I have been paying installment payments for a memorial lot for almost four years now. Last month, however, I defaulted on my payment, because I had been struggling with my finances. The pre-need company told me that under the pre-need plan agreement that I signed with the company, I should pay them within 30 days from the date of my non-payment. Otherwise, they will forfeit my plan agreement. The 30-day grace period is too short for me to be able to comply. Please advise me on the matter.
The regulation of the establishment of pre-need companies is governed by the Pre-Need Code of the Philippines (Republic Act 9829), and under this act, pre-need plans and pre-need companies are under the supervision of the Insurance Commission.
Also, included in this code are the guidelines in case the plan holder defaults on payment of his/her plan and/or opts to reinstate his/her plan. Chapter VI, Section 23 thereof provides:
“Section 23. Default; Reinstatement Period. – The pre-need company must provide in all contracts issued to planholders a grace period of at least sixty (60) days within which to pay accrued installments, counted from the due date of the first unpaid installment. Non-payment of a plan within the grace period shall render the plan a lapsed plan. Any payment by the planholder after the grace period shall be reimbursed forthwith, unless the planholder duly reinstates the plan. The planholder shall be allowed a period of not less than two (2) years from the lapse of the grace period or a longer period as provided in the contract within which to reinstate his plan. No cancelation of plans shall be made by the issuer during such period when reinstatement may be effected.
Within thirty (30) days from the expiration of the grace period and within thirty (30) days from the expiration of the reinstatement period, which is two (2) years from the lapse of the grace period, the pre-need company shall give written notice to the planholder that his/her plan will be canceled if not reinstated within two (2) years. Failure to give either of the required notices shall preclude the pre-need company from treating the plans as canceled.”
It is clear from the foregoing that there should be at least 60-day grace period specified in your plan within which to pay accumulated unpaid installments, counted from the due date of the first unpaid installment in case a planholder defaulted on his/her payment. The 30-day grace period in your pre-need plan agreement with your pre-need company is violative of the provision specified in the Pre-Need Code. Nevertheless, you can reinstate your plan within two (2) years from the lapse of the grace period as mentioned in the second paragraph of Section 23 of RA 9829.
As the agency that has primary and exclusive supervision and regulation over these pre-need companies, you may raise your concern with the Insurance Commission. Part of its function is to impose sanctions, institute cases and/or prosecute offenders for the violation of the Pre-Need Code, related laws, rules, regulations and orders issued pursuant thereto.
We hope that we were able to answer your queries. Please be reminded that 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.