Question & AnswerQ&A (Republic Act No. 9829)
Republic Act No. 9829 is known as the "Pre-need Code of the Philippines."
The policy of the State is to regulate pre-need companies to ensure their operation is sound, efficient and stable to protect planholders’ interests and prevent practices prejudicial to public interest.
The Insurance Commission has the primary and exclusive supervision and regulation over all pre-need companies.
Pre-need plans are contracts or agreements for the benefit of planholders providing for future services, payments, or delivery of benefits at actual need or maturity, in exchange for cash or installments with or without interest or insurance coverage.
A planholder is any natural or juridical person who purchases pre-need plans, for whom or whose beneficiaries’ benefits are to be delivered as guaranteed by the pre-need company, including assignees and successors.
A pre-need company must have a minimum paid-up capital of One Hundred Million pesos (P100,000,000.00). Existing companies have varying minimums depending on the number and type of plans offered.
No person may operate as a pre-need company or engage in business as such without a license issued by the Insurance Commission, subject to annual renewal and compliance with prescribed requirements.
The Commission may impose cease and desist orders, suspend or revoke licenses, impose fines, disqualify officers or directors, and initiate criminal charges depending on the violation.
Selling or offering unregistered pre-need plans is punishable by imprisonment of one year and a fine equivalent to triple the contract or indicated price.
Pre-need plans must provide a minimum grace period of sixty (60) days from the due date of the first unpaid installment before a plan is considered lapsed.
The trustee must administer and manage the trust fund with utmost good faith, care, and prudence, have exclusive control over the funds, and avoid conflicts of interest, such as investing in or loaning to related persons.
Pre-need companies must submit an annual pre-need reserve valuation report, annual audited financial statements, and an annual statement of their trust fund for each plan type.
The Insurance Commission accredits actuaries responsible for certifying viability studies and actuarial reports, and may disaccredit actuaries for failure to meet qualifications or duties.
The Commission may order the company to cease business, appoint a receiver or liquidator to manage and dispose of assets for planholders' and creditors' benefit, and may order liquidation proceedings.
Persons convicted of crimes involving pre-need plans, fraud, moral turpitude, those enjoined by courts from fiduciary roles, insolvents, or those found unfit by the Commission may be disqualified.