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Group life insurance is a type of life insurance in which a single contract covers an entire group of people.

Typically, the policyowner is an employer or an entity such as a labor organization, and the policy covers
the employees or members of the group.

What is group life insurance?


Answer:
Group life insurance is a type of life insurance in which a single contract covers an entire group of people.
Typically, the policyowner is an employer or an entity such as a labor organization, and the policy covers
the employees or members of the group. Group life insurance is often provided as part of a complete
employee benefit package. In most cases, the cost of group coverage is far less than what the employees
or members would pay for a similar amount of individual protection. So if you are offered group life
insurance through your employer or another group, you should usually take it, especially if you have no
other life insurance or if your personal coverage is inadequate.

As the policyowner, the employer or other entity keeps the actual insurance policy, known as the master
contract. All of those who are covered typically receive a certificate of insurance that serves as proof of
insurance but is not actually the insurance policy. As with other types of life insurance, group life insurance
allows you to choose your beneficiary.

Term insurance is the most common form of group life insurance. Group term life is typically provided in
the form of yearly renewable term insurance. When group term insurance is provided through your
employer, the employer usually pays for most (and in some cases all) of the premiums. The amount of
your coverage is typically equal to one or two times your annual salary.

Group term coverage remains in force until your employment is terminated or until the specific term of
coverage ends. You may have the option of converting your group coverage to an individual policy if you
leave your employer. However, most people choose not to do this because these conversion premiums
tend to be much higher than premiums for comparable policies available to individuals. Typically, only
those who are otherwise uninsurable take advantage of this conversion option.

REPUBLIC ACT NO. 10607


AN ACT STRENGTHENING THE INSURANCE INDUSTRY, FURTHER AMENDING PRESIDENTIAL DECREE
NO. 612, OTHERWISE KNOWN AS THE INSURANCE CODE, AS AMENDED BY PRESIDENTIAL DECREE
NOS. 1141, 1280, 1455, 1460, 1814 AND 1981, AND BATAS PAMBANSA BLG. 874, AND FOR OTHER
PURPOSES

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.

BAR Q’s

1. X Company procured a group accident insurance policy for its construction employees variously
assigned to its provincial infrastructure projects. Y Insurance Company underwrote the coverage, the
premiums of which were paid for entirely by X Company without any employee contributions. While the
policy was in effect, five of the covered employees perished at sea on their way to their provincial
assignments. Their wives sued Y Insurance Company for payment of death benefits under the policy. While
the suit was pending, the wives signed a power of attorney designating an X Company executive. PJ as
their authorized representative to enter into a settlement with the insurance company. When a
settlement was reached, PJ instructed the insurance company to issue a settlement check to the order of
the X Company, which will undertake the payment to the individual claimants of their respective shares.
PJ misappropriated the settlement amount and the wives pursued their case against Y Insurance
Company. Will the suit prosper? Explain.

Answer:
Yes. The suit will prosper. Y insurance Company is liable. X Company, through its executive, PJ, acted as
agent of Y Insurance Company. The latter is thus bound by the misconduct of its agent. It is the usual
practice in the group insurance business that the employer-policy holder is the agent of the issuer. (BAR
2000)

2. Manpower Company obtained a group life insurance policy for its employees from Phoenix
Insurance Company. The master policy issued by Phoenix on June 1, 1986 contained a provision that
eligible employees for insurance coverage were all full time employees of Manpower regularly working at
least 30 hours per week. The policy had also an incontestable clause. Beforehand, Phoenix sent enrollment
cards to Manpower for distribution to its eligible employees. X filled out the card which contained a
printed clause: “I request the insurance for which I may become eligible under said Group Policy.” The
cards were then sent to Phoenix and X was among the employees of Manpower who was issued a
certificate of coverage by Phoenix

On July 3, 1988, X was killed on the occasion of a robbery in their house. While processing the claim of X’s
beneficiary, Phoenix found out that X was not an eligible employee as defined in the group policy since he
has not been employed 30 hours a week by Manpower. Phoenix refused to pay. May X’s beneficiary invoke
the incontestability clause against Phoenix? Reasons.

Answer:
The beneficiary of X may validly invoke the incontestability clause. If the incontestability clause can apply
even to cases of intentional concealment and misrepresentation, there would be no cogent reason for
denying such application where the insured had not been guilty thereof. When X filled out the card
containing the printed clause “I request the insurance for which I may become eligible under said Group
Policy”, it behooved the insurer to look into the qualifications of X whether he can thus be covered or not
by the group life insurance policy. In issuing the certificate of coverage to X, Phoenix may, in fact, be said
to have waived the 30-hour per week requirement. (BAR 1989)