Suicide and a life insurance

Can you take out a life insurance and then commit suicide? Will the insurer have to pay if you kill yourself? It depends.
What about if the insured was killed in a robbery? Is there a possibility the insurer will not have to pay the beneficiaries of the life insurance policy? Again, the answer is, it depends. Here are several digests of cases we had to read for our insurance class this semester.

CALANOC v CA (G.R. L-8151): Melencio Basilio was a security guard who died while on duty. The insurance company paid his widow, Virginia Calanoc, the face value of the policy, P2,000, but refused to give the additional sum of P2,000 in the supplementary contract covering death by accident. The insurance company said he was killed by someone participating in a robbery and while making an arrest, two contingencies expressly excluded in the contract.
Basilio was killed as he stood outside the iron gate of Atty Ojeda, as they tried to get into the house where they suspected a robber had broken into.
The Court of Appeals upheld the company, that said Basilio’s killing was not an accident, but rather an intentional act on the part of the robber. The Supreme Court ruled that there was no proof that it was intentional, that the robber had aimed for Basilio, because there was nothing on record that showed how the fatal shot was fired while it was an accident on the part of Basilio. The house being robbed was not the one he was guarding, and he had earlier refused to go to the house without a policeman. Insurer ordered to pay.

BIAGTAN v CA (G.R. L-25579): Biagtan was killed as his house was being robbed. The insurance company paid the basic amount of P5,000 but refused to pay the additional P5,000 under the accidental death benefit clause, on the ground that his death was the result of injuries intentionally inflicted by third parties and was not covered. The trial court ruled that there was no proof that the robbers intended to kill Biagtan, or just to scare him away by thrusting at him with their knives. The Supreme Court held otherwise, pointing out that there were nine wounds in all. The exception in the accidental benefit clause does not speak of the purpose – whether homicidal or not – of a third party in causing the injuries, but only of the fact that such injuries have been intentionally inflicted. Nine wounds inflicted with bladed weapons at close range cannot be considered innocent insofar as intent is concerned. The manner of execution of the crime permits no other conclusion.

Dissent: The case of Calanoc is controlling. The thrusts seemed to be a reflex action on the part of the robbers upon being surprised by Biagtan. The accidental death benefit clause carries several exceptions, with an ambiguous fifth paragraph saying that injuries inflicted intentionally by a third party were among the exceptions. The ambiguous clause conflicts with all the other four exceptions and seemingly except all other injuries, intentionally inflicted by a third party, regardless of any violation of law or provocation by the insured, and defeat the very purpose of the policy of giving the insured double indemnity in case of accidental death by external and violent means.
Applying the rule of noscitus a sociis, the double indemnity policy covers the insured against accidental death, whether caused by fault, negligence or intent of a third party which is unforeseen and unexpected by the insured. All the associated words and concepts in the policy plainly exclude the accidental death from the coverage of the policy only where the injuries are self-inflicted or attended by some proscribed act of the insured or incurred in some expressly included calamity such as riot, war or atomic explosion. Besides, two other insurance companies which also covered the insured paid the benefits.

SIMON DE LA CRUZ(**can’t remember the exact case): Eduardo de la Cruz, a mucker at the Itogon-Suyoc Mines, was killed in a boxing bout. The insurer refused to pay, saying that his death was caused by his participation in the boxing bout, which was voluntary and not accidental. The trial court ruled in favor of de la Cruz. The Court upheld the decision.
1. An accident is an event that takes place without one’s foresight or expectation – an event that proceeds from an unknown cause, or is an unusual effect of a known cause. The fact that boxing is attended with some risks of external injuries does not make any injuries received in the course of the game not accidental. In boxing, as in other equally physically rigorous sports, such as basketball or baseball, death is not ordinarily anticipated to result. If it ever does, the injury or death can only be accidental or produced by some unforeseen happening or event.
2. Death or injury does not result from accident or accidental means within the terms of an accident policy if it is the natural result of the insured’s voluntary act, unaccompanied by anything unforeseen except the death or injury. Where the death or injury is not the natural or probable result of the insured’s voluntary act, or if something unforeseen occurs in the doing of the act which produces the injury, the resulting death is within the protection of policies insuring against death or injury from accident. In this case, de la Cruz slipped – which gave his opponent the chance to land the head blow that eventually killed him.
3. The policy specifically excluded from its coverage several sports but did not mention boxing. The court held that failure of the insurer to expressly include boxing among the prohibitive risks meant it did not intend to exempt itself from liability for such death.

SUN INSURANCE OFFICE LTD v CA: Felix Lim Jr shot himself dead and the family tried to claim on the policy. The insurer refused, saying that when he put a gun to his head, though thinking it was not loaded, he willfully exposed himself to needless peril and removed himself from the coverage of the insurance policy. The family said that Lim had removed the magazine before and fully believed that the gun was not loaded. As such, it was an accident that should be covered by the policy. The court held that while Lim was unquestionably negligent, that should not prevent his widow from recovering from the insurance policy he obtained precisely against accident. There is nothing in the policy that relieves the insurer of the responsibility to pay the indemnity agreed upon if the insured is shown to have contributed to his own accident.

