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Flashcards in Life Insurance Deck (16)
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1

LIFE INSURANCE

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)

2

Life Insurance vs Accident and Health Insurannce

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

3

PARTIES in a Life Insurance Policy

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

4

NATURE of Life Insurance

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

5

ACCIDENTAL DEATH BENEFIT CLAUSE

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

6

EFFECTIVITY of Accidental Death Benefit Clause

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

7

SCOPE of Life Insurance

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

8

DEATH - Economic Standpoint

1. ACTUAL DEATH

casket death

2. LIVING DEATH

involves permanent disability

3. RETIREMENT DEATH

represents living beyond the period of earning capacity

9

TRANSFER OF POLICY

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

10

RIGHT of the Insured to ASSIGN Life Insurance Policy

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)

 

11

NOTICE TO INSURER OF TRANSFER

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

12

MEASURE OF INDEMNITY

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)

13

CASH SURRENDER VALUE

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

14

LIABILITY of Insurer in SUICIDE

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

15

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

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

16

LIABILITY OF INSURER in case of  KILLING BY THE BENEFICIARY

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