1.

Effects and rights of irrevocable beneficiary (2005)

An irrevocable beneficiary has certain guaranteed rights to assets held
in the policy or fund. Unlike a revocable beneficiary, where their right to
assets can be denied or amended under certain circumstances.
For example, A spouse who is an irrevocable beneficiary has the right to a
pay-out even after a divorce. The living, divorced spouse, must agree to
changes in the policy before or after the death of the insured. Even the
insured cannot change the status of an irrevocable beneficiary once they are
named.
Children are often named irrevocable beneficiaries. If a parent wanted to
leave money to a child, the parent could designate that child as an irrevocable
beneficiary, thus ensuring the child will receive compensation from the life
insurance policy or the segregated fund contract.
In some, an irrevocable beneficiary has the right to veto changes to an
insurance policy. Depending on the state, they may challenge any change to
the policy, including cancellation. In other states, they may only challenge
items that directly affect them such as payout.
2. Prohibited beneficiaries in life insurance (1998)
A beneficiary is a person whether natural or juridical for whose benefit
the policy is issued and is the recipient of the proceeds in the insurance. Any
person in general can be a beneficiary. However, the only persons
disqualified from being a beneficiary are those not qualified to receive
donations under Art. 739. They cannot be named beneficiaries of a life
insurance policy by the person who cannot make any donation to him.
3. Material concealment (2001)
A concealment, whether intentional or not, entitles the injured party to
rescind a contract of insurance.

Requisites:
(a) the party concealing must have knowledge of the facts concealed;

(b) the facts concealed must be material to the risk;

(c) the party is duty bound to disclose such fact to the other;

(d) the party concealing makes no warranty as to the facts concealed;

(e) the other party has no other means of ascertaining the facts concealed.

Note: An insured need not die of the very disease he failed to reveal to the
insurer. It is sufficient that the non-revelation has misled the insurer in
forming his estimate of the disadvantages of the proposed policy or in
making his inquiries in order to entitle the insurance company to avoid the
contract.
Note: The insured is under an obligation to disclose not only such material
facts as are known to him, but also those known to his agent where:
a. it was the duty of the agent to acquire and communicate information of
the facts in question;
b. it was possible for the agent, in the exercise of reasonable diligence, to
have made the communication before the making of the insurance contract.

4. Incontestability clause (1994, 1996, 1997, 1991, 1998)

After a policy of life insurance made payable on the death of the
insured shall have been in force during the lifetime of the insured for a period
of 2 years from the date of its issue or of its last reinstatement, the insurer
cannot prove that the policy is void ab initio or is rescindable by reason of the
fraudulent concealment or misrepresentation of the insured or his agent.
Exceptions: (a) absence of insurable risk
(b) cause of loss is an unexpected risk

(c) fraud

(d) non-payment of premium

(e) violation of conditions relating to naval or military services

(f) failure to comply with conditions subsequent to the occurrence of the
loss

5. Insurable interest, bank deposits, public enemy (2000)

Under the Philippine Insurance Law Act No. 2427 Sec. 14, A carrier or
depository of any kind has an insurable interest in a thing held by him as
such, to the extent of his liability but not to exceed the value thereof.
The Philippine Insurance Law (Act No. 2427, as amended,) in section 8,
provides that "anyone except a public enemy may be insured." It stands to
reason that an insurance policy ceases to be allowable as soon as an insured
becomes a public enemy.
6. Equitable interest (1991)
Where title to real property is in the name of the partnership, a
conveyance executed by a partner, in his own name, passes the equitable
interest of the partnership, provided the act is one within the authority of the
partner under the provisions of the first paragraph of Article 1818.

Where title to real property is in the name of one or more but not all the
partners, and the record does not disclose the right of the partnership, the
partners in whose name the title stands may convey title to such property, but
the partnership may recover such property if the partners’ act does not bind
the partnership under the provisions of the first paragraph of Article 1818,
unless the purchaser or his assignee, is a holder for value, without knowledge.

Where the title to real property is in the name of one or more or all the
partners, or in a third person in trust for the partnership, a conveyance
executed by a partner in the partnership name, or in his own name, passes the
equitable interest of the partnership, provided the act is one within the
authority of the partner under the provisions of the first paragraph of Article
1818.

Where the title to real property is in the name of all the partners a conveyance
executed by all the partners passes all their rights in such property.
7. Insurable interest: Life vs. property insurance (1997, 2000, 2002)
8. Insurable interest in Property insurance (1994, 2001)
Instances when Insurable Interest must exist:
a. Interest in Property insured must exist when the insurance takes effect
and when the loss occurs, but need not exist in the meantime.
b. Interest in the Life or Health of a Person Insured must exist when the
insurance takes effect, but need not exist thereafter or when the loss occurs.
c. Beneficiaries of Life Insurance need not have insurable interest in the
life of the insured.
d. Beneficiaries of Property Insurance must have insurable interest in the
property insured.

