

Upon buying the new policy

12 months before

12 months after

Your client have an existing policy that has been:

a) Lapsed, surrendered, partially surrendered or forfeitedb) Changed or modified into paid-up insurance policy, continued as extended term insurance or placed under automatic

premium loan for a continuous period of 6 months, or under another form of non-forfeiture benefits or otherwisereduced in value by the use of non-forfeiture benefits, dividend accumulations, dividend cash values or other cashvalues or

c) Changed or modified so as to effect a reduction in the amount of premiums of more than 25% arising from thereduction of sums insured and/or reduction of rider or removal of rider, or in the period of time the existing lifeinsurance will continue in force.

However, this excludes any withdrawal or utilization of cash bonus to pay premium for the existing life insurancepolicies.

Replacement of Policy means

Any transaction involving the purchase of a life insurance policy is construed as a replacement of policy if within 12 months beforeor after a new policy is effected, an existing life insurance policy has been:


Rev02 dated 01/10/2013


59

My BasicsReplacement of Policy (ROP)AIA Scope of Replacement of Policy

ROP shall cover Basic Term (P) or Son policies, WSM plans, Telemarketing plans, Bancassurance,

Investment - linked plans, and Family Takaful.

Existing policies under automatic premium loan (APL) for a continuous period of six (6) months and

above.

Existing ROP rules for single premium products shall remain unchanged. ROP rules shall apply if a

single premium policy is replaced by another single premium policy within three (3) Months (Refer to

Agency Circular: 14/02/2008)

The latest implementation includes the following: -


Rev02 dated 01/10/2013


60

My BasicsReplacement of Policy (ROP)Disadvantages of ROP

In the event of ROP is applied:

Your client and youwill lose more since:

Your client or you have to pay for:

Termination charges of existing policy

Entry charges for the replacement of policy

Administrative costs

Agents commission and production affected

Policyholder may also stand to lose certain benefits such as a bonus credit/ dividendsunder the existing policy

Policyholder may not get a new policy due to deteriorating health conditions or payshigher premium rates.

All contestable clauses and health insurance waiting period begins. If cash values of one policy are used to pay premiums on a new policy; the valuesused may not be sufficient to support the new policy in future years, and this mayresult in the need to make additional premium payments to keep the insurance inforce. Policyholder may not have immediate access to his/her money in a new policy. He/She may have to wait a considerable period of time to access the cash value in thepolicy.


Rev02 dated 01/10/2013


61

My BasicsReplacement of Policy (ROP)If ROP happened within AIA

Your client

Control Mechanism in place to detect Internal Replacement of Policy

Policy owner indicates in the proposal form on whether he/sheintends to replace or has replaced the existing policy/rider.

Policy owner indicates in the Confidential Personal Financial Review(CPFR) booklet the reasons for replacement.

Upon submission of the new policy and if a Replacement of Policy hasbeen detected, a letter known as Replacement of Policy Letterwould be issued and sent to policy owner and agent to explain on:

a) Disadvantages and limitations of Replacement of Policy.

b) Asking the policy owner to respond by answering whetherhe/she accepts the new policy or not; and return the letterto us 30 days from the date of the letter.

Financial Health Review (FHR) Form


Rev02 dated 01/10/2013


62


Letter to Policy Owner on Discovery of Replacement

If the policy owner responds, the Company

shall proceed with the option requested

accordingly.

Agents are urged to advise policy owner on policy conservation. Policy owner is required to return the letter to the company within 30 days from date of the

letter confirming his/ her choice of option provided.

If the policy owner does not respond to the ROP letter, the Company shall proceed to process the new application, and ROP rules shall apply accordingly.


Rev02 dated 01/10/2013


63


Production & Commission Adjustments

Reinstatement of the existing policy, Repayment of APL, Increase of the gross premium equivalent to the original level or higher, due

to addition of rider sum assured and/or inclusion of riders Waiver category (*) (Refer to Appendix 1)

FYP production, FYC, renewal commissions, overriding commissions and other overriding benefits shall be credited upon the occurrence of the following: -


Rev02 dated 01/10/2013


64


Waiver Category (*)

ROP will be waived if Policy owner confirms placing a new policy by signing and returning the ROP letterto Conservation Unit (under POS Dept) for the following types of replacement (Kindly refer to AgencyCircular: 155/11/2006):

An existing policy is changed or modified into a RPU, ETI or placed under APLfor a continuous period of 6 months, or under another form of non-forfeiturebenefits or otherwise reduced in value by the use of non-forfeiture benefits,dividend accumulations, dividend cash values or other cash values.

