Dear PAO,

My husband procured a life insurance policy from an insurance company here in Leyte, and I was the designated beneficiary. When he died in a vehicular accident, I promptly filed a claim with the insurance company, but my claim was denied on the ground that my husband did not disclose facts relevant to the issuance of the policy. According to the insurance company, he denied seeing a doctor for health problems when asked. The company alleged that their investigators found out that prior to his application, my husband was diagnosed with chronic migraine. In all honestly, he did not consider that a health problem, which is why he answered negatively when asked about seeing a doctor. Moreover, his death was not due to his undisclosed condition, but rather a collision. Can the insurance company legally deny my claim?

Juday of Baybay City

Dear Juday of Baybay City,

Under the law, “‘a’ neglect to communicate that which a party knows and ought to communicate, is called a concealment” and “[a] concealment whether intentional or unintentional entitles the injured party to rescind a contract of insurance” (Secs. 26 & 27, Presidential Decree 612, as amended by Republic Act 10607). Thus, even if your husband acted in good faith, by simply not disclosing relevant information, he misled the insurer in assessing the risks regarding the proposed insurance policy.

The Court in the case of Sunlife Assurance Company of Canada v. The Court of Appeals and Sps. Bacani (GR 105135, June 22, 1995, penned by Associate Justice Camilo Danganan Quiason) stated that “Section 26 of The Insurance Code is explicit in requiring a party to a contract of insurance to communicate to the other, in good faith, all facts within his knowledge which are material to the contract and as to which he makes no warranty, and which the other has no means of ascertaining. Said Section provides: ‘A neglect to communicate that which a party knows and ought to communicate. is called concealment.’ Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom communication is due, in forming his estimate of the disadvantages of the proposed contract or in making his inquiries (The Insurance Code, Sec. 31).”

In deciding against the Sps. Bacani, the Court pronounced: “The terms of the contract are clear. The insured is specifically required to disclose to the insurer matters relating to his health. The information which the insured failed to disclose were material and relevant to the approval and issuance of the insurance policy. The matters concealed would have definitely affected petitioner’s action on his application, either by approving it with the corresponding adjustment for a higher premium or rejecting the same. Moreover, a disclosure may have warranted a medical examination of the insured by petitioner in order for it to reasonably assess the risk involved in accepting the application.”

Further, your husband need not have died of the disease that he failed to disclose for the insurer to deny liability. As declared by the Court in the Sps. Bacani case, “Anent the finding that the facts concealed had no bearing to the cause of death of the insured, it is well settled that the insured need not die of the disease he had failed to disclose to the insurer. It is sufficient that his non-disclosure misled the insurer in forming his estimates of the risks of the proposed insurance policy or in making inquiries.”

Nonetheless, the insurer is only given two years from the date of issue or last reinstatement of a life insurance policy to rescind it. After the lapse of the said period, the concealment may no longer be used to deny liability. The law is clear, “‘[a]fter a policy of life insurance made payable on the death of the insured shall have been in force during the lifetime of the insured for a period of two (2) years from the date of its issue or of its last reinstatement, the insurer cannot prove that the policy is void ab initio or is rescindable by reason of the fraudulent concealment or misrepresentation of the insured or his agent.” (Sec. 48, Id.)

Hence, if the life insurance policy of your husband has been in force for at least two years, then the insurance company may no longer deny liability on the ground that your husband concealed material facts.

We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Thank you for your continued trust and support.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]