Insurable Interest in Insurable Interest in

Category Life Insurance Property
may be based on
pecuniary interest,
affinity, or based purely on
1.  basis consanguinity pecuniary interest
at the time the policy
takes effect
EXCEPT:  life
insurance taken by the
creditor on the life of
the debtor wherein
interest must also at the time the policy
2.  when interest must exist at the time of the takes effect and at the
exist loss time of the loss
no limit EXCEPT:  if
insurable interest is
based on creditor-
debtor relationship limited to the actual
3.  amount of (only to the extent of value of
insurable interest the credit or debt) damage/injury/loss

9. Double insurance (2005, 1993)

Double insurance is a type of insurance where the same subject matter is
insured more than once. In such cases the same subject is insured, but with
different insurers. The method of double insurance is considered a legal act.
In case of loss the insured can claim from both the insurers and the insurers
are liable to pay under their respective policies.
The features of double insurance are:
1. subject matter is insured with two or more insurance companies;
2. the insured can claim the amount from the policies; and
3. the insurer cannot claim more than the actual loss.
Double insurance also follows the basic principles of insurance. Thus a
double insurance does not allow for unjust enrichment of the insured.

10. Co-insurance vs. re-insurance (1994)

The difference between Reinsurance and Coinsurance:

1. Reinsurance: Is a product the insurance company purchases to insure

against large losses.
The company transfers risk of large loss by purchasing insurance from
a “ Reinsurer ”. See Investopedia definition.
2. Coinsurance: Is a percentage the insured/policyholder must pay for
losses they incur. The application is different in property insurance than
with health insurance:
1. Property Insurance: It is the risk or cost that
the insured/policyholder assumes for losses in the event that the
insurance limit they purchase is not adequate, when compared to
the contractual value required of the insured property.
This is sometimes called a Coinsurance requirement or
Coinsurance penalty. See Business Dictionary .com definition
2. Health Insurance: It is the percentage
the insured/policyholder must pay for covered losses. Usually
this amount starts after a deductible and is capped after a certain
amount of out of pocket loss. See Investopedia definition

What Is Reinsurance?
Reinsurance is also known as insurance for insurers or stop-loss insurance.
Reinsurance is the practice whereby insurers transfer portions of their risk
portfolios to other parties by some form of agreement to reduce the likelihood
of paying a large obligation resulting from an insurance claim.
Types of Reinsurance

Facultative coverage protects an insurer for an individual or a specified risk

or contract. If several risks or contracts need reinsurance, they a renegotiated
separately. The reinsurer holds all rights for accepting or denying a
facultative reinsurance proposal.
A reinsurance treaty is for a set period rather than on a per-risk or contract
basis. The reinsurer covers all or a portion of the risks that the insurer may
incur.
KEY TAKEAWAYS

 Reinsurance, or insurance for insurers, transfers risk to another

company to reduce the likelihood of large payouts for a claim.
 Reinsurance allows insurers to remain solvent by recovering all or part
of a payout.
 Companies that seek reinsurance are called ceding companies.
 Types of reinsurance include facultative, proportional, and non-
proportional.

11. Payments of premium by installment (2006)

What Is an Insurance Premium?
An insurance premium is the amount of money an individual or business pays
for an insurance policy. Insurance premiums are paid for policies that cover
healthcare, auto, home, and life insurance.
Once earned, the premium is income for the insurance company. It also
represents a liability, as the insurer must provide coverage for claims being
made against the policy. Failure to pay the premium on the part of the
individual or the business may result in the cancellation of the policy.
Understanding Insurance Premiums
When you sign up for an insurance policy, your insurer will charge you a
premium. This is the amount you pay for the policy. Policyholders
may choose from a number of options for paying their insurance premiums.
Some insurers allow the policyholder to pay the insurance premium in
installments—monthly or semi-annually—while others may require an
upfront payment in full before any coverage starts.
 
There may be additional charges payable to the insurer on top of the
premium, including taxes or services fees.
THE original provision of Section 72 of the Insurance Act (Act 2427) did not
require the full and prompt payment of the premium for an insurance contract
to be effective. Thus, even if the premium had not been paid, an insurer was
obligated to pay indemnity in case of loss and, correlatively, he had also the
right to sue for payment of the premium. This, however, changed on June 20,
1963, when Republic Act (RA) 3540 introduced an amendment to Section 72
by adding the sentence: “No policy issued by an insurance company is valid
and binding unless and until the premium thereof has been paid.” This
radically changed the legal regime in that unless the premium is paid there is
no insurance.
Today, Section 77 of the Amended Insurance Code provides that no contract
of insurance is valid and binding unless the premium has been paid. After all,
premium has been described as the “elixir vitae” or the elixir of life of the
insurance business.