An existing policy is changed or modified as to effect a reduction in theamount of premiums of more than 25%.

However, where a replacement is due to an existing policy being lapsed, cash surrendered,the normal appeal via Conservation Unit shall apply.


Rev02 dated 01/10/2013


65


Appealing Channel

Requests must be documented in official writing to Conservation Unit. Conservation Unit will vet,review and co-ordinate the necessary actions. In order to consider waiver of ROP, Conservation Unitwould require the following:

1. ROP Appeal Form (To be obtained from ALPP)2. Any other document(s) / evidence(s) in supporting your appeal case

(Log in to ALPP -> Resources -> Forms Library -> AIA Service)

Even all the evidences/documents are obtained, waiver of ROP is not guaranteed. Theultimate decision rests with the Company. Once a decision is finalized; Conservation Unit willinform appealer via memo. Conservation Unit will revert to agent within 30 days uponreceiving the complete document(s) / evidence(s).Any consideration of appeal must be forwarded to Conservation Unit within three (3)Months from the date of ROP letter. Failure of notification may result in non-credit of theabove.

Conservation Unit Policyowner Service Department (POS)Level 8, Menara AIANo: 99 Jalan Ampang50450 Kuala LumpurEmail: [email protected]: 03-20563891


Rev02 dated 01/10/2013


66

My BasicsReplacement of Policy (ROP)If ROP happened between different insurance company

External Replacement of Policy (between different insurers)

BNM/LIAM does not handle complaints from agents directly. Should an agent would like to feedback regarding an External ROP; he/ she may

forward them in writing directly to Conservation Unit.

Conservation Unit Policyowner Service Department (POS)Level 8, Menara AIA99 Jalan Ampang50450 Kuala LumpurEmail: [email protected]: 03-20563891

(1) Details can be accessed through Policy Details - ALPP

Insured Name IC Number Effective Date Paid To Date / Terminated Date Premium Amount & Mode of Payment Policy Number Plan Name Plan Type (ie. Medical / Endowment / Life) Payment Mode Your Contact Number (Conservation Unit will call you where necessary)

The agent will need to provide the following details to facilitate in the External Replacement of Policies investigation:

(2) Details of other life insurer(s)

Name of Insurer/Life Insurance Company Agent of other insurer (Optional) Policy No of other insurer (Optional) Evidence(s). Example: Policy Contract

(Optional) (Kindly refer to Agency Circular: 07/01/2007)


Rev02 dated 01/10/2013


67

My BasicsReplacement of Policy (ROP)BNM/LIAMS Resolution

FYP, FYC, Renewal Commissions & Overriding Benefit

When a policy is detected as an (internal replacement); FYP, FYC, all subsequentrenewal commissions, overriding commissions and other overriding benefits willNOT be credited.

In instances where an agent or agency leader has been or is involved in thereplacement of a policy or policies from one company to another (externalreplacement); the insurer shall be required to undertake the following action:

Cease payment of all commissions, including overriding commissions and bonuseson all policies replaced and re-booked in the new company and if any payment hasbeen made, the new company shall claw back all payments made.

Enforcement Action A


Rev02 dated 01/10/2013


68

My BasicsReplacement of Policy (ROP)BNM/LIAMS Resolution

Disciplinary Actions

If an agent is found to be repeatedly involved in the practice of replacement of policies:

Insurers may also exercise one or more of the following disciplinary actions:

i. Deferment of promotion for one year together with a warning letter (after 5 instances ofreplacement of policies);

ii. Demotion and a warning letter (after 10 instances of replacement of policies)

iii. Termination (after 15 instances of replacement of policies). An agent who has been terminatedunder (iii) shall be placed under the Referred Listing of LIAM.

Enforcement Action B

Any member company involved in any instances of replacement of policies that FAILto enforce the actions as stated in above A & B would be fined.

The quantum of fine shall be up to a multiple of 10 times the premiums of each new policy that has been replaced, subject to a maximum of RM200,000.


Rev02 dated 01/10/2013


69

My BasicsReplacement of Policy (ROP)Conservation on Policy Replacement

1. Taking out a new policy in addition to existing policy if the intention is merely to increase the sum insured or extend the scope of their insurance coverage.

2. Convert a whole life policy into an endowment policy.

3. Shorten or extend the term of the

policy.

4. Add riders to existing

policy.


