What is a contract of insurance?

Sec. 2 (1) It is an agreement whereby one undertakes for a consideration to indemnify another
against the loss, damage or liability arising from an unknown or contingent event.
What may be insured?
Section 3. Any contingent or unknown event, whether past or future, which may damnify a
person having an insurable interest, or create a liability against him, may be insured against,
subject to the provisions of this chapter.
The consent of the husband is not necessary for the validity of an insurance policy taken out by a
married woman on her life or that of her children.
Who may or may not be insured?
Section 7. Anyone except a public enemy may be insured.
To whom does a person has an insurable interest in the life and health?
Section 10. Every person has an insurable interest in the life and health:
(a) Of himself, of his spouse and of his children;
(b) Of any person on whom he depends wholly or in part for education or support, or in whom he
has a pecuniary interest;
(c) Of any person under a legal obligation to him for the payment of money, or respecting
property or services, of which death or illness might delay or prevent the performance; and
(d) Of any person upon whose life any estate or interest vested in him depends.
Can the insured change his/her beneficiary designated in the policy?
Section 11. The insured shall have the right to change the beneficiary he designated in the
policy, unless he has expressly waived this right in said policy.
What happens if the beneficiary is an accomplice in the bringing about of death of the assured?
Section 12. The interest of a beneficiary in a life insurance policy shall be forfeited when the
beneficiary is the principal, accomplice, or accessory in willfully bringing about the death of the
insured; in which event, the nearest relative of the insured shall receive the proceeds of said
insurance if not otherwise disqualified.
Other notes in insurable interest:
Section 14. An insurable interest in property may consist in:
(a) an existing interest
(b) An inchoate interest founded on an existing interest
(c) An expectancy, coupled with in an existing interest in that of which expectancy arises

When must insurable interest exist in property and in life?

Section 19. An interest in property insured must exist when the insurance takes effect, and when
the loss occurs, but not exist in the meantime; and interest in the life or health of a person
insured must exist when the insurance takes effect, but need not exist thereafter or when the
loss occurs.
Cha V. CA (1997)
A non-life insurance policy such as the fire insurance policy taken by petitioner-spouses over
their merchandise is primarily a contract of indemnity. Insurable interest in the property insured
must exist a t the time the insurance takes effect and at the time the loss occurs.
The automatic assignment of the policy to CKS under the provision of the lease contract
previously quoted is void for being contrary to law and/or public policy. The proceeds of the fire
insurance policy thus rightfully belong to the spouses. The liability of the Cha spouses to CKS for
violating their lease contract in that Cha spouses obtained a fire insurance policy over their own
merchandise, without the consent of CKS, is a separate and distinct issue which we do not
resolve in this case.
Suter vs Union Surety and Insurance Co. Inc.
Suter had insurable interest. The test for insurable interest in property is whether or not the
insured will benefit in the propertys reservation or continued existence, or suffer a direct
pecuniary loss in its destruction. Suter, being the managing partner will clearly benefit in the
juke boxes preservation and would also be affected by its destruction.
SPS. GO IT BUN and CHOI PING TAI, Petitioners, v. HON. BALTAZAR R. DIZON
Choi Ping Tai, therefore, had no insurable interest in the property 21 as of the date of the fire
March 19, 1982 since his last day to redeem the property pursuant to Section 30, Rule 39 of
the Rules of Court expired on March 18, 1982.
Is insurance proceeds taxable?
No, insurance proceed is tax exempted.
El Oriente, Fabrica De Tabacos, Inc., V. Posadas (1931)
In reality, what the plaintiff received was in the nature of an indemnity for the loss which it
actually suffered because of the death of its manager and not taxable income. Proceeds of life
insurance policies paid to corporate beneficiaries upon the death of the insured are tax
exempted.
May a beneficiary in a life insurance policy recover the amount thereof although the insured died
after repeatedly failing to pay the stipulated premiums, such failure being caused by war?
When the life insurance policy provides that non-payment of premiums will cause its forfeiture,
war does NOT excuse non-payment and does not avoid forfeiture. Essentially, the reason why
punctual payments are important is that the insurer calculates on the basis of the prompt
payments.
Constantino v. Asia Life

Due to the express terms of the policy, non-payment of the premium produces its avoidance. In
Glaraga v. Sun Life, it was held that a life policy was avoided because the premium had not been
paid within the time fixed; since by its express terms, non-payment of any premium when due or
within the 31 day grace period ipso fact caused the policy to lapse.