Insurance: Null & Void
1. What will happen if I die during the contestability period? We can never be sure nothing will happen.
2. How about after the 2-year contestability period? Will my family be able to claim this time?
Under Article 1409 of the Civil Code, one of the void and inexistent contracts is where it is expressly prohibited or declared void by law. Insurance agents and companies here in the Philippines are prohibited from selling insurance abroad because the license issued to them is good only within the Philippines. Thus, it follows that there cannot be an insurance policy born out from solicitations made by insurance agents and companies abroad.
Under Article 1410 of the Civil Code, the action or defense for the declaration of the inexistence of a contract does not prescribe. This means that the insurance company can claim that the contract is void at anytime, if indeed it is void. There is no time limit for the company to raise that. The contract being void, the company can refuse to pay the benefits under the premise that they have no obligation. Do note that in void contracts, the parties cannot be compelled to fulfill their obligations because the very source of those duties are inexistent.
1. If he wanted to keep his policy, he can request for a letter of acceptance from the company which will be heard and decided by a Committee.
2. If he wants nothing to do with his policy anymore, he can request for a cancellation of the policy and refund of all the premiums he paid.