Parties to the Insurance Contract

The Insurer

The insurer is a person who undertakes to indemnify another. An insurer can be an individual person, a partnership, association or corporation duly licensed by the Insurance Commissioner to engage in the insurance business.

An insurance corporation is a corporation formed to do the following: 

1.) Save persons or corporations from loss, damage or liability caused by unknown, future or contingent events

2.) Indemnify/compensate persons or corporations from any such loss, liability or damage

3.) Guarantee the compliance/performance of contractual obligations or payment of the debts of others

An insurance corporations must have sufficient capital and assets under the Insurance Code as well as under the regulations from the Insurance Commission and a certificate of authority issued by the commission, which must be renewed every year. In case of a foreign insurance corporations who want to do business in the Philippines, these are the requirements:

1.) Appointment of a resident of the Philippines as a general agent for the purposes of receiving notices/proofs of loss as well as service of summons or other processes.

2.) Must possess paid-up unimpaired assets or capital and reserve not less than what is required of a domestic corporation.

3.) Must deposit securities satisfactory to the Insurance Commission for the benefit and security of policyholders.

4.) Its investments should not exceed 20% of the net worth of the foreign corporation or 20% of the capital of the registered enterprise.

The Insured

The insured is the person with the capacity to contract and has an insurable interest in the life or property of the insured (the insured can be himself or another person.) Married women can enter into insurance contracts without the consent of their husbands; minors, on the other hand, can't. The exception to minors is if they're already 18 years old.

In time of war, public enemies aren't allowed to enter into insurance contracts. "Public enemy" refers to the enemy country as well as its people. If the entity in question is a corporation, the nationality of the controlling stockholders is the determining factor, not the corporation's place of incorporation (corporate veil doctrine.) When war breaks out insurance contracts with public enemies lose their binding effect (Filipinas Cia de Seguros vs. Henefeld & Co., 89 Phil 54.)

The Beneficiary

The beneficiary is the person designated to receive the policy proceeds when risk attaches (read: when the loss takes place.) He may or may not be the insured. If an insured insures his own life he can designate another person as beneficiary, even if that person doesn't have an insurable interest in his life. A life insurance is similar to a donation as far as the beneficiary is concerned because it is founded on liberality, just like a donation. The exceptions are the following (Art.739):

1.) If made between persons who are guilty of concubinage or adultery at the time the designation was made (conviction isn't necessary)

2.) If made between persons guilty of the same criminal offense, as a consideration of that offense

3.) If made to a public officer, his wife, descendants or ascendants because of his office

In the above enumeration, although the designation will be void, the policy will still be binding. They just won't get the proceeds.

If the insurer will insure another person with himself as the beneficiary, he must have an insurable interest in that person's life. If property is insured, the beneficiary must have insurable interest in the property.

The designation of a beneficiary is revocable unless there is an express waiver of the right to revoke in the policy. If the beneficiary is designated as irrevocable, the insurance policy can't be assigned to someone else because the irrevocable beneficiary has a vested right (but in Art. 64 of the Family Code, an the innocent spouse can revoke the guilty spouse's designation as an irrevocable beneficiary after they are legally separated.) If there is no waiver of the right of revocation, assignment of the policy will be considered as an implied revocation. If the insured won't pay the premiums, the designated irrevocable beneficiary can continue the policy by paying the premiums himself.

If the premiums are paid from conjugal funds, the proceeds are also conjugal. If the beneficiary is someone other than the estate of a deceased person, the source of the premiums won't be relevant.

Illegitimate children can be designated as beneficiaries because there is no prohibition against naming illegitimate children as beneficiaries of an insurance contract.