IFMP Life Insurance Agents Certification (LIAC), Pakistan flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Utmost good faith

The mutual duty of proposer and insurer to disclose all material facts. Breach by the proposer, such as non-disclosure or misrepresentation, can allow the insurer to avoid the contract.

Material fact

Any information that would influence a prudent underwriter's decision to accept a risk, set its premium, or impose terms. Examples include health history, occupation, hazardous hobbies and prior declines.

Insurable interest

A legally recognised relationship whereby the proposer benefits from the life assured continuing to live or suffers loss on death. It must exist at inception, otherwise the contract is void.

Free-look period

A stated number of days after receiving the policy document in which the policyholder may cancel and receive a refund of premium, less any charges permitted by the policy terms.

Grace period

The interval after a premium due date during which cover continues despite non-payment. Commonly 30 days for non-monthly modes and 15 days for monthly modes, as set in the policy.

Nomination

A direction by the policyholder that policy money be paid to a named person on death. It gives the nominee the right to receive proceeds but does not transfer ownership of the policy.

Assignment of policy

The transfer of a policyholder's rights under the policy to another person or entity, either absolutely or conditionally. Notice must be given to the insurer to be effective.

Rebating

Returning part of the agent's commission to a client, or offering an inducement, to secure business. It is a market-conduct violation and can lead to licence action.

Needs analysis

A documented assessment of the client's income, dependants, liabilities, existing cover and affordability, used to justify the recommended sum assured, term and premium.

Know your customer

Identity verification, source-of-funds checks and risk screening performed before and during the relationship, with records retained for the statutory period for anti-money-laundering purposes.

Suspicious transaction report

An internal report an agent raises to the insurer's compliance officer when a premium payment, refund request or client behaviour appears unusual or inconsistent with the known profile.

SECP oversight

The Securities and Exchange Commission of Pakistan supervises insurers and market conduct under the Insurance Ordinance, 2000, and receives escalated complaints from policyholders.

Agent licence renewal

Continuation of authority to solicit life business, requiring timely application, prescribed training or examination compliance, and a clean conduct record; soliciting after expiry is a breach.

Proposal form accuracy

The agent must record answers as given by the proposer, never complete or alter answers, and have the proposer sign and date the declaration. Inaccuracies can void the contract.

Policy document delivery

Prompt handover of the policy to the client with explanation of benefits, exclusions, waiting periods, premium due dates, surrender values and the free-look right, with receipt acknowledged.

First premium receipt

The document evidencing payment of the initial premium. Cover generally begins only when the proposal is accepted and the first premium is received, per the policy's conditions.

Claim documentation support

The agent assists the nominee with the death certificate, claim forms, identity documents and medical or police records, and forwards the complete file to the insurer without delay.

Grievance escalation route

A complaint goes first to the insurer's complaint cell for a written response within its stated timeline, then to the SECP if unresolved, with the agent maintaining a record of each step.

Commission clawback

Recovery of previously paid commission when a policy lapses early, is surrendered, or premium is refunded, as provided in the agency agreement and within regulatory limits.

Misrepresentation

A false or misleading statement of fact, by the proposer or the agent, that induces the contract. If material, it entitles the insurer to rescind and refuse the claim.

Non-disclosure

Failure to reveal a material fact when asked or when a prudent underwriter would need it. The insurer may avoid the policy if the omission was material and induced acceptance.

Waiting period

The initial period of a policy, commonly applied to death by natural causes or specified illnesses, during which only limited or no benefit is payable. It must be disclosed clearly.

Suicide exclusion clause

A policy condition limiting or excluding payment if death results from suicide within a stated period from inception or revival, after which the full sum assured normally applies.

Policy revival

Restoration of a lapsed policy by payment of arrears with interest and evidence of insurability, within the revival window set by the policy, often five years from the due date.

Surrender value

The amount payable if a policy with accumulated value is terminated early. It is usually nil in the first years and is stated in the policy's table of guaranteed values.

Reduced paid-up policy

A continuation option after premiums cease, where the sum assured is reduced to the amount the accumulated value can support, and cover continues without further premium payment.

Automatic premium loan

A policy provision that pays an overdue premium from the policy's accumulated value to prevent lapse, subject to sufficient value and repayment with interest.

Unit-linked product disclosure

For investment-linked policies the agent must explain that returns depend on fund performance and are not guaranteed, and must set out allocation rates, charges and surrender penalties.

Replacement disclosure

When a new policy replaces existing cover, the agent must disclose the comparison, including new waiting periods, surrender loss on the old policy and any fresh underwriting.

Confidentiality of client data

Personal and medical information collected for underwriting may be used only for insurance purposes and shared only with the insurer and authorised parties, consistent with data protection rules.

Anti-money-laundering record retention

Client identification, transaction and correspondence records must be kept for the period prescribed by regulation and produced on request to the insurer or the regulator.

Professional indemnity and conduct

Agents are accountable for the advice given, must correct errors promptly, must not sign or forge client declarations, and must cooperate fully with insurer audits and regulatory inspections.