The payment contemplated means full and prompt payment. Hence, the
nonpayment of premiums would result to the lapse and forfeiture of the
policies (Valenzuela v. Court of Appeals). Nonpayment of the premiums does
not merely suspend but puts an end to an insurance contract.
In Constantino v. Asia Life Insurance Company, it was ruled that even if the
nonpayment of premiums was due to the second world war, specifically by
reason of the closure of the insurer’s Manila branch office because of the
Japanese occupation, the insurance contract should be deemed abrogated by
reason of nonpayments, as argued by the so-called United States Rule. In
other words, war was no excuse for the nonpayment of premiums. This
general rule in Section 77 is what is known as the Cash and Carry rule.

The payment may be made to the insurer or to its agent pursuant to Section
315 (paragraph 2) of the Insurance Code.

The Insurance Code and jurisprudence have, however, stated five exceptions
to this general rule: a) in case of a life and or an industrial life policy
whenever the grace period applies (Section 77); b) when a 90-day credit
extension is given (Section 77); c) acknowledgement of payment in the
policy even if no actual payment has been received (Section 79); d) if the
parties have agreed to the payment in installments of the premium and partial
payment has been made at the time of loss (

The payment contemplated means full and prompt payment. Hence, the
nonpayment of premiums would result to the lapse and forfeiture of the
policies (Valenzuela v. Court of Appeals). Nonpayment of the premiums does
not merely suspend but puts an end to an insurance contract.
In Constantino v. Asia Life Insurance Company, it was ruled that even if the
nonpayment of premiums was due to the second world war, specifically by
reason of the closure of the insurer’s Manila branch office because of the
Japanese occupation, the insurance contract should be deemed abrogated by
reason of nonpayments, as argued by the so-called United States Rule. In
other words, war was no excuse for the nonpayment of premiums. This
general rule in Section 77 is what is known as the Cash and Carry rule.

The payment may be made to the insurer or to its agent pursuant to Section
315 (paragraph 2) of the Insurance Code.

The Insurance Code and jurisprudence have, however, stated five exceptions
to this general rule: a) in case of a life and or an industrial life policy
whenever the grace period applies (Section 77); b) when a 90-day credit
extension is given (Section 77); c) acknowledgement of payment in the
policy even if no actual payment has been received (Section 79); d) if the
parties have agreed to the payment in installments of the premium and partial
payment has been made at the time of loss (

12. Assignment of policy (1991)

ssignment of Policy
Assignment of a life insurance policy means transfer of rights from one
person to another. You can transfer the rights on your life insurance policy to
another person/entity for various reasons. This process is referred to as
Assignment and is governed under Policies of Assurance Act (Chapter 392).
The person who assigns the insurance policy is called the Assignor (policy
owner) and the one to whom the policy has been assigned, i.e. the person to
whom the policy rights have been transferred is called the Assignee.

Who can assign policy?

Only the policy owner of the life insurance policy can assign the policy.
If the assignor (i.e policy owner) is a natural person, he/she must have
attained at least 18 years of age to assign a policy. The assignee, as a natural
person, must also have attained at least 18 years of age at the assignment.
What is Assignment in an Insurance Policy?
Assignment means a complete transfer of the ownership of the policy to some
other person. Usually assignment is done for the purpose of raising a loan
from a bank or a financial institution.
13. Perfection of insurance contract (2003)
A contract of insurance, like all other contracts, must be assented to by both
parties, either in person or through their agents and so long as an application
for insurance has not been either accepted or rejected, it is merely a proposal
or an offer to make a contract.
When an insurance policy is delivered to the insured upon partial payment of
the premium there was not only a perfected contract of insurance but a
partially performed one as far as the payment of the agreed premium was
concerned. 

