Article 56p. 56

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

assets and liability items of and associated with the said

separate variable accounts. Said statement shall be under

oath of two (2) officers of the company and shall be filed

simultaneously with the annual statement required by

the preceding section.

SECTION 231. Within thirty (30) days after receipt of

the annual statement approved by the Commissioner,

every

insurance

company

doing

business

in

the

Philippines

shall publish in a newspaper of general

circulation,

a

full

synopsis

of

its

annual

financial

statement showing fully the conditions of its business,

and

setting

forth

its

resources

and

liabilities

in

accordance

with

such

form

prescribed

by

the

Commissioner.

The Commissioner shall have the authority to make,

amend,

and

rescind

such

accounting

rules

and

regulations

as

may

be

necessary

to

carry

out

the

provisions of this Code, and define accounting, technical

and trade terms used in this Code: Provided, That such

shall be in accordance with internationally accepted

accounting

standards.

Among

other

things,

the

Commissioner may prescribe the form or forms in which

required information shall be set forth, the items or

details to be shown in the balance sheet and income

statement,

and the methods to be followed in the

preparation of accounts, appraisal or valuation of assets

and

liabilities,

determination

of

recurring

and

nonrecurring income, differentiation of investment and

operating income, and in the preparation, where the

Commissioner

deems

it

necessary

or

desirable,

of

consolidated balance sheets or income accounts of any

person directly or indirectly controlling or controlled by

the insurance company.

TITLE 9 Policy Forms

SECTION 232. No policy, certificate or contract of

insurance

shall

be

issued

or

delivered

within

the

Philippines unless in the form previously approved by the

Commissioner, and no application form shall be used

with, and no rider, clause, warranty or endorsement shall

be attached to, printed or stamped upon such policy,

certificate or contract unless the form of such application,

rider,

clause,

warranty

or

endorsement

has

been

approved by the Commissioner.

SECTION

233.

In

the

case

of

individual

life

or

endowment

insurance,

the

policy

shall

contain

in

substance the following conditions:

(a) A provision that the policyholder is entitled to a

grace period either of thirty (30) days or of one (1) month

within which the payment of any premium after the first

may be made, subject at the option of the insurer to an

interest charge not in excess of six percent (6%) per

annum for the number of days of grace elapsing before

the payment of the premium, during which period of

grace the policy shall continue in full force, but in case the

policy becomes a claim during the said period of grace

before the overdue premium is paid, the amount of such

premium

with

interest

may

be deducted from the

amount payable under the policy in settlement;

(b) A provision that the policy shall be incontestable

after it shall have been in force during the lifetime of the

insured for a period of two (2) years from its date of issue

as shown in the policy, or date of approval of last

reinstatement, except for nonpayment of premium and

except for violation of the conditions of the policy relating

to military or naval service in time of war;

(c) A provision that the policy shall constitute the

entire contract between the parties, but if the company

desires to make the application a part of the contract it

may do so provided a copy of such application shall be

indorsed upon or attached to the policy when issued, and

in such case the policy shall contain a provision that the

policy and the application therefor shall constitute the

entire contract between the parties;

(d) A provision that if the age of the insured is

considered in determining the premium and the benefits

accruing under the policy, and the age of the insured has

been misstated, the amount payable under the policy

shall be such as the premium would have purchased at

the correct age;

(e) If the policy is participating, a provision that the

company shall periodically ascertain and apportion any

divisible surplus accruing on the policy under conditions

specified therein;

(f) A provision specifying the options to which the

policyholder is entitled to in the event of default in a

premium payment after three (3) full annual premiums

shall have been paid. Such option shall consist of:

(1) A cash surrender value payable upon surrender of

the policy which shall not be less than the reserve on the

policy, the basis of which shall be indicated, for the then

current policy year and any dividend additions thereto,

reduced by a surrender charge which shall not be more

than one-fifth (1/5) of the entire reserve or two and

one-half percent (2 1/2%) of the amount insured and any

dividend additions thereto; and

(2) One or more paid-up benefits on a plan or plans

specified in the policy of such value as may be purchased

by the cash surrender value.

(g) A provision that at any time after a cash surrender

value is available under the policy and while the policy is

in force, the company will advance, on proper assignment

or pledge of the policy and on sole security thereof, a sum

equal to, or at the option of the owner of the policy, less

than the cash surrender value on the policy, at a specified

rate of interest, not more than the maximum allowed by

law, to be determined by the company from time to time,

but not more often than once a year, subject to the

approval of the Commissioner; and that the company will

deduct from such loan value any existing indebtedness

on the policy and any unpaid balance of the premium for

the current policy year, and may collect interest in

advance on the loan to the end of the current policy year,

which provision may further provide that such loan may

be deferred for not exceeding six (6) months after the

application therefor is made;

(h) A table showing in figures cash surrender values

and paid-up options available under the policy each year

upon default in premium payments, during at least

twenty (20) years of the policy beginning with the year in

which the values and options first become available,

together with a provision that in the event of the failure of

the policyholder to elect one of the said options within

the time specified in the policy, one of said options shall

automatically take effect and no policyholder shall ever

forfeit his right to same by reason of his failure to so elect;

(i) In case the proceeds of a policy are payable in

installments

or

as an annuity, a table showing the

minimum

amounts

of

the

installments

or

annuity

payments;

(j) A provision that the policyholder shall be entitled

to have the policy reinstated at any time within three (3)

years from the date of default of premium payment

unless the cash surrender value has been duly paid, or

the extension period has expired, upon production of

evidence of insurability satisfactory to the company and

upon

payment

of

all

overdue

premiums

and

any

indebtedness to the company upon said policy, with

interest rate not exceeding that which would have been

applicable to said premiums and indebtedness in the

policy years prior to reinstatement.

Any of the foregoing provisions or portions thereof

not applicable to single premium or term policies shall to

that extent not be incorporated therein; and any such

policy may be issued and delivered in the Philippines

which in the opinion of the Commissioner contains

provisions

on

any

one

or

more

of

the

foregoing

requirements more favorable to the policyholder than

hereinbefore required.

This section shall not apply to policies of group life or

industrial life insurance.

© Compiled by RGL

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