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Pre Need Plans PPT Notes

The document discusses regulations for pre-need plans in the Philippines. It defines pre-need plans and companies, outlines requirements for registering plans and licensing sales agents. It also describes what happens if a plan holder defaults on payments, including grace and reinstatement periods. The document also discusses grounds for denying, suspending or canceling registrations or licenses, and settlement of claims against pre-need companies.

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Reyniere Alo
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0% found this document useful (0 votes)
220 views3 pages

Pre Need Plans PPT Notes

The document discusses regulations for pre-need plans in the Philippines. It defines pre-need plans and companies, outlines requirements for registering plans and licensing sales agents. It also describes what happens if a plan holder defaults on payments, including grace and reinstatement periods. The document also discusses grounds for denying, suspending or canceling registrations or licenses, and settlement of claims against pre-need companies.

Uploaded by

Reyniere Alo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Pre-Need Plan RA 9829 Initial denial is on the basis of its latest audited financial

Definition statement, trust fund annual statements and reserves


"Pre-need plans" are contracts, agreements, deeds or valuation report.
plants for the benefit of the plan holders which provide
for the performance of future service/s, payment of The commission shall cancel the registration of any pre-
monetary considerations or delivery of other benefits at need plan by issuing an order to this effect, setting forth
the time of actual need or agreed maturity date, as its findings in respect thereto, if, after due notice and
specified therein, in exchange for cash or installment hearing, it shall appear that the issuer:
amounts with or without interest or insurance coverage i. insolvent
and includes life, pension, education, interment and other ii. Has violated any of the provisions of the code,
plans, instruments, contracts or deeds as may in the or the rules promulgated pursuant thereto, or
future xx any order of the commission of which the issuer
has notice;
“Pre-need Company” iii. Has been or is engaged or is about to engage
Refers to any corporation registered with the Commission in fraudulent transactions;
and authorized/licensed to sell or offer to sell pre-need iv. Is in any other way dishonest or has made any
plans. It may also refer to schools, memorial chapels, fraudulent representation in any circular or other
banks, nonbank financial institutions and other entities literature that has been distributed concerning
which have also been authorized/licensed to sell or offer the issuer or its pre-need plans; and
to sell pre-need plans insofar as their pre-need activities v. Does not conduct its business in accordance
or business are concerned. with law

Pre-need v. Insurance A registration of a pre-need plan may be cancelled or a


Pre-need Insurance permit to sell may be suspended or cancelled by the
Pre-determined Period Uncertain time commission upon petition for its suspension and/or
Contingent of Future Fixed amount cancellation, as the case may be, by the issuer as herein
Liability provided.

Registration of Pre-need Plans Licensing of Sales Counselors


1. Registration Statement should be submitted within 45 Qualifications:
days after the grant of license to do business or every pre- 1. Must be of good moral character and must not have
need plan which the pre-need company intends to offer been convicted of any crime involving moral turpitude
for sale to the public. 2. Undergone a training program approved by the IC and
2. Contract forms and advertising materials also require such fact has been certified under oath by a duly
approval of IC. authorized representative of a pre-need company
3. Information brochure must be provided to prospective 3. Passed a written examination administered by the IC
plan holders. The License shall automatically expire every 30th day of
June or such date of every year as may be fixed by the
The information shall contain an explanation of the Commission xxx
principal features of the pre-need plan, a statement that
the plan holder may avail of a default or reinstatement Grounds for denial, suspension, revocation:
period within which to reinstate his lapsed plan, and the (a) Materially misrepresented statements in the
conditions of the same and the rates of return for application requirements;
scheduled benefit plans and illustrative yields for (b) Obtained or attempted to obtain a license by fraud or
contingent benefit plans, and such other information that misrepresentation;
the Commission shall require by rule. (c) Materially misrepresented the terms and conditions of
pre-need plan which he sold or offered to sell;
4. Registration may be denied on the ground of solvency (d) Solicited, sold or attempted to solicit or sell a pre-need
or trust fund deficiencies, or paid-up capital impairment. plan by means of false or misleading representation and
5. Cancellation of registration may be voluntary or other fraudulent means;
involuntary. (e) terminated for cause from another pre-need
company;
(f) Similar grounds found in Section 11 of these rules;