14. Prescription of claims (1996)

Prescription of Claims
In terms of the Prescription Act, various debts have various periods for
prescription. You start calculating the time period for prescription as soon as
the debt is due.
If the debtor wilfully prevents the creditor from coming to know of the
existence of debt, prescription shall not commence to run until the creditor
becomes aware of the existence of the debt.
A debt shall not be deemed due until the creditor has knowledge of the
identity of the debtor and of the facts from which the debt arises, provided
that a creditor shall be deemed to have such knowledge if he could have
acquired it by exercising reasonable care.
15. Return of premiums (2000)
Return of premium (ROP) is a type of life insurance policy that returns the
premiums paid for coverage if the insured party survives the policy's term, or
includes a portion of the premiums paid to the beneficiary upon the death of
the insured.[1
16. Accident Policy (2004)
Accident insurance helps you pay for medical and other out-of-pocket costs
incurred after an accidental injury such as emergency treatment, hospital
stays, medical exams, and miscellaneous expenses like transportation and
lodging needs.
Accident insurance covers qualifying injuries, which might include a broken
limb, loss of a limb, burns, lacerations, or paralysis and the like.

What is a beneficiary?
A beneficiary is a person whether natural or juridical for whose benefit the
policy is issued and is the recipient of the proceeds in the insurance.

Who can be a beneficiary?

Any person in general can be a beneficiary.
Are there any exceptions?
Yes.  The only persons disqualified from being a beneficiary are those not
qualified to receive donations under Art. 739.  They cannot be named
beneficiaries of a life insurance policy by the person who cannot make any
donation to him.

In case of adultery, concubinage does the disqualification extend to the

illegitimate children?
NO.  The disqualification does not extend to the children, and as such, they
may be made beneficiaries.

What is the old rule regarding revocability of designation of beneficiary

as enunciated in the case of Gercio v. Sunlife?
The OLD rule is: When the insured did NOT expressly reserve his right to
revoke the designation of his beneficiary, such designation is irrevocable and
he cannot change his beneficiary without the consent of the latter.

What is the current rule?

The rule now is: The insured has the power to revoke the designation of the
beneficiary even without the consent of the latter, whether or not such power
is reserved in the policy.  Such right must be exercised specifically in the
manner set forth in the policy or contract.  It is of course, extinguished at his
death and CANNOT be exercised by his personal representatives or
assignees.

17. Beneficiary: effects and rights; Irrevocable beneficiary (2005 Bar)

Primary and Contingent Life Insurance Beneficiaries

How do you designate a life insurance beneficiary legally? There are two
basic types of life insurance beneficiaries:

Primary beneficiary: The primary beneficiary is the person (or persons)

who will receive the proceeds of the life insurance policy when the
insured person dies. However, the primary beneficiary will not receive
any proceeds if he or she dies before the death of the named insured.
Contingent beneficiary: This is also known as the secondary beneficiary.
The contingent beneficiary will not receive any of the life insurance
proceeds if the primary beneficiary is still alive when the insured person
dies. The contingent beneficiary is only entitled to receive proceeds if the
primary beneficiary dies before the named insured.
Many professionals in the industry feel that the best or safest approach is
to name a primary beneficiary and a contingent beneficiary on a life
insurance policy.

Irrevocable beneficiaries: The owner of the life insurance policy cannot

change the designation of the beneficiary without the consent of the
original beneficiary.

18. Insured Accident Policy; accident vs. suicide

When the right to change the beneficiary is expressly waived in the policy,
the insured has no power to make such change without the consent of the
beneficiary.
General Rule: The insurer is not liable for a loss caused by the willful act of
the insured.
Exception:  Suicide Clause in Life Insurance: Insurer liable in case insured
committed suicide after the policy has been in force for a period of 2 years
from the date of its issue or last reinstatement.  If insured kills himself within
a period of 2 years, insurer is not liable.
Exception to Exception:  If suicide is committed in a state of insanity,
regardless of the time of commission, the insurer is liable.

in case of over-insurance by several insurers (ratable return of premiums,

proportioned to the amount by which the aggregate sum insured in all
policies exceed the insurable value of the thing at risk)
19. Effects of several insurers (2005 Bar)
In case of an over insurance by several insurers other than life, the
insured is entitled to a ratable return of the premium, proportioned to the
amount by which the aggregate sum insured in all the policies exceeds the
insurable value of the thing at risk.
20. Third Party Liability
Third Party Liability (TPL) refers to the legal obligation of third parties
(for example, certain individuals, entities, insurers, or programs) to pay part
or all of the expenditures for medical assistance furnished under a Medicaid
state plan. By law, all other available third party resources must meet their
legal obligation to pay claims before the Medicaid program pays for the care
of an individual eligible for Medicaid. States are required to take all
reasonable measures to ascertain the legal liability of third parties to pay for
care and services that are available under the Medicaid state plan. The Deficit
Reduction Act of 2005 included several additional provisions related to TPL
and coordination of benefits for Medicaid beneficiaries.
- No car may be registered or its registration renewed without a
*Insurer’s liability under TPL accrues imm

21. No Fault Indemnity Clause: 

The insurance company shall pay any claim for death or bodily injuries
sustained by a passenger or 3rd party without the necessity of proving fault or
negligence of any kind subject to certain conditions.  This does not apply to
property damage.

