Rule 1. Definition of Terms

As used in these Rules:

1.1.    “Commission” refers to the Securities and Exchange Commission.

1.2.    “Pre-Need Plans” are contracts which provide for the performance of future service/s or payment of future monetary consideration at the time of actual need, payable either in cash or installment by Planholders at prices stated in the Contract with or without interest or insurance coverage and includes life, pension, education, interment, and other plans which the Commission may from time to time approve.

1.3.     “Pre-Need Company” or “issuer” means any corporation registered with the Commission and authorized/licensed to sell or offer for sale Pre-Need Plans.  A Pre-Need Company may be a single plan (selling one type of Pre-Need Plan) or multi-plan (selling more than one (1) type of Pre-Need Plan). 

1.4.    “Planholder” means any person, natural or juridical, who purchases Pre-Need Plans for whom or for whose beneficiaries future services and/or payments are to be rendered or made at the time of need or for whom or for whose beneficiaries payment/benefits are to be delivered as stipulated and guaranteed by the Pre-Need Company at the time of need or maturity of the Contract. The term includes the assignee, transferee, and any successor in interest of such Planholder.

1.5.    “Contract Price” is the stipulated price paid by the Planholder for the purchase of a Pre-Need Plan. Contract Price may be paid either in lump sum (single payment) or in installments.

1.6.    “Benefits” are the money or services which the Pre-Need Company undertakes to deliver in the future to the Planholder or his beneficiary.

1.7.    Insurance Premium Reserve is the amount that must be set aside by a Pre-Need Company to pay for premiums for insurance coverage, if any, of fully paid Planholders.

1.8.    “Salesman” means a natural person engaged in the sale, whether on commission or salary basis, of Pre-Need Plans upon authority of a registered Pre-Need Company and registered by the Commission to engage in the business of selling Pre-Need Plans.

1.9.    “Trust Fund” means a fund set up from Planholders’ payments, separate and distinct from the paid-up capital of a registered Pre-Need Company, established with a Trustee under a trust agreement approved by the Commission, to pay for the Benefits as provided in the Pre-Need Plan.

1.10.    “Liquidity Reserve Fund” means a portion of the Trust Fund set aside by the Trustee to cover the Benefits due to Planholders during the ensuing year.

1.11.    “Plan Value” is the value of the Benefits which the Pre-Need Company undertakes to deliver upon maturity.

1.12.    “Fixed Value Plans” are Pre-Need Plans whose benefits and costs are fixed and pre-determined at the inception or purchase of the Plan. 

1.13.    “Actual cost or Traditional Plans “ are Pre-Need Plans wherein the benefits or services at the time they are due are guaranteed, regardless of any increase in cost from the originally assumed values since the date of issue of the Pre-Need Plan.

1.14.    “Actuarial Reserve Liability” (ARL) is the measure of liabilities of the Pre-Need Company for its In-Force Plans or Lapsed Plans as of valuation date.

1.15.    “In Force Plan” means a Pre-Need Plan for which the Pre-Need Company has an outstanding obligation, either for (1) delivery of benefits or services or (2) payment of termination value.

1.16.    “Delinquent Plan” is a Pre-Need Plan where any due installment has been unpaid.

1.17.    “Lapsed Plan” means a Delinquent Plan which has remained unpaid beyond the grace period of two (2) months from date of delinquency.

1.18.    “Reinstatement period” means the period within which a Lapsed Plan may be reinstated which shall in no case extend beyond two (2) years from the lapse of the grace period.

1.19.    “Cancelled Plan” means a Lapsed Plan which has remained unpaid for more than two (2) years counted from the lapse of the grace period.

1.20.    “Surrender” means the termination of a Pre-need Plan at the option of the Planholder in exchange for its termination value at surrender date.

1.21.    “Termination Value” is the amount the Planholder should be paid upon surrender of the Pre-Need Plan prior to maturity or availment of full benefits.

1.22.    “Federation” shall mean the Philippine Federation Of Pre-Need Plan Companies.

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