FINMAN GENERAL ASSURANCE CORP v CA (G.R. 100970): Carlie Suposa was killed while on his way home from a party. When his family tried to collect on the insurance proceeds, the insurer denied the claim saying that murder and assault were not within the scope of coverage of the insurance policy, because it was not accidental but a deliberate and intentional act of the assailant. The Insurance Commission said the death was covered by the policy, a decision upheld by the CA.
The CA pointed out that:
1. The record is barren of how the stab wound was inflicted
2. While the act may not exempt the unknown perpetrator from criminal liability, the happening was a pure accident on the part of the victim
3. The personal accident policy enumerated 10 circumstances wherein no liability attaches to insurer and murder and assault were not expressly mentioned. Failure of the insurer to include these leads to the conclusion that it did not intend to exempt itself from liability for such death.

ETERNAL GARDENS MEMORIAL PARK CORP v PHILAMLIFE (G.R. 166245): Eternal Gardens took out a group life policy insurance for customers buying its memorial plots on installment basis. When it tried to claim on behalf of one of its lot buyers, John Chuang, Philam Life denied the claim, saying that at the time Chuang died, it had yet to receive an application for group insurance for Chuang, and so could not have approved any. Premiums, though paid, do not connote approval of the insurance coverage but are held by the insurer in trust for the payor until the prerequisites for insurance coverage are met. The trial court decided in favor of Eternal, holding that the application for insurance was accomplished before Chuang died. The CA reversed, finding instead that the application was not submitted and that non-accomplishment of the submitted application form violated sec 26 of the Insurance Code.
The Supreme Court ruled in favor of Eternal, finding that Philamlife received a letter stating that the insurance forms are attached to the letter. Although Philam did not approve the application, an ambiguous provision saying that “the insurance of any eligible lot purchaser shall be effective on the date he contracts a loan with the assured. However, there shall be no insurance if the application of the lot purchaser is not approved by the company.”
The first sentence appears to state that insurance coverage of clients of Eternal become effective upon contracting a loan with Eternal while the second sentence implies that Philamlife’s approval of the contract is required first. The vague provision must be construed in favor of the insured, and the provisions harmonized to mean that upon a party’s purchase of a memorial lot on installment from Eternal, an insurance contract covering the lot purchaser is created and the same is effective and valid until terminated by Philamlife by disapproving the insurance application. In order to protect the interest of insurance applicants, insurance companies must be obligated to act with haste upon insurance applications, to either deny or approve the same, or otherwise be bound to honor the application as valid, binding, and effective insurance contract.

GREAT PACIFIC LIFE ASSURANCE CORP v CA (G.R. 113899): Dr. Wilfredo Leuterio, a housing debtor of DBP, applied for membership in Grepalife’s group life insurance plan DBP housing loan mortgagors. Grepalife insured him to the extent of his DBP mortgage indebtedness, P86,200. When Eleuterio died of massive cerebral hemorrhage the following year, Grepalife denied the claim alleging that Leuterio failed to disclose he was suffering from hypertension, and that the non-disclosure constituted concealment that justified the denial. Because of Grepalife’s refusal to pay, DBP foreclosed on the mortgage on the property to satisfy the outstanding loan.

Grepalife raised several issues on appeal:

1.Leuterio’s widow filed the suit, not DBP, which was the party in interest.
Leuterio assigned the proceeds to DBP, but in a mortgage redemption insurance, the mortgagors remains the party in interest because the insurance also protects his interests. (so widow, as heir, may succeed him as party in interest).

MORTGAGE REDEMPTION INSURANCE. A device to protect both mortgagee and mortgagor. In case the mortgagor dies, the proceeds of the insurance are used to pay the mortgage debt, relieving the heirs of the mortgagor from paying it. The mortgage obligation is extinguished by the application of the insurance proceeds to the mortgage indebtedness. Where the mortgagor pays the insurance premium under the group insurance policy, making the loss payable to the mortgagee, the insurance is on the mortgagor’s interest, and the mortgagor continues to be a party to the contract. In this type of policy insurance, the mortgagee is simply an appointee of the insurance fund, such loss-payable clause does not make the mortgagee a party to the contract. The insured may still be regarded as the party in interest, although he has assigned the policy for the purpose of collection, or has assigned as collateral security any judgment he may obtain. However, where the mortgagee under a mortgage redemption insurance has already foreclosed on the mortgage, it cannot collect the insurance proceeds – these rightly belong to the heirs of the mortgagor.
Sec. 8. Unless the policy provides, where a mortgagor of property effects insurance in his own name providing that the loss shall be payable to the mortgagee, or assigns a policy of insurance to a mortgagee, the insurance is deemed to be upon the interest of the mortgagor, who does not cease to be a party to the original contract, and any act of his, prior to the loss, which would otherwise avoid the insurance, will have the same effect, although the property is in the hands of the mortgagee, but any act which, under the contract of insurance, is to be performed by the mortgagor, may be performed by the mortgagee therein named, with the same effect as if it had been performed by the mortgagor. Since a policy of insurance upon life or health may pass by transfer, will or succession to any person, whether he has insurable interest or not, and such person may recover it whatever the insured might have recovered, the widow of Dr. Leuterio may file the suit against the insurer.

2. CONCEALMENT. The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. Misrepresentation as a defense of the insurer to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and convincing evidence rests upon the insurer. Petitioner failed to clearly and satisfactorily establish its defense, and is therefore liable to pay the proceeds of the insurance. (No autopsy proving that Eleuterio died of hypertension. Death certificate said cerebral hemorrhage, probably secondary to hypertension. )

3. PECUNIARY ESTIMATION. A life insurance is a valued policy. Unless the interest of a person insured is susceptible of exact pecuniary measurement, the measure of indemnity under a policy of insurance upon life or health is the sum fixed in the policy.

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