Life Insurance Fundamentals

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Questions and Answers

What type of insurance is not commonly offered by companies as part of their benefits package?

Private health insurance

Who pays for private health insurance premiums?

Individuals

Can private health insurance policies still apply when the insured member is out of the country?

Yes

What happens to the contribution if a policy is not used in a year or contract period?

It goes to the PhilHealth Fund Signup and view all the answers

What is earned by the policyholder if the policy defaults after the calendar year?

Dividends Signup and view all the answers

What is the section of the Insurance Code related to the Incontestability Clause?

Section 48 Signup and view all the answers

Can private health insurance cover family members?

Yes, at an additional cost Signup and view all the answers

What are some of the well-known private health insurance providers in the country?

Manulife, PRU Life U.K., and Sun Life Signup and view all the answers

What is the primary purpose of a life insurance contract?

To pay a designated beneficiary a sum of money upon the death of an insured person Signup and view all the answers

What type of insurance policy typically makes a lump sum cash payment if the policyholder is diagnosed with a specific illness?

Critical illness insurance Signup and view all the answers

What is the typical survival period used in critical illness insurance policies?

14 days Signup and view all the answers

What type of expenses can be included in the benefits of a life insurance policy?

Funeral expenses Signup and view all the answers

What is the purpose of exclusions in life insurance contracts?

To limit the liability of the insurer Signup and view all the answers

What is the term for the payment made by the policyholder to the insurer?

Premium Signup and view all the answers

What is the term for the sum of money paid to the beneficiary in the event of the policyholder's death?

Benefit Signup and view all the answers

What is the term for the person who receives the benefit in the event of the policyholder's death?

Designated beneficiary Signup and view all the answers

What is the period of time after which an insurer cannot prove that a policy is void or rescindable due to fraudulent concealment or misrepresentation?

Two (2) years from the date of its issue or of its last reinstatement Signup and view all the answers

What is the general rule regarding contracts obtained by mistake or fraud?

They can be invalidated Signup and view all the answers

What is the purpose of a life insurance policy?

To pay the insured's designated beneficiary upon the occurrence of the insured individual's death or other event covered by the policy Signup and view all the answers

What is the stipulated amount that the insured agrees to pay at regular intervals or in lump sums?

Premium Signup and view all the answers

What was the face value of Delia's life insurance policy in the case of Manila Bankers Life Insurance Corporation vs. Cresencia P.Aban?

P100,000.00 Signup and view all the answers

How long had Delia's insurance policy been in force when she died?

More than two (2) years and seven (7) months Signup and view all the answers

What is the document issued by the insurer that sets forth the contract of insurance?

Policy Signup and view all the answers

Who is the beneficiary designated by Delia in her life insurance policy?

Her niece, Cresencia Signup and view all the answers

Why did Delia not personally apply for insurance coverage?

Because she was illiterate. Signup and view all the answers

Who filed the insurance application and designated herself as the beneficiary?

Cresencia Signup and view all the answers

On what ground did the insurer file a civil case against Cresencia?

The policy was obtained by fraud, concealment and/or misrepresentation. Signup and view all the answers

How long does the insurer have to discover or prove that a life insurance contract is void or rescindable?

Two years from the effectivity of the contract while the insured is alive. Signup and view all the answers

What is the consequence if the insurer fails to prove fraud, concealment, or misrepresentation within the two-year period?

The insurer must make good on the policy. Signup and view all the answers

Can the insurer deny a claim if the policy was obtained by fraud, concealment, or misrepresentation of the insured or his agent?

No, the insurer still must make good on the policy. Signup and view all the answers

What is the only ground on which the insurer can deny a claim after the two-year period?

Non-payment of premiums. Signup and view all the answers

Can Cresencia's claim be denied by the insurer based on the facts of the case?

No, the insurer cannot deny Cresencia's claim. Signup and view all the answers

What is the time period within which an insurer can contest a policy due to concealment or misrepresentation?

2 years from the date of issuance of the insurance contract or its last reinstatement Signup and view all the answers

What is the condition for an insurer to be liable in case of suicide, according to Section 183 of the Insurance Code?

If suicide was committed after the policy has been in force for a period of 2 years from the date of issue or its last reinstatement, or if suicide was committed in a state of insanity, regardless of the date. Signup and view all the answers

Why can't XYZ Insurance Co. avoid liability in paying the proceeds to Mrs. W, the beneficiary?

Because the policy has been in force and subsisting for 3 years, and Mr. H died within that period, making the incontestability clause applicable. Signup and view all the answers

What is the effect of the Incontestability Clause on the defenses of concealment or misrepresentation?

After 2 years, the defenses of concealment or misrepresentation, no matter how well founded, no longer lie. Signup and view all the answers

What is the relevance of the date of issuance of the insurance contract or its last reinstatement in determining the insurer's liability?

It is the starting point for the 2-year period within which the insurer can contest the policy due to concealment or misrepresentation. Signup and view all the answers

Why is XYZ Insurance Co.'s contention untenable in this case?

Because the policy has been in force for more than 2 years, and the insurer cannot contest the policy due to concealment or misrepresentation. Signup and view all the answers

Study Notes

Life Insurance

A contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person.
The policy holder typically pays a premium, either regularly or as one lump sum.
Other expenses, such as funeral expenses, can also be included in the benefits.
Life policies are legal contracts and the terms of the contract describe the limitations of the insured events.
Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot, and civil commotion.

Critical Illness Insurance

An insurance product in which the insurer is contracted to typically make a lump sum cash payment if the policyholder is diagnosed with one of the specific illnesses on a predetermined list as part of an insurance policy.
The policy may also be structured to pay out regular income, and the payout may also be on the policyholder undergoing a surgical procedure.
The policy may require the policyholder to survive a minimum number of days (the survival period) from when the illness was first diagnosed.
In the Australian market, survival periods are set between 8-14 days.
The contract terms contain specific rules that define when a diagnosis of a critical illness is considered valid.

Private Health Insurance

Premiums can be pricey and are fully paid for by individuals voluntarily if they want to be insured.
If you want your family members to be covered, that would be at an additional cost.
Note that this only applies to immediate family members.
Private health insurance companies are comparable to international ones, and some of their policies still apply even when the insured member is out of the country.
The most well-known private health insurance providers in the country include Manulife, PRU Life U.K., and Sun Life.

Incontestability Clause

Insurance Code Section 48 states that after a policy of life insurance has been in force during the lifetime of the insured for a period of two (2) years from the date of its issue or of its last reinstatement, the insurer cannot prove that the policy is void ab initio or is rescindable by reason of the fraudulent concealment or misrepresentation of the insured or his agent.
A life insurance policy is incontestable after two (2) years from the date of issuance.
The insurer is given two (2) years from the effectivity of a life insurance contract and while the insured is alive to discover or prove that the policy is void from the beginning or is rescindable by reason of fraud, concealment or misrepresentation of the insured or his agent.
After the two-year period lapses, the insurer must make good on the policy.
This means that the beneficiary is entitled to the claim on the insurance proceeds.
The insurer cannot deny the claim except by reason of non-payment of premiums.

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Description

Learn about the basics of life insurance, including contracts, premiums, and benefits paid to beneficiaries in the event of death or other specified events.