22. Quitclaim (1994)

A quitclaim deed releases a person's interest in a property without stating the
nature of the person's interest or rights, and with no warranties of that
person’s interest or rights in the property.
Quitclaim deeds are typically used to transfer property in non-sale situations,
such as transfers of property between family members. They can be used to
add a spouse to a property title after marriage, remove a spouse from a title
after divorce, clarify ownership of inherited property, transfer property into
(or out of) a revocable living trust, clarify an easement, or change how a
property’s title is held.

23. What is “Authorized Driver Clause”?

Authorized Driver Clause is a stipulation in a motor vehicle insurance which
provides that the driver, other than the insured owner, must be duly licensed
to drive the motor vehicle otherwise the insurer is excused from liability.
(Villacorta v. I.C., 100 SCRA 467 [1980]).
The clause means that the insurer indemnifies the insured owner against loss
or damage to the car but limits the use of the insured vehicle to the insured
himself or any person who drives on his order or with permission.

24.Stolen Vehicle- authorized driver clause (1993)

The authorized driver clause, which allows coverage of vehicles not driven
by their owners provided permitted by the owner to operate the vehicle. The
authorized driver which may be the owner’s regular driver, a friend or a
family member, even an employee of a car repair shop must or should carry a
valid and unexpired driver’s license issued by the Land Transportation
Office.
If the driver of an insured vehicle is neither the owner nor anyone authorized
by him or her to operate it, this may be considered as theft. And if theft
clause is present in the motor vehicle insurance policy, the owner of the
vehicle has the right to claim against the insurance company for the loss of
the insured vehicle.

25. Group Insurance policy holder (2000)

Group insurance is a single contract for life insurance coverage that extends
to a group of people. This is often purchased by companies or organizations
to secure costs for each individual employee, staff or member. With group
life insurance, the employer or the organization, retains the master contract.
26.  Actual Total Loss

 a total destruction of the thing insured

 the irretrievable loss of the thing by sinking or by being broken up

 any damage to the thing which renders it valueless to the owner for
which he held it

 any other event which effectively deprives the owner of possession, at

the port of destination, of the thing insured
  Constructive Total Loss – gives to the person insured the right to abandon
 Average – any extraordinary or additional expense incurred during
the voyage for the preservation of the vessel, cargo, or both and all
damages to the vessel and cargo from the time it is loaded and the
voyage commenced until it ends and the cargo unloaded
 General Average – an expense or damage suffered deliberately in
order to save the vessel, its cargo, or both from the real or known
risk
 Abandonment – act of the insured by which, after a constructive
total loss, he declares the relinquishment to the insured of his
interest in the thing insured (where the cause of loss is a peril
insured against)

 Implied Warranties:
1. a.       that the ship is seaworthy – complied with if the ship is
seaworthy at the time of commencement of risk, except:  (a) 
 insurance for a specified length of time – at the commencement of
every voyage it undertakes during that time; (b) cargo to be
transshipped at indeterminate port – each vessel upon which cargo
is shipped is seaworthy at the commencement of each particular
voyage
2. b.       that the vessel shall not engage in illegal venture
3. c.       that the vessel shall not deviate from the course of the
voyage insured
4. d.       where the nationality or neutrality of a ship or cargo is
expressly warranted, it is implied that the ship will carry the
requisite documents to show such nationality or neutrality and that
it will not carry any documents which may cast reasonable
suspicion thereon

 Marine insurance: Perils of the ship vs. perils of the sea (1998 Bar)
Perils of the Sea
covered by marine insurance
denote nature accidents peculiar to
the sea which do not happen by
intervention of man nor are to be
prevented by human prudence
Perils of the Ship
not covered by marine insurance
damage or losses resulting from:
27. 1.       natural and
inevitable action of the
sea
28. 2.       ordinary wear
and tear of a ship, or
29. 3.       negligent failure
of the ship owner to
provide the vessel with
proper equipment to
convey the cargo under
ordinary conditions

29. Mutual Insurance company; nature and definition (2006)

What Is a Mutual Insurance Company?
A mutual insurance company is an insurance company that is owned 100%
by policyholders. The sole purpose of a mutual insurance company is to
provide insurance coverage for its members and policyholders, and its
members are given the right to select management.
The goal of a mutual insurance company is to provide its members with
insurance coverage at or near cost. When a mutual insurance company has
profits, those profits are distributed to members via a dividend payment or a
reduction in premiums.