SC: Concealment may void insurance policy
Withholding one’s personal information, including a health condition, when applying for insurance is considered a fraudulent act that could lead to the claim being rejected.
This was the rationale of the Supreme Court in a Jan. 28 ruling released only on Tuesday that affirmed the cancellation of a claimant’s life insurance policy after his death because he did not disclose that he had a terminal illness at the time he applied.
The high tribunal upheld the earlier rulings of the Court of Appeals (CA) and a regional trial court in the case.
Manila Bankers Life Insurance Corp. (MB Life) had denied the claim made by his heirs because the man did not inform the company that he had been diagnosed with cancer and underwent procedures for treatment.
Without basis
Citing Republic Act No. 10607, or the Insurance Code, the Supreme Court said the petition for review on certiorari filed by the surviving heirs of the deceased individual “has no leg to stand on” because concealment, whether deliberate or not, entitles the injured party to revoke a contract.
“As unequivocally ruled by the CA, [the applicant’s] concealment is material considering the effect on MB Life in forming its estimate of whether to deny or approve his applications and in prescribing the amounts of the premiums thereon,” the high court said in the 13-page decision written by Associate Justice Japar Dimaampao.
It stressed that the law does not distinguish between intentional and unintentional “concealment” or failure to disclose relevant information.
“Thus, no proof of fraudulent intent is necessary in cases of rescission due to concealment,” it said.
The high court also found that the two-year incontestability rule under the Insurance Code was not applicable to the case because the policies being questioned were all short-term. The provision prohibits insurers from contesting a policy after it has been in effect for two years.
