Question & AnswerQ&A (GSIS Resolution NO. 179)
The Automatic Policy Loan (APL) is a feature that keeps the policy in force by taking out a loan amount against the unrestricted portion of the policy's accumulated cash value (CV) or termination value (TV) to pay unpaid premiums after the due date or grace period.
The GSIS life insurance programs that include APL are: Enhanced Life Policy (ELP), Life Endowment Policy (LEP), Optional Additional policies and the Unlimited Optional Life Insurance (UOLI).
APL is applied only if the policy has an unpaid premium after the grace period and has sufficient CV or TV to cover the unpaid premium or a fraction thereof, including any existing policy loan and corresponding interests.
A policy is considered lapsed when the combined outstanding balances of its APL and policy loan exceed the cash value (for LEP) or termination value (for ELP) of the policy.
For LEP and ELP, an interest rate of 6% per annum compounded monthly (0.5% per month compounded monthly) is imposed. For Optional Additional and UOLI policies, an interest rate of 8% per annum compounded annually (0.64% per month compounded monthly) or the rate indicated in the policy contract is imposed.
In the event of policy lapse, the regular/optional policy loan and the APL are deemed paid by the accumulated cash value or termination value, the loan accounts are closed, and the member may be given a grace period to pay overdue premiums or the policy may be converted or reinstated under certain conditions.
For lapsed ELP, if the member is still in active service, there is a 60-day grace period starting from the day the premiums became due and unpaid to pay the premiums either through agency remittance or direct payment.
A compulsory life insurance policy shall automatically be considered lapsed after twelve (12) consecutive months of non-payment of premiums, even if there is still a balance in the cash or termination value.
If the member is separated, the balance from CV/TV after automatic lapse is used to pay other existing GSIS loan obligations, and any excess may be paid to the policyholder upon request or held as a seed fund for a new or reinstated ELP in case of re-entry into government service.
APL Balance (Current Month) = APL Balance (Previous Month) + Interest Due on APL Balance (Previous Month) + Unpaid Premium Due for the Current Month (full or partial).