Section 1. The last
paragraph of section one hundred eighty-four of Act Numbered Two
Thousand Four Hundred Twenty-Seven, as amended, is hereby further
amended to read as follows:
"Any
of the foregoing provisions or portions thereof not applicable to
single premium or non-participating or term policies shall to that
extent not be incorporated therein; and any such policy may be issued
or delivered in the Philippines which in the opinion of the Insurance
Commissioner contains provisions on any one or more of the several
foregoing requirements more favorable to the policy-holder than
hereinbefore required. The provisions of this section shall not apply
to policies of reinsurance nor to policies of industrial life
insurance."
Sec. 2. The same Act, as amended, is further amended
by inserting between Section s one hundred eighty-four and one hundred
eighty-five thereof the following new sections which shall read as
follows:
"Sec.
184-A. The term "industrial life insurance" as used
in this Act shall mean that form of life insurance either (a) under
which the premiums are payable weekly, or (b) under which the premiums
are payable monthly or oftener, but less often than weekly, if the face
amount of insurance provided in any policy is two thousand pesos or
less and if the words "industrial policy" are printed upon the policy
as part of the descriptive matter.
"Sec. 184-B.
No policy of industrial life insurance shall be issued or delivered in
the Philippines, unless the same shall contain in substance the
following provisions:
"First, a provision that the
insured is entitled to a grace period of four 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
month or thirty 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
deducted from any amount payable under the policy in settlement;
"Second, a provision that the
policy shall be incontestable after it has been in force during the
lifetime of the insured for a specified period, not more than two years
from its date of issue, except for non-payment of premiums and except
for violation of the conditions of the policy relating to naval or
military service, or services auxiliary thereto, and except as to
provisions relating to benefits in the event of disability as defined
in the policy, and those granting additional insurance specifically
against death by accident or by accidental means, or to additional
insurance against loss of, or loss of use of, specific members of the
body;
"Third, a provision that the
policy shall constitute the entire contract between the parties, or if
a copy of the application is endorsed upon and attached to the policy
when issued, a provision that the policy and the application therefor
shall constitute the entire contract between the parties, and in the
latter case, a provision that all statements made by the insured shall,
in the absence of fraud, be deemed representations and not
warranties;
"Fourth, a provision that if the
age of the person insured (or the age of any other person considered in
determining the premium) has been misstated, any amount payable or
benefit accruing under the policy shall be such as the premium paid
would have purchased at the correct age or ages;
"Fifth, a provision that if the
policy is a participating policy, the company shall periodically
ascertain and apportion any divisible surplus accruing on the policy
under the condition specified therein;
"Sixth, a provision that in the
event of default in premium payments after three full years premiums
have been paid, the policy shall be converted into a stipulated form of
insurance at the option of the policy-holder, and that in the event of
default in premium payments after five full years premiums have been
paid, a specified cash surrender value shall be available in lieu of
the stipulated form of insurance. The net value of such stipulated form
of insurance and the amount of such cash value shall not be less than
the reserve on the policy and dividend additions thereto, if any, at
the end of the last completed policy year for which premiums shall have
been paid (the policy to specify the mortality table, rate of interest
and method of valuation adopted to compute such reserve), exclusive of
any reserve on disability benefits and accidental-death benefits, less
an amount not to exceed two and one-half per centum of the maximum
amount insured by the policy and dividend additions thereto, if any,
when the issue age is under ten years and less an amount not to exceed
two and one-half per centum of the current amount insured by the policy
and dividend additions thereto, if any, if the issue age is ten years
or older, and less any existing indebtedness to the company on or
secured by the policy;
"Seventh, a provision that the
policy may be surrendered to the company at its home office within a
period of not less than sixty days after the due date of a premium in
default for the specified cash value, provided that the insurer may
defer payment for not more than six months after the application
therefor is made;
"Eighth, a table that shows in
figures the non-forfeiture benefits available under the policy every
year upon default in payment of premiums during at least the first
twenty years of the policy, such table to begin with the year in which
such values become available, and a provision that the company will
furnish upon request an extension of such table beyond the year shown
in policy;
"Ninth, a provision that
specifies which one of the stipulated form of insurance provided for
under the sixth provisions of this section shall take effect in the
event of the insured's failure within sixty days from the due date of
the premium in default to notify the insurer in writing as to which one
of such forms he has selected;
"Tenth, a provision that the
policy may be reinstated at any time within two years from the due date
of the premium in default unless the cash surrender value has been paid
or the period of extended term insurance expired, upon production of
evidence of insurability satisfactory to the company and payment of
arrears of premiums with interest at a rate not exceeding six per
centum per annum payable annually;
"Eleventh, a provision that when
a policy shall become a claim by death of the insured, settlement be
made upon receipt of due proof of death, or not later than two months
after receipt of such proof;
"Twelfth, a title on the face
and on the back of the policy correctly describing its
form;
"Thirteenth, a space on the
front or the back of the policy for the name of the beneficiary
designated by the insured with a reservation of the insured's right to
designate or change the beneficiary after the issuance of the policy.
