In January 2016, Mr. H was issued a life insurance policy by XYZ Insurance Co., wherein his wife, Mrs. W, was designated as the sole beneficiary. Unbeknownst to XYZ Insurance Co., however, Mr. H had been previously diagnosed with colon cancer, the fact of which Mr. H had concealed during the entire time his insurance policy was being processed.
In January 2019, Mr. H unfortunately committed suicide. Due to her husband’s death, Mrs. W, as beneficiary, filed a claim with XYZ Insurance Co. to recover the proceeds of the late Mr. H’s life insurance policy. However, XYZ Insurance Co. resisted the claim, contending that: 1. the policy is void ab initio because Mr. H fraudulently concealed or misrepresented his medical condition, i.e., his colon cancer; and 2. as an insurer in a life insurance policy, it cannot be held liable in case of suicide. Rule on each of XYZ Insurance Co.’s contentions. (5%)
Rule on each of XYZ Insurance Co.’s contentions. (5%)
Suggested answer only. Not an official answer and not legal advice.
Both contentions of XYZ Insurance Co. are untenable. Under Section 48 of the Insurance Code (R.A. 10607), after a life policy has been in force during the insured's lifetime for two (2) years from issue, the insurer cannot
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Quick check
Under Section 48 of the Insurance Code, when does a life insurance policy become incontestable by the insurer?
Section 48 provides that a life insurance policy becomes incontestable after two years in force during the insured's lifetime.
What is the legal effect of the incontestability clause after the lapse of the two-year statutory period?
The incontestability clause bars the insurer from rescinding the policy for concealment or misrepresentation after two years.
Under Section 183 of the Insurance Code, is the insurer liable if the insured commits suicide three years after policy issuance?
Section 183 holds the insurer liable for suicide committed after two years from the date of policy issuance.
Why are XYZ Insurance Co.'s defenses against Mrs. W's insurance claim legally untenable?
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Which statute governs insurance contracts, contestability periods, and suicide exclusions in the Philippines?
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Learn more about these topics
1. Incontestability Clause
Under Section 48 of the Insurance Code of the Philippines (Republic Act Number 10607), after a life insurance policy has been in force during the lifetime of the insured for a period of two years from its date of issue or last reinstatement, the insurer cannot prove that the policy is void ab initio or rescindable on the ground of fraudulent concealment or misrepresentation. The incontestability clause is a mandatory statutory provision designed to prevent insurers from collecting premiums while postponing investigation until after the insured's death, thereby protecting beneficiaries from delayed rescission claims.
2. Suicide Exclusion Period
Under Section 183 of the Insurance Code, the insurer in a life insurance contract remains liable in the event of suicide committed by the insured after the policy has been in force for a period of two years from the date of issue or last reinstatement, unless the policy provides for a shorter period. Suicide committed after the lapse of the two-year statutory period does not relieve the insurer of liability, regardless of the insured's mental state at the time of death, making the beneficiary's claim fully enforceable.
3. Beneficiary Recovery Rights
In life insurance contracts, a designated beneficiary acquires a vested interest in the policy proceeds upon the occurrence of the insured risk, subject to valid statutory conditions and policy terms. When the two-year contestability period and suicide exclusion period have both lapsed prior to the insured's death, the insurer cannot interpose defenses of concealment or self-destruction to deny payment. Consequently, the designated beneficiary possesses an absolute legal right to collect the full insurance proceeds from the insurer.