Objectives
- Ensure uniformity and proper implementation of APL and policy lapse under automated platform.
- Administer, control, and monitor APL and lapse provisions effectively.
Definitions
- Life Insurance Policy: Legal contract guaranteeing specified benefits upon death or other events, includes LEP, ELP, Optional Additional, and UOLI.
- Unrestricted Portion of CV/TV: CV/TV minus total indebtedness (existing loans and APL).
- APL: Loan against unrestricted CV/TV to pay overdue premiums after due date/grace period.
- Automatic Premium Loan (APL) Provision: Enables unpaid premiums to be paid via automatic loan against CV/TV once policy has earned CV/TV.
- APL Balance: Outstanding principal plus interest of APL.
- APL Program: Automated system (ILMAAAMS) to implement and monitor APL.
- Cash Value (CV): Accumulated value in LEP and Optional policies payable on surrender before maturity.
- Termination Value (TV): Accumulated value under ELP.
- Premium Due Date: Date premiums are due with grace periods differing by policy type.
- Grace Period: Time after due date to pay premiums without interest; varies by policy type.
Coverage
- Policies covered: LEP, ELP, Optional Additional, and UOLI.
Automatic Policy Loan (APL) Application
- APL applies only if premium unpaid after grace period and sufficient CV/TV to cover unpaid amounts and loans.
- Partial premiums covered by APL if payment insufficient after deductions.
- Interest rates: 6% per annum compounded monthly for LEP/ELP, 8% per annum compounded annually for Optional Additional/UOLI.
- Interest calculated monthly, fractions count as full month.
- Interest on APL is independent of agency remittance penalties.
- Formula for APL balance includes previous balance, monthly interest, and current unpaid premiums.
- Payments can be made via agency remittance or life insurance claim deductions.
- APL not included in monthly agency billing.
Policy Lapse
- Policy lapses when APL plus policy loan balances exceed CV/TV.
- Upon lapse, existing loans are deemed paid by CV/TV and accounts closed.
- Payments received post-lapse are applied to other loans or refunded.
- For lapsed ELP, active members get 60-day grace period to pay premiums.
- Death during grace period means benefits paid less outstanding obligations.
- Lapsed ELP reinstated automatically upon payment.
- Lapsed LEP active members issued new ELP upon premium receipt.
- Unposted payments before lapse applied to new policy termination value.
- Billing ceases for lapsed optional policies.
Additional Conditions for Lapsing LEP or ELP
- Compulsory policies lapse automatically after 12 consecutive months of non-payment, regardless of CV/TV balance.
- If CV/TV remains after lapse:
- Active members: Amount used as seed fund for new ELP or added to reinstated ELP.
- Separated members: Balance applied to other GSIS loans; excess refunded or held for future coverage if re-employed.
Lapsing Process
- Accounts Management Unit (AMU) regularly identifies lapsed policies.
- AMU issues Notices of Lapse immediately to affected members.
- Membership Unit verifies active status and assists in reinstatement or conversion to ELP.
Instructions
- ITSG to develop and enhance automated systems for APL and lapse implementation.
- Operations and Controller Groups to provide requirements and support.
- Operating units to revise manuals and submit for official codification.
- Controller Group to provide accounting entries and reports.
- All inconsistent prior guidelines and orders are deemed amended or superseded.