After reading “What are Pre-Need Plans?”, read also “What are Treasury Shares?”
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Pre-need plans refers to contracts that provide for the performance of future service, payment of monetary consideration or delivery of other benefits at the time of actual need or agreed maturity date of the contract.
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This includes life, pension, education, interment, and other plans, instruments or contracts.
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All pre-need companies are supervised and regulated by the Insurance Commission.
The law says:
Section 4(b) of Republic Act No. 9829, or the Pre-Need Code provides that:
Section 4. Definition of Terms. – Whenever used in this Code, the following terms shall have their respective. meanings;
x x x
(b) “Pre-need plans” are contracts, agreements, deeds or plans for the benefit of the planholders which provide for the performance of future service/s, payment of monetary considerations or delivery of other benefits at the time of actual need or agreed maturity date, as specified therein, in exchange for cash or installment amounts with or without interest or insurance coverage and includes life, pension, education, interment and other plans, instruments contracts or deeds as may in the future be determined by the Commission.
x x x
Who are the parties to a Pre-Need Plan?
The three (3) parties to a pre-need plan are the pre-need company, the planholder, and the beneficiary.
A pre-need company is any corporation registered with the Commission and authorized/licensed to sell or offer to sell pre-need plans. This includes schools, memorial chapels, banks, nonbank financial institutions and other entities which have also been authorized/licensed to sell pre-need plans insofar as their pre-need activities or business are concerned.
A planholder refers to any natural or juridical person who purchases pre-need plans from a pre-need company for whom or for whose beneficiaries’ benefits are to be delivered, as stipulated and guaranteed by the pre-need company. This includes the assignee, transferee and any successor-in-interest of the planholder.
A beneficiary refers to the person designated by the planholder as the recipient of the benefits in the pre-need plan.
What is the role of the Insurance Commission in relation to pre-need plans?
All pre-need companies, as defined under the Pre-Need Code, shall be under the primary and exclusive supervision and regulation of the Insurance Commission. (Pre-Need Code, Section 5).
Section 20, Rule 4 of the Implementing Rules and Regulations of the Pre-Need Code states that pre-need plans shall be advertised and sold in an appropriate manner.
Likewise, it shall be unlawful for any pre-need company to advertise itself or its pre-need plans unless the Insurance Commission has approved such advertising material. (IRR, Pre-Need Code, Section 18).
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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