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PELAYO, CHRISTOPHER

PHILIP M.
LLB III C
LAW ON INSURANCE

LIFE INSURANCE
As defined in Section 180, Life Insurance is insurance on human
lives and insurance appertaining thereto or connected therewith.
It is that which is payable on the death of a person or on his surviving a
specified period, or otherwise contingently on the continuance of cessation
of life. (Sec.181)
KINDS OF LIFE INSURANCE:
1) Ordinary Life Policy. The insured pays a premium every year until he
dies. Surrender value after 3 years.
2) Limited Payment Life Policy. - Insured pays premium for a limited
period. It is payable only at the death of the insured.
3) Endowment Policy.- Insured pays a premium for a specified period. If he
outlives the period, the face value of the policy is paid to him; if not,
his beneficiaries receive benefit.
4) Term Insurance. - Insured pays once only, and he is insured for a
specified period. If he dies within the period, his beneficiaries benefit. If
he outlives the period, no person benefits from the insurance. This is
also known as temporary insurance.
5) Industrial Life.- Life Insurance entitling the insured to pay premiums
weekly, or where premiums are payable monthly or oftener.
Generally speaking, a life insurance is distinct and different from an
accident insurance. However, when one of the risks insures in the latter is
death of the insured by accident, and then such accident insurance may also
be regarded as a life insurance.
A policy of insurance upon life or health may pass by transfer, will or
succession to any person whether he has an insurable interest or not, and
such person may recover upon it whatever the insured might have
recovered.
If the policy does not expressly require the insured to give notice of an
assignment or transfer of the policy to the insurer, such notice is not
essential to the validity of the assignment. Of course, where notice to the
insurer is required by the provisions of the policy, an assignment (not the

policy itself) without such notice, in the absence of waiver, shall have no
effect so far as the insurer is concerned.
The interest of a beneficiary in a life insurance policy shall be forfeited
when the beneficiary is the principal, accomplice, or accessory in bringing
about the death of the insured, in which event, the nearest relative of the
insured shall receive he proceeds of the insurance, if not otherwise
disqualified.
The insurer in a life insurance shall be liable in case of suicide
only when:
1. The suicide is committed after the policy has been in force for a period
of 2 years from the date of its issue or of its last reinstatement.
2. The suicide is committed after a shorter period provided in the policy
although within the 2-year period.
3. The suicide is committed in the state of insanity regardless of the date
of commission, unless suicide is an excepted risk.
The policy cannot provide a period longer than 2 years. If the policy
provides for a longer period and the suicide is committed within said period
but after 2 years, the insurer is liable.
The insurer is not liable if it can show that the policy was obtained with
the intention to commit suicide even in the absence of any suicide exclusion
in the policy.
Lastly, unless the interest of a person is susceptible of exact pecuniary
measurement, the measure of indemnity under a policy of insurance upon
life or health is the sum fixed in the policy.

MICROINSURANCE
As defined under Sec. 187, Microinsurance is a financial product or
service that meets the risk protection needs of the poor where:
a) The amount of premiums, contributions, fees or charges, computed
on a daily basis, does not exceed five (5) percent of the current
daily minimum wage rate for non-agricultural workers in Metro
Manila;
b) The maximum sum guaranteed benefits is not more than 500 times
the daily minimum wage rate for non-agricultural workers in Metro
Manila.
Microinsurance shall include all forms of insurance, insurance-like and
other similar activities with the following features:
Premiums, contributions, fees or charges are collected/deducted
prior to the occurrence of a contingent event; and
Guaranteed benefits are provided upon occurrence

of

contingent event.
Under

Section

188,

No

insurance

company

or

mutual

benefit

association shall engage in the business of microinsurance unless it


possesses all the requirements as may be prescribed by the Commissioner.
The Commissioner shall issue such rules and regulations governing
microinsurance.
To ensure stability, viability and delivery of safe and sound products
and services to their clients, microinsurance providers shall be evaluated and
monitored on the basis of a set of performance standards to be established
by the Insurance Commission covering the areas of solvency and stability,
efficiency, governance, understanding of the product of the client, risk
management, outreach and such other areas deemed by the Insurance
Commission to be critical to the continuing validity, growth and development
of the microinsurance industry.

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