[This item has two questions.] Muviel obtained a life insurance policy from X Insurance Corp. Muviel underwent a medical examination and was certified as qualified to be insured. Unknown to X Insurance Corp., Muviel had a mild stroke some years earlier. The insurance policy expressly provided that any misrepresentation in the questionnaire filled up by Muviel for the issuance of the policy would render the policy null, void and of no effect.
Suggested answer only. Not an official answer and not legal advice.
If Muviel dies within two years, his beneficiaries cannot claim the proceeds; if he dies after two years, they can claim.
Under Section 48 of the Insurance Code (R.A. No. 10607) and Tan v. CA, the incontestability clause requires a life policy to be in force for two years during the insured's lifetime before the insurer is barred from rescinding due to misrepresentation. Within two years, the insurer may rescind for material concealment.
Here, Muviel concealed his prior mild stroke. If death occurs within two years, the policy is contestable, allowing X Insurance Corp. to rescind and deny the claim. If death occurs after two years, the incontestability clause applies, barring X Insurance Corp. from denying the proceeds.
Therefore, the beneficiaries cannot claim if death occurs within two years, but can claim if death occurs after two years.
This is not an official scoring system and carries no weight with the Supreme Court or any bar review provider. It measures how much of the suggested answer's wording your response covers, not whether your reasoning is correct. For practice only.
Quick check
Under Section 48 of the Insurance Code, when does a life insurance policy become incontestable?
Section 48 provides that a life insurance policy becomes incontestable after two years from issue or last reinstatement during the insured's lifetime.
Does passing a medical examination cure or excuse an applicant's concealment of a prior stroke?
Passing a medical examination does not cure concealment because insurers rely on truthful disclosures in the application.
What is the statutory effect of material concealment under Section 27 of the Insurance Code?
Material concealment entitles the injured party to rescind the contract of insurance.
In Tan versus Court of Appeals, what was the ruling regarding the two-year incontestability period?
Tan v. CA holds that the two-year incontestability period is counted from issue or last reinstatement during the insured's lifetime.
If an insured dies within two years from policy issuance having concealed a mild stroke, can the beneficiaries claim?
Beneficiaries cannot claim if death occurs within two years because the insurer may rescind for material concealment.
Learn more about these topics
1. Incontestability Clause
Under Section 48 of the Insurance Code (Republic Act Number 10607), after a policy of life insurance has been in force during the lifetime of the insured for a period of two 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 fraudulent concealment or misrepresentation of the insured. The incontestability clause is mandatory and precludes the insurer from raising defenses grounded on misrepresentation or concealment once the two-year statutory period has elapsed during the lifetime of the insured.
2. Material Concealment
Section 27 of the Insurance Code provides that a concealment, whether intentional or unintentional, entitles the injured party to rescind a contract of insurance. Concealment is defined as a neglect to communicate that which a party knows and ought to communicate. A prior stroke is a material fact concerning the health and medical history of the applicant because it directly affects the insurer in estimating the risk and forming the insurance contract. Within the contestability period of two years, proven material concealment grants the insurer the legal right to rescind the life insurance policy.
3. Medical Examination Effect
In Tan versus Court of Appeals, the Supreme Court ruled that the passage of a medical examination conducted by the insurer's designated physician does not waive or cure the insured's fraudulent concealment of material medical history. An insurer relies primarily on the truthfulness of the applicant's disclosures in the insurance application questionnaire. The fact that the insurer's physician certified the applicant as qualified does not prevent the insurer from rescinding the policy within the two-year contestability period upon discovering that the insured concealed a prior serious medical condition such as a stroke.