Finals Exam on Insurance

1. The insurance taken by Arthur on his life whom he named Xavier as his beneficiary is valid
insurance contract this is in accord with the Insurance Code which provides that a person who
insures his own life can designate any person as his beneficiary, whether or not the beneficiary
has an insurable interest in the life of the insured. On the other hand, the Insurance taken by
Arthur on the life of Yuan is not a valid contract of insurance. Again, under the insurance code,
if a person names himself a beneficiary in a policy he takes on the life of another, he must have
insurable interest in the life of the latter. Here, Arthur does not have any insurable interest on
Yuan. The facts seemed did not provide a pecuniary interest by Arthur in case Yuan will suffer
death. Hence, negating Arthur’s claim of insurance proceeds later on.

2. If I will be the FIP Co.’s counsel, I will deny the ABC Co. claim on insurance benefit. Cha did not
assign his interest in the insurance contract to ABC Co. Likewise, FIP was not inform of such
assignment of interest in the insurance, if any. Thus, ABC Co.’s claim for insurance benefit is
bereft of merit. The condition/stipulation between Cha and ABC will not oblige FIP to award the
insurance benefit to ABC since the latter is not a party to the insurance contract.

3. Yes, FIP Co. is correct in denying Mr. Ramos claim of insurance benefit. Under the insurance
code, citizen or subject of nation with whom the Philippines is at war, any property insurance
contract associated with them ceases to be enforceable. Thus, FIP is correct in denying Mr.
Ramos claim since the property he insured is the headquarters of the NPA.

4. The insurer is correct in denying the Jaime’s claim of insurance. Under the jurisprudence, mere
delay of acceptance of check by DIC’s agent raises no implication of acceptance nor does it estop
DIC to deny the existence of insurance contract. Here, DIC’s agent cannot be faulted not to
received the payment on September 25, 2021, a day after the incident happened, although such
as seemed to be unreasonable. That being said, Jaime’s car was not insured. Thus, no insurance
contract to speak of, hence DIC cannot be forced to pay Jaime an insurance benefit.

Ryan took out 3 Million life insurance policy naming his friend and creditor, Rico as his
beneficiary. When Ryan died, his outstanding loan to Rico was only 500,000. Ryan's Executor
contended that only P500,000 out of the 3Million insurance proceeds should go to Rico and
the P2.5M should be paid to the estate of Ryan. Is the executor's contention correct? Reason
out your answer.
No. The executor’s contention is untenable. Under the insurance code, the beneficiary cannot
claim of insurance benefit more than of its interest therein. At the time of the death of Rico,
Ryan’s debt is only P500,000.00 from the total amount of P3,000,000.00. Hence, Ryan can only
claim insurance benefit of P500,000.00.

Existence of insurable interest is necessary for a contract of insurance to be valid because it gives a
person the legal right to insure the subject matter of the policy of insurance, and because it is a matter
of public policy.

On May 12, 2019, Santos borrowed P300K from Ramos. When National emergency was
proclaimed by the President, Ramos insured the life of his friend and debtor, Mr. Santos for
300k. On Dec. 15, 2020, Mr. Santos visited Mr. Ramos in his house and paid in- full his debt.
Unfortunately, when he got back home, he experienced shortness of breath and other
symptoms of COVID19 infection. He was brought to the hospital but after five days, he
succumb to death. Upon knowing of the demise of Santos, Ramos submitted his claim to the
insurer. Likewise Santos' legal wife filed her claim with the insurer. To whom will the proceed
go? Justify your answer

The proceeds of insurance policy will go to legal wife of Santos. Since Santos predeceased
Ramos, the latter’s debt to the former is extinguished. Thus, it is only proper that the legal
heirs of Santos shall claimed the insurance benefit. After all, Santos applied for an insurance
policy for the life of Ramos in order to protect his interest.

Rodney is the grandson and only heir of business tycoon and billionaire Mr. Lee Tan. Upon
knowing that he was named in the Last Will and Testament of Mr. Lee Tan as the sole heir of
the latter's estate which includes a manor at an exclusive Subdivision, he went to Property
Assurance company and purchased a Fire Insurance Policy for the property equivalent to the
value of the manor. On the last month of the insurance policy, fire broke within the
neighborhood damaging the manor. Should Property Assurance pay the proceeds of the
policy to Rodney? Explain

Yes, Property Assurance should pay Rodney the proceeds of Fire Insurance Policy. Rodney has
an insurable interest on the property of Mr. Lee Tan. His insurable interest is an expectancy
coupled with an existing interest in that out of which the expectancy arises being the only heir of
Mr. Lee Tan. Thus, he is entitled to the insurance proceeds.
George and Tommy are best friends. Because of their friendship, Tommy decided to insure his
life and name George as the irrevocable beneficiary. Three years thereafter, Tommy fell in love
with and married . He Considering the amount of the life insurance policy that he had
previously purchased, he thought that George and Becky could share the proceeds in case he
dies and decided to include her as beneficiary. George was not aware of Tommy's decision.
When Tommy died, Becky filed her claim with the Insurer but the insurer denied stating that
the proceeds cannot be paid to her but to George only. Is the Insurer correct? why or why not?

No, the Insurer contention is not correct. Under the insurance code, the insurer shall the right
to change the beneficiary he designated in the policy. In the instant case, the change was
made during the lifetime of Tommy, the insured. Thus, such change was valid. Beck then may
claim for insurance benefit proportionate to his share, as she was a co-beneficiary in that
insurance policy.

Mary and John are husband and wife. After 10 years of marriage, John felt unhappy and found
happiness in the comfort of young Luisa which resulted to the birth of Julia. Aware of his
advanced age, John wanted to secure the future of Luisa and their daughter Julia. He asked
advice from his friend Mark who advised him to get an insurance policy without informing
Mary and name Luisa and Julia as the beneficiaries. The following day, John purchased a Life
Insurance policy from Sunlife worth 15M naming therein Luisa and Julia as the irrevocable
beneficiaries. 3 years later, John died a natural and peaceful death. Mary and Luisa both filed
their respective claims with Sunlife. To whom should Sunlife pay the proceeds of the
insurance policy? Explain

Sunlife shall pay the insurance proceeds to Mary the wife of John and to his illegitimate child
Julia. Luisa cannot claim for insurance benefit in accordance with the civil code, which
provides that any person who is forbidden from receiving any donation cannot be named
beneficiary of a life insurance policy of the person who cannot make any donation to him.
On July 11, 2019, X a homosexual took an insurance policy on his life for 5M and named his
boyfriend, Y as beneficiary. On December 10, 2020, Y & X attended a birthday party and while
at the party, X had been enjoying the company of A. This made Y very jealous. On their way
home, they were in engaged in a heated argument which made Y very reckless in his driving
that resulted to them getting in an accident. The accident took the life of X. When Y filed his
claim, the insurer denied the same stating that Y has caused the death of X. Is the Insurer's
denial valid? why?