The policy may also provide that no designation or change of
beneficiary shall be binding on the insurer until endorsed on the
policy by the insurer, and that the insurer may refuse to endorse the
name of any proposed beneficiary who does not appear to the insurer to
have an insurable interest in the life of the insured. Such policy may
also contain a provision that if the beneficiary designated in the
policy does not surrender the policy with due proof of death within the
period stated in the policy, which shall not be less than thirty days
after the death of the insured, or if the beneficiary is the estate of
the insured, or is a minor, or dies before the insured, or is not
legally competent to give valid release, then the insurer may make any
payment thereunder to the executor or administrator of the insured, or
to any of the insured's relatives by blood or legal adoption or
connections by marriage or to any person appearing to the insurer to be
equitably entitled thereto by reason of having incurred expense for the
maintenance, medical attention or burial of the insured;
and
"Fourteenth, a provision that
when an industrial life insurance policy is issued providing for
accidental or health benefits, or both, in addition to life insurance,
the foregoing provisions shall apply only to the life insurance portion
of the policy. Any of the foregoing provisions or portions thereof not
applicable to non-participating or term policies shall to that extent
not be incorporated therein. The foregoing provisions shall not apply
to policies issued or granted pursuant to the non-forfeiture provisions
prescribed in provisions sixth and ninth of this section nor shall
provisions sixth, seventh, eighth and ninth hereof be required in term
insurance of twenty years or less but such term policies shall specify
the mortality table, rate of interest, and method of computing
reserves.
"Sec. 184-C.
No policy of industrial life insurance shall be issued or delivered in
the Philippines if it contains any of the following provisions:
"First, a provision that gives
the insurer the right to declare the policy void because the insured
has had any disease or ailment, whether specified or not, or because
the insured has received institutional, hospital, medical or surgical
treatment or attention, except a provision which gives the insurer the
right to declare the policy void if the insured has, within two years
prior to the issuance of the policy, received institutional, hospital,
medical or surgical treatment or attention and if the insured or the
claimant under the policy fails to show that the condition occasioning
such treatment or attention was not of a serious nature or was not
material to the risk;
"Second, a provision that gives
the insurer the right to declare the policy void because the insured
had been rejected for insurance, unless such right be conditioned upon
a showing by the insurer that knowledge of such rejection would have
led to a refusal by the insurer to make such contract;
"Third, 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 in the thirteenth
provision of Section one hundred eighty-four — B of this Act;
"Fourth, a provision that limits
the time within which any action at law or in equity may be commenced
to less than six years after the cause of action shall accrue;
and
"Fifth, 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
provision nor in the second provision of Section one hundred
eighty-four — B of this Act 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: (a) death resulting from aviation other than as a fare-paying
passenger on a regularly scheduled route between definitely established
airports; and (b) 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.
"Nothing contained in this
section shall apply to any provision in an industrial life insurance
policy for additional benefits in the event of death by accident or
accidental means."
Sec. 3. This Act shall take effect upon its approval.
Approved: June 17, 1961
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