Article 57p. 57

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

SECTION 234. No policy of group life insurance shall

be issued and delivered in the Philippines unless it

contains

in

substance

the

following

provisions,

or

provisions which in the opinion of the Commissioner are

more favorable to the persons insured, or at least as

favorable to the persons insured and more favorable to

the policyholders:

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

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

for the payment of any premium due after the first,

during which grace period the death benefit coverage

shall continue in force, unless the policyholder shall have

given the insurer written notice of discontinuance in

advance of the date of discontinuance and in accordance

with the terms of the policy. The policy may provide that

the policyholder shall be liable for the payment of a pro

rata premium for the time the policy is in force during

such grace period;

(b) A provision that the validity of the policy shall not

be contested, except for nonpayment of premiums after

it has been in force for two (2) years from its date of issue;

and that no statement made by any insured under the

policy

relating

to

his

insurability

shall

be

used

in

contesting the validity of the insurance with respect to

which such statement was made after such insurance

has been in force prior to the contest for a period of two

(2)

years

during

such

person's

lifetime

nor

unless

contained in a written instrument signed by him;

(c) A provision that a copy of the application, if any, of

the policyholder shall be attached to the policy when

issued, that all statements made by the policyholder or by

persons insured shall be deemed representations and not

warranties, and that no statement made by any insured

shall be used in any contest unless a copy of the

instrument containing the statement is or has been

furnished to such person or to his beneficiary;

(d) A provision setting forth the conditions, if any,

under which the insurer reserves the right to require a

person

eligible

for insurance to furnish evidence of

individual insurability satisfactory to the insurer as a

condition to part or all of his coverage;

(e) A provision specifying an equitable adjustment of

premiums or of benefits or of both to be made in the

event

that

the

age

of

a

person insured has been

misstated, such provision to contain a clear statement of

the method of adjustment to be used;

(f) A provision that any sum becoming due by reason

of death of the person insured shall be payable to the

beneficiary designated by the insured, subject to the

provisions of the policy in the event that there is no

designated beneficiary, as to all or any part of such sum,

living at the death of the insured, and subject to any right

reserved by the insurer in the policy and set forth in the

certificate to pay at its option a part of such sum not

exceeding Five hundred pesos (P500.00) to any person

appearing to the insurer to be equitably entitled thereto

by reason of having incurred funeral or other expenses

incident to the last illness or death of the person insured;

(g) A provision that the insurer will issue to the

policyholder

for

delivery

to

each

person

insured

a

statement as to the insurance protection to which he is

entitled, to whom the insurance benefits are payable, and

the rights set forth in paragraphs (h), (i) and (j) following;

(h) A provision that if the insurance, or any portion of

it, on a person covered under the policy ceases because of

termination of employment or of membership in the

class or classes eligible for coverage under the policy,

such person shall be entitled to have issued to him by the

insurer, without evidence of insurability, an individual

policy

of

life

insurance

without

disability

or

other

supplementary benefits, provided application for the

individual policy and payment of the first premium to the

insurer shall be made within thirty (30) days after such

termination, and provided further that:

(1) The individual policy shall be on any one of the

forms, except term insurance, then customarily issued by

the insurer at the age and for an amount not in excess of

the coverage under the group policy; and

(2) The premium on the individual policy shall be at

the insurer's then customary rate applicable to the form

and amount of the individual policy, to the class of risk to

which such person then belongs, and to his age attained

on the effective date of the individual policy.

(i) A provision that if the group policy terminates or is

amended so as to terminate the insurance of any class of

insured persons, every person insured thereunder at the

date of such termination whose insurance terminates

and who has been so insured for five (5) years prior to

such termination date shall be entitled to have issued to

him by the insurer an individual policy of life insurance

subject to the same limitations as set forth in paragraph

(h), except that the group policy may provide that the

amount of such individual policy shall not exceed the

amount of the person's life insurance protection ceasing;

(j) A provision that if a person insured under the

group policy dies during the thirty (30)-day period within

which he would have been entitled to an individual policy

issued to him in accordance with paragraphs (h) and (i)

above

and

before

such

individual

policy

shall have

become effective, the amount of life insurance which he

would have been entitled to have issued to him as an

individual policy shall be payable as a claim under the

group policy whether or not application for the individual

policy or the payment of the first premium has been

made;

(k) In the case of a policy issued to a creditor to insure

debtors of such creditor, a provision that the insurer will

furnish to the policyholder for delivery to each debtor

insured under the policy a form which will contain a

statement that the life of the debtor is insured under the

policy and that any death benefit paid thereunder by

reason

of

his

death

shall

be

applied to reduce or

extinguish indebtedness.

The provisions of paragraphs (f) to (j) shall not apply

to policies issued to a creditor to insure his debtors. If a

group life policy is on a plan of insurance other than term,

it shall contain a non-forfeiture provision or provisions

which in the opinion of the Commissioner is or are

equitable to the insured or the policyholder: Provided,

That nothing herein contained shall be so construed as to

require

group

life

policies

to

contain

the

same

non-forfeiture provisions as are required of individual life

policies.

SECTION 235. The term industrial life insurance as

used in this Code shall mean that form of life insurance

under which the premiums are payable either monthly or

oftener, if the face amount of insurance provided in any

policy is not more than five hundred times that of the

current statutory minimum daily wage in the City of

Manila, and if the words industrial policy are printed upon

the policy as part of the descriptive matter.

An

industrial

life

policy

shall

not

lapse

for

nonpayment of premium if such nonpayment was due to

the failure of the company to send its representative or

agent to the insured at the residence of the insured or at

some other place indicated by him for the purpose of

collecting such premium: Provided, That the provisions of

this paragraph shall not apply when the premium on the

policy remains unpaid for a period of three (3) months or

twelve (12) weeks after the grace period has expired.

SECTION 236. In the case of industrial life insurance,

the

policy

shall

contain

in

substance

the following

provisions:

(a) A provision that the insured is entitled to a grace

period of four (4) weeks within which the payment of any

premium after the first may be made, except that where

premiums are payable monthly, the period of grace shall

be either one (1) month or thirty (30) days; and that

during the period of grace, the policy shall continue in full

force, but if during such grace period the policy becomes

a claim, then any overdue and unpaid premiums may be

© Compiled by RGL

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