Rev02 dated 01/10/2013


70

My BasicsReplacement of Policy (ROP)ROP System Enhancements in ALPP & AIA DashBoard

ROP Detection Search Engine

A search engine on potential ROP is made available for agents reference and this will be based on real time checking. The result ofthis potential ROP search will depend on the info keyed in by agent. For more accuracy, agents are encouraged to input more info inthis search engine where possible.

ROP Enquiry Tool

For pre-Single License JRC policy and post Single License AIA policy (at the moment)

ROP Enquiry Tool


Rev02 dated 01/10/2013


71


Can select what to search, New / Old IC, Passport, Birth Cert, click Submit.


Rev02 dated 01/10/2013


72

Adequate information is provided as per screen.



Rev02 dated 01/10/2013


Potential ROP

73

Potential ROPFor pre-Single License AIA policy only



Rev02 dated 01/10/2013


74

Another window will pop out, key in EITHER New IC or Old IC or Birth Cert No.



Rev02 dated 01/10/2013


75

If there is potential ROP, then message Potential ROP detected will prompt, else No Record Found will prompt.



Rev02 dated 01/10/2013


PersistencySales Compliance


Rev02 dated 01/10/2013


Persistency is the percentage of an agents existing policies remaining in force, without lapsing or being replaced by policies of own company or other insurers.

Its no good to anyone if they dont keep it. A life insurance policy, as part of a program designed to meet an insureds financial need, is of no value if its not there when its needed.

Persistency is the key to developing and building a successful sales practice. What an agent will say and do before, during and after the sale to get the business and keep it requires a religious use of a process that will foster superior policy persistency.

My BasicsPersistencyUnderstanding Persistency

What is Persistency?


Rev02 dated 01/10/2013



Improving Your Persistency

There are several actions the agent can take to improve persistency to top-notch,money making, service-after-the-sale persistency. Lets see some of them:

Be professional

Think about persistency up front

Use a fact-finder and sell needs

In-Person delivery

Stay In Touch

Provide Value-added Services

Keep the coverage up-to-date

Know the competition

Implement a Policy Conservation Plan

Reinstate whenever possible

Measure it yourself

Finding qualified prospects


Rev02 dated 01/10/2013



How to improve Quality of Business?

Look for quality prospects

Sell on a needs basis

Sell appropriate policies at proper amounts

Try for annual or automatic premium payments

Get payment with the application

Resell the policy on delivery

Follow-up when second or third premiums are due

Keep in touch with your policy owners and be a professional.


Rev02 dated 01/10/2013



Types of Persistency Measurement

2 Types of Persistency Measurement

DGI Persistency(Government Std)

Persistency Bonus

LIMRA 19 Months

(Company Std)

Contests, Awards,

Conventions


Rev02 dated 01/10/2013


My BasicsPersistencyTypes of Persistency Measurement

LIMRA 19 Months Persistency

LIMRA 19 is the 19 months persistency rate which analyses the lapse performance within the previous 12 months.

Life span of a policy < 19 months

Policy Date

19 months

Critical Period

All contests, conventions & awards are based on Past 12 months (P12M) Case Count

Average Persistency is derived from Past 12 months Case Count

Son policies, WSM* & Single Premium are excluded

Refer to EB8 report or AIA Direct


Rev02 dated 01/10/2013


82


LIMRA 19 Months Persistency

Factors Affecting Persistency

New Business (Father Policy Only)

Past 12 Month lapses

To Improve Persistency

Increase New Business (Counted 3 months later)

Reinstate ALL lapsed cases Focus on FL (First Year Lapse) and

RL (Renewal Lapse)(EB8 report)


Rev02 dated 01/10/2013


83


Definitions of Terms

First Year Lapse (FL) = policies lapsed due to 2nd to 13th month premium being unpaid.

Renewal Lapse (RL) = policies lapsed due to 14th to 19th month premium being unpaid.

First Year Reinstatement (FR) = reinstatements of policies lapsed due to 2nd to 13th month premium being unpaid.

Renewal Reinstatement (RR) = reinstatements of policies lapsed due to 14th to 19th month premium being unpaid.

Grace Period (GP) = policies under grace period due to 2nd to 19th month premium being unpaid.

Current Month Exposure = past 3rd to 20th Months New Business / 18

Current Month Lapse = policies lapsed in current month due to the 19th months premium or prior premium being unpaid.

