Life Insurance

Question 1

LIFE INSURANCE

Answer 1

it is the insurance on HUMAN LIVES and insurance APPERTAINING THERETO or CONNECTED THEREWITH which includes every contract or pledge for the payment of ENDOWMENT or ANNUITIES (Sec. 181)

It is an insurance UPON LIFE which may be MADE PAYABLE

on the DEATH of the person or

on his SURVIVING A SPECIFIED PERIOD, or

otherwise CONTINNGENTLY on the continuance or cessation of life
(Sec. 182)

Question 2

Life Insurance vs Accident and Health Insurannce

Answer 2

OBJECT/PURPOSE

LI - PROVIDE a FUND for the benefit of the estate o the heirs or beneficiaries of the insured after the latter’s death

AHI - To PROTECT against LOSS of

time

earning capacity and

expenses

NOTE: When one of the risks insured in an accident insurance is the DEATH of the insured BY ACCIDENT, such insurance may also be regarded as a LIFE INSURANCE

Question 3

PARTIES in a Life Insurance Policy

Answer 3

1. OWNER of the policy

one who has the POWER

TO NAME or CHANGE the BENEFICIARY,

to ASSIGN the policy (under certain conditions),

CASH IT IN for its surrender value, or

USE IT AS COLLATERAL in obtaining a loan; and

the OBLIGATION TO PAY the premiums

2. CESTUI QUE VIE

the person whose LIFE is the SUBJECT of the policy

3. BENEFICIARY

on to whom the PROCEEDS are PAID

Question 4

NATURE of Life Insurance

Answer 4

a CONTRACT OF INDEMNITY;

treated substantially as a VALUED POLICY, it being regarded as a MISNOMER to speak of death as a LOSS in the sense in which the burning of a building is spoken as a loss

Question 5

ACCIDENTAL DEATH BENEFIT CLAUSE

Answer 5

gives the beneficiaries ADDITIONAL BENEFITS if the DEATH of the insured is through ACCIDENTAL MEANS

Question 6

EFFECTIVITY of Accidental Death Benefit Clause

Answer 6

the death or injury must be sustained in an ACCIDENT in contrast to INTENTIONAL CAUSES;

Intentional implies use of reasoning faculties, consciousness and volition. It is the intention of the PERSON INFLICTING the injury that is CONTROLLING

Question 7

SCOPE of Life Insurance

Answer 7

1. LIFE INSURANCE

undertakes to protect the insured’s family, creditors, or others AGAINST PECUNIARY LOSS which may be the outgrowth of the death of the insured

2. HEALTH, ACCIDENT AND DISABILITY INSURANCE

provides BENEFITS for HOSPITAL or MEDICAL expenses, LOSS of TIME or EARNING POWER because of injury or illness

Question 8

DEATH - Economic Standpoint

Answer 8

1. ACTUAL DEATH

casket death

2. LIVING DEATH

involves permanent disability

3. RETIREMENT DEATH

represents living beyond the period of earning capacity

Question 9

TRANSFER OF POLICY

Answer 9

policy of life insurance may be the object of VOLUNTARY and INVOLUNTARY transfer. INSURABLE INTEREST on the part of the TRANSFEREE is NOT necessary. NOTICE to the insurer is also NOT necessary

Question 10

RIGHT of the Insured to ASSIGN Life Insurance Policy

Answer 10

A policy of insurance for life or health may pass by TRANSFER, WILL OR SUCCESSION to any person whether he has an insrable interest or not, and such person MAY RECOVER upon it whatever the insured might have recovered

(Sec. 184)

Question 11

NOTICE TO INSURER OF TRANSFER

Answer 11

1. WHEN NOTICE NOT REQUIRED IN THE POLICY

notice is not essential to the validity of the assignment

2. WHEN NOTICE REQUIRED IN THE POLICY

an assignment not the policy itself without such notice in the absence of waiver shall have no effect so far as the insurer is concerned

Question 12

MEASURE OF INDEMNITY

Answer 12

Unless the interest of a person insured is SUSCEPTIBLE OF EXACT PECUNIARY MEASUREMENT, the measure of indemnity under a policy of insurance upon life or health is the SUM FIXED IN THE POLICY

(Sec. 186)

Question 13

CASH SURRENDER VALUE

Answer 13

it is the AMOUNT the insured, in case of DEFAULT, after the PAYMENT of AT LEAST 3 FULL ANNUAL PREMIUMS, is ENTITLED TO RECEIVE if he SURRENDERS the policy and RELEASES his claims upon it

Question 14

LIABILITY of Insurer in SUICIDE

Answer 14

LIABLE:

(a. ) committed AFTER 2 YEARS FROM the date of the POLICY’S ISSUANCE or its LAST REINSTATEMENT
(b. ) committed in the state of INSANITY regardless of the date of the commission unless suicide is an EXCEPTED PERIL
(c. ) committed AFTER a SHORTER PERIOD provided in the policy

NOTE: any STIPULATION EXTENDING the 2 year period is NULL AND VOID

Question 15

LIABILITY OF INSURER in case of death AT THE HANDS OF THE LAW

Answer 15

it is one of the risks ASSUMED by the insurer under a life insurance policy IN THE ABSENCE of a valid POLICY EXCEPTION

when the insured is executed for a crime he committed, the beneficiary CANNOT recover if his death is caused through his CONNIVANCE.

any stipulation to render the insurer liable under these circumstances would be CONTRARY TO PUBLIC POLICY

Question 16

LIABILITY OF INSURER in case of KILLING BY THE BENEFICIARY

Answer 16

GR: (Sec. 12)

the interest of a beneficiary in a life insurance policy is FORFEITED when he is the PRINCIPAL, ACCOMPLICE or ACCESSORY in willfully bringing about the death of the insured. In such case, the share forfeited shall PASS ON to the other beneficiaries, unless otherwise disqualified.

In the ABSENCE OF OTHER BENEFICIARIES, the proceeds shall be PAID IN ACCORDANCE with the policy contract.

If the Policy is SILENT, the proceeds shall be PAID TO THE ESTATE of the deceased.

XP:

(a. ) ACCIDENTAL killing
(b. ) SELF-DEFENSE
(c. ) INSANITY of the BENEFICIARY AT THE TIME he killed the insured