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(g) Willfully allowing the use of one’s license by a non-
licensed or barred individual; and Recovery of No fraud – legal action against the
(h) Analogous circumstances. Investment Pre-need Company
With fraud or illegality – legal
Licensing of Agents action against officers or
Requirements controlling owners
1. Submission of General Agency Agreement and other
documentary requirements Claims Settlement
- must be registered corporation or partnership in the PH IC determines whether the payment of the claim of the
-agents soliciting or selling pre-need plans must possess plan holder has been unreasonably denied or withheld.
the same qualifications as the sales counselors
-must be authorized to receive notices, summons and If found to have denied or withheld the claim, the pre-
legal processes for and in behalf of the pre-need company need company shall be liable to pay damages, consisting
concerned in connection with actions or legal of actual damages, attorney’s fees and legal interest, to
proceedings against said pre-need company be computed from the date the claim is made until it is
fully satisfied.
The application of a general agent shall not be approved
unless a salesman is qualified and licensed by the Other Claims Settlement
commission. The general agent shall cease solicitation i. Knowingly misrepresenting to claimants
and selling of pre-need plans when no natural person pertinent facts or plan provisions relating to
holds a valid license representing the general agent. coverages at issue;
ii. Failing to acknowledge with reasonable
A license issued to a general agent shall authorize only the promptness pertinent communications with
individual or individuals named in the license exercise respect to claims arising under its plan;
iii. Failing to adopt and implement reasonable
What happens if you have a pre-need plan and you're standards for the prompt investigation of
supposed to make payments of the premium but you claims arising under its plan;
defaulted? iv. Failing to provide prompt, fair and equitable
Grace Period - 60 days after default of the 1st installment settlement of claims submitted in which
(default) liability has become reasonably clear; or
Reinstatement Period - not less than 2 years from end of v. Compelling plan holders to institute suits or
grace period recover amounts due under its plan by
Notice of Cancellation - 30 days after lapse of grace period offering, without justifiable reason,
and 30 days before end of reinstatement period substantially less than the amounts
Notice of termination is required from plan holder. ultimately recovered in suits brought by
them.
Any offer by the pre-need company to terminate the pre-
need plan for consideration exceeding the termination Trust Fund
value provided in the plan contract shall not require the In respect of pre-need companies, the trust fund is set up
prior approval of the Commission, provided that (i) the from the plan holders’ payments to pay for the cost of
consideration shall be below the pre-need reserves for benefits and services, termination values payable to the
the specific plan, (ii) the offer is accepted by the pre-need plan holders and other costs necessary to ensure the
plan holders, and (iii) the offer shall not prejudice the delivery of benefits or services to the plan holders as
claim of plan holders who do not avail of such offer. provided for in the contracts. The trust fund is to be
treated as separate and distinct from the paid-up capital
Claims Settlement of the company, and is established with a trustee under a
Period Scheduled benefit plans – trust agreement approved by the Securities and Exchange
Settlement immediately; after 15 days interest Commission to pay the benefits as provided in the pre-
(12%) will be demandable need plans.
Contingent benefit plan – 30 days
after submission of all necessary The term “benefits” used in Section 16.4 is defined as the
documents “money or services which the Pre-Need Company
undertakes to deliver in the future to the plan holder or

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his beneficiary”. Hence, benefits can only mean payments
or services rendered to the plan holders by virtue of the
pre-need contracts.

The CA observed that only the paid value of the MRT III
Bonds should be made part of the trust fund; that with
the MRT III Bonds being subject to the unpaid seller's line,
Smart and FEMI were considered as contributors to the
source of the assets of the trust fund, and for that reason
were not to be treated as ordinary creditors of the
respondent. (SEC v. CAP, 2018)

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