Current Month Lapse Rate = Current Month Lapse X 100 %

Current Month Exposure

Current Month Persistency Rate = 100 % - Current Month Lapse Rate %

Past-12-month Exposure = Total of exposure for the past-12-months up to the current report month

Past-12-month Lapse = Total of lapse for the past-12-month up to the current report month

Past-12-month Lapse Rate = Past-12-month Lapse X 100 %

Past-12-month Exposure

Past-12-month Persistency Rate = 100 % Past-12-month Lapse Rate %

Average Persistency = Total Monthly P12M Persistency in Qualification Period

Months in Qualification Period


Rev02 dated 01/10/2013



SURVEY Findings:

The longer a policy is in force, the more commission itgenerates for the agent

An agent with 95% persistency will earn 20% morethan an agent who has 85% persistency

of all lapses are never contacted in an attempt toconserve the business

The cost of reinstatement; clerical, postage materials& phone calls equaled approximately 1% of thepremium that was saved

Nearly 50% of lapsed policies can be reinstated withpersonal contact


Rev02 dated 01/10/2013



DGI Persistency

AGENTS PERSISTENCY BONUS:

In the year following determination of persistency by the Company, a monthlyPersistency Bonus of 5% shall be paid as follows:

YEAR BONUS

1ST Year 5% of 2nd Year Renewal Premiums

2nd Year 5% of 3rd Year Renewal PremiumsPayment subjected to persistency requirement as specified by Bank Negara Malaysiaand the Company from time to time. Persistency requirement shall be defined in theDGIs Guidelines on Operating Costs of Life Insurance Business[JPI/GPI 6 (Revised)]

As stated in AIAs Agents Schedule of Commissions:

D1 D1 measures 1st Year Persistency FULL FYP must be collected on or before policy

anniversary date Meaning policy must be in force at least 12 months If D1 > 90%: 5% will be paid on the 2nd Year

Renewal Premium (2RP)

D2 D2 measures 2nd Year Persistency Full 2RP must be collected on or before the next policy

anniversary date Meaning a policy must be in force at least 24 months If D2 > 80%: 5% will be paid on the 3rd Year Renewal

Premium (3RP)


Rev02 dated 01/10/2013



DGI Persistency

D persistency is weighted by Annualized Premiums

If a policy is lapsed, D Persistency of the policy is = 0

If a lapsed policy is reinstated within the anniversary date or the premium is decreased, D persistency of the policy remains = 100%

D Persistency is computed at January 15 in calendar year

Father & Son Policy (Basic Term) affects D Persistency

Riders are excluded from D Persistency Count

2 agents sharing a policy - calculated on a pro-rated basis

Reinstatement by another agent:a) Included in the original agent as LAPSEDb) b) Included in the new agent using the original effective date

D1 = B1A1

A1 = Total Annualized FYP (base)B1 = FULLY Collected FYP

D2 = B2A2

A2 = Total Annualized RP (base)B2 = FULLY Collected 2RP

1st Year Persistency: Premium on new policies sold which remain inforced at the end of the 1st policy year

2nd Year Persistency: Premium on new policies sold which remain inforced at the end of the 2nd policy year


Rev02 dated 01/10/2013



Commission Statement


Rev02 dated 01/10/2013


NO LIMRA 19 M D PERSISTENCY

1. Case Count Premium Count2. Reinstate 19M Lapsed

Cases (FL & RL)

4. EB8Contests, Awards, Conventions

EDDPersistency Bonus

Cases must reinstate within policy anniversary date D1 - 12 monthsD2 - 24 months

3. Son policy will not affect persistency

Son policy affects persistency(Basic Term)

LIMRA Persistency vs DGI Persistency



Rev02 dated 01/10/2013


You have completed the Persistency module and ready to be a qualifier for Quality Business Awards!


Rev02 dated 01/10/2013


Quality Business Awards (Refer to your Club Membership Guidelines)

ObjectiveTo give recognition to Agency members who are both persistent and quality conscious in their business

EligibilityAgents/Leaders

Qualifying PeriodPast 24 months of Average Persistency (ending November)

CategoryAverage 24monthsEB8 Persistency

Min FYP (Life Only) Qualifying Year

Rewards

Agent 95% 100,000*Cash rewards:

DM&UM = RM600

Agent = RM200*Certificate

Unit Manager 90% 280,000

District Manager 90% 400,000

My BasicsPersistencyQuality of Business


Rev02 dated 01/10/2013


Recognition: Club Membership Guidelines

Ranking: Credited FYP

Benefits: Conventions, Contract Maintenance, Group Benefits etc

Income: Renewal Commission, Persistency Bonus, Quality Business Award, Career Benefit etc

Why monitor your Persistency?

My BasicsPersistencyQuality of Business

Date post:	22-Nov-2015
Category:	Documents
Upload:	shah-aia-takaful-planner
View:	122 times
Download:	3 times

50

Documents