Insured person can demand cash value

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Dear PAO,
What do you mean by “cash surrender value”? I am a plan holder of life insurance who wishes to avail of this cash surrender value. How much would I get for that value?
M.L. Rivera

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Dear M.L. Rivera,
Cash value or cash surrender value is an amount which the insurance company holds in trust for the insured to be delivered to him upon demand (The Manufacturers Life Insurance Co. v. Bibiano L. Meer, G.R. L-2910, June 29, 1951). Under Section 79 of Presidential Decree (P.D.) No. 612, entitled Insurance Code of the Philippines, the person insured who has defaulted in premium payment after three full annual premiums have been paid is entitled to a return of premium where the insurance is made for a definite period of time and the insured surrenders his policy. The insurance company shall pay the insured upon surrender of his policy such portion of the premium as corresponds with the unexpired time, at a pro rata rate, unless a shorter period rate has been agreed upon and appears on the face of the policy, after deducting from the whole premium any claim for loss or damage under the policy which has been previously accrued (Section 79, Insurance Code of the Philippines). In this regard, it is required by the Insurance Code of the Philippines for the insurance contract to include therein a table showing in figures of cash surrender value and paid-up options available under the policy year (Section 227 (h), Insurance Code of the Philippines). The insured has also an option in case of the said default for the payment of one or more paid-up benefits or plan specified in the policy of such value as may be purchased by the cash surrender value (Section 79, Insurance Code of the Philippines).

In order to fully answer your query, we advise that you examine your insurance policy to verify the amount or value for which you are entitled to once you surrender or give back your policy to the insurance company. In case of doubt or further clarification, it would be best to speak with your insurance agent or the officers of the insurance company.

However, be reminded that you can do nothing to divest the beneficiary of his rights without his consent. You cannot assign your policy, nor even take its cash surrender value without the consent of the beneficiary, neither can your creditor seize the policy or any right thereunder (The Philippine American Insurance Company v. Honorable Pineda, et. al. G.R. L-54216, 19 July 1989, citing Notes and Cases on Insurance Law by Campos and Campos, 1960).

Please be reminded that the above legal opinion is solely based on our appreciation of the problem that you have stated. The opinion may vary when other facts are stated.

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