Article 59p. 59

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

rejection would have led to a refusal by the insurer to

make such contract;

(c) A provision that allows the company to pay the

proceeds of the policy at the death of the insured to any

person other than the named beneficiary, except in

accordance with a standard provision as specified under

the provisions of paragraph (m) of the preceding section;

(d) A provision that limits the time within which any

action at law or in equity may be commenced to less than

six (6) years after the cause of action shall accrue; and

(e) A provision that specifies any mode of settlement

at maturity of less value than the amount insured by the

policy

plus

dividend

additions,

if

any,

less

any

indebtedness to the company on the policy and less any

premium

that

may

by

the

terms of the policy be

deducted, payments to be made in accordance with the

terms of the policy.

Nothing contained in this section nor in the provision

of paragraph (b) of the preceding section, relating to

incontestability, shall be construed as prohibiting the life

insurance company from placing in its industrial life

policies provisions limiting its liability with respect to:

(1) Death resulting from aviation other than as a

fare-paying passenger on a regularly scheduled route

between definitely established airports; and

(2) Military or naval service: Provided, That if the

liability of the company is limited as herein provided, such

liability shall in no event be fixed at an amount less than

the reserve on the policy (excluding the reserve for any

additional benefits in the event of death by accident or

accidental means or for benefits in the event of any type

of disability), less any indebtedness on or secured by such

policy; nor shall any provision of this section apply to any

provision

in

an

industrial

life

insurance

policy

for

additional benefits in the event of death by accident or

accidental means.

TITLE 10 Variable Contracts

SECTION 238. (a) No insurance company authorized

to transact business in the Philippines shall issue, deliver,

sell or use any variable contract in the Philippines, unless

and

until

such

company

shall

have

satisfied

the

Commissioner that its financial and general condition

and its methods of operations, including the issue and

sale

of

variable

contracts,

are

not and will not be

hazardous to the public or to its policy and contract

owners.

No

foreign

insurance

company

shall

be

authorized to issue, deliver or sell any variable contract in

the Philippines, unless it is likewise authorized to do so by

the laws of its domicile.

(b) The term variable contract shall mean any policy

or contract on either a group or on an individual basis

issued by an insurance company providing for benefits or

other contractual payments or values thereunder to vary

so as to reflect investment results of any segregated

portfolio of investments or of a designated separate

account in which amounts received in connection with

such contracts shall have been placed and accounted for

separately

and

apart

from

other

investments

and

accounts. This contract may also provide benefits or

values incidental thereto payable in fixed or variable

amounts, or both. It shall not be deemed to be a security

or securities as defined in the Securities Act , as amended,

or in the Investment Company Act , as amended, nor

subject to regulations under said Acts.

(c) In determining the qualifications of a company

requesting authority to issue, deliver, sell or use variable

contracts, the Commissioner shall always consider the

following:

(1) The history, financial and general condition of the

company: Provided, That such company, if a foreign

company, must have deposited with the Commissioner

for the benefit and security of its variable contract owners

in

the

Philippines,

securities

satisfactory

to

the

Commissioner consisting of bonds of the Government of

the Philippines or its instrumentalities with an actual

market value of Two million pesos (P2,000,000.00);

(2) The character, responsibility and fitness of the

officers and directors of the company; and

(3) The law and regulation under which the company

is authorized in the state of domicile to issue such

contracts.

(d) If after notice and hearing, the Commissioner shall

find that the company is qualified to issue, deliver, sell or

use variable contracts in accordance with this Code and

the

regulations

and

rules

issued

thereunder,

the

corresponding order of authorization shall be issued. Any

decision or order denying authority to issue, deliver, sell or

use variable contracts shall clearly and distinctly state the

reasons and grounds on which it is based.

SECTION

239.

Any

insurance

company

issuing

variable contracts pursuant to this Code may in its

discretion issue contracts providing a combination of

fixed amount and variable amount of benefits and for

option lump-sum payment of benefits.

SECTION 240. Every variable contract form delivered

or

issued

for

delivery

in the Philippines, and every

certified

form

evidencing

variable

benefits

issued

pursuant to any such contract on a group basis, and the

application,

rider and endorsement forms applicable

thereto

and

used

in connection therewith, shall be

subject to the prior approval of the Commissioner.

SECTION 241. Illustration of benefits payable under

any

variable

contract

shall

not

include

or

involve

projections of past investment experience into the future

and

shall

conform

with

the

rules

and

regulations

promulgated by the Commissioner.

SECTION 242. Variable contracts may be issued on

the

industrial life basis, provided that the pertinent

provisions of this Code and of the rules and regulations of

the

Commissioner

governing

variable

contracts

are

complied with in connection with such contracts.

SECTION

243.

Every

life

insurance

company

authorized under the provisions of this Code to issue,

deliver, sell or use variable contracts shall, in connection

with the same, establish one or more separate accounts

to be known as separate variable accounts. All amounts

received by the company in connection with any such

contracts which are required by the terms thereof, to be

allocated or applied to one or more designated separate

variable accounts shall be placed in such designated

account or accounts. The assets and liabilities of each

such separate variable account shall at all times be clearly

identifiable and distinguishable from the assets and

liabilities

in

all

other

accounts

of

the

company.

Notwithstanding any provision of law to the contrary, the

assets held in any such separate variable account shall

not be chargeable with liabilities arising out of any other

business the company may conduct but shall be held

and applied exclusively for the benefit of the owners or

beneficiaries of the variable contracts applicable thereto.

In the event of the insolvency of the company, the assets

of each such separate variable account shall be applied to

the contractual claims of the owners or beneficiaries of

the

variable

contracts

applicable

thereto.

Except

as

otherwise specifically provided by the contract, no sale,

exchange or other transfer of assets may be made by a

company,

between

any

of

its

separate accounts or

between any other investment account and one or more

of its separate accounts, unless in the case of a transfer

into a separate account, such transfer is made solely to

establish the account or to support the operation of the

contracts with respect to the separate account to which

the transfer is made, or in case of a transfer from a

separate account, such transfer would not cause the

remaining assets of the account to become less than the

reserves and other contract liabilities with respect to such

separate account. Such transfer, whether into or from a

separate account, shall be made by a transfer of cash, or

by a transfer of securities having a valuation which could

be readily determined in the market place: Provided, That

© Compiled by RGL

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