The Insurance Commission has ordered companies to immediately pay death claims to beneficiaries.
In issuing Circular Letter No. 2018-63 on Dec. 11, Insurance Commissioner Dennis Funa repealed a 60-year-old directive, which had put in place a number of conditions before death claims could be paid.
Under the old rules, “proceeds of life insurance policies not exceeding P5,000 and payable to the surviving spouse, a legitimate recognized natural, illegitimate or adopted child, revocably designated by the insured, may be paid outright.”
Proof of payment
For beneficiaries other than those mentioned above, the proof of payment of the transfer taxes must be presented by the claimant.
But Funa pointed out that under the Amended Insurance Code, or Republic Act No. 10607, the proceeds of a life insurance policy should be paid immediately upon maturity of the policy, “unless such proceeds are made payable in instalments or as an annuity,” in which case the instalments, or annuities shall be paid as they become due.
“In the case of a policy maturing by the death of the insured, the proceeds thereof shall be paid within 60 days after presentation of the claim and filing of the proof of death of the insured,” Funa said, citing Section 248 of the Insurance Code.
Interest on policy proceeds
He said refusal or failure to pay the claim within 60 days would entitle the beneficiary to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceiling prescribed by the Monetary Board.
An insurance company may refuse to pay only if the claim is found fraudulent, Funa said.
“The insurer is required to immediately release the proceeds of the life insurance policy to the beneficiaries within 60 days after presentation of the claim and filing of the proof of death of the insured,” he said.