I. General rules refer to Life Insurance
Accordingly, the Law Insurance Business, Article 4, Clause 13: “Life insurance refers to a type of insurance designed to offer protection for an insured person who is alive or dead”.
Article 4, Clause 16: “Insurance contract refers to an arrangement between a policyholder and an insurer or a foreign non-life insurer’s branch or a mutual providing microinsurance product whereunder the policyholder is bound to pay insurance premiums; the insurer, the foreign non-life insurer’s branch or the mutual providing microinsurance service is bound to pay indemnity or insurance benefits or coverage under contractual terms and conditions”.
Specific concepts in a life insurance contract are detailed as follows in Article 4, Clause 24, 25, 26, Law Insurance Business 2022:
“Policyholder (also the assured) refers to an entity or person entering into an insurance contract with an insurer, foreign non-life insurer’s branch or mutual providing microinsurance product and paying insurance premiums.”
“Insured person (also the insured) refers to an entity and person whose property, civil liability, health, life, obligations or economic benefit is insured under an insurance contract.”
“Beneficiary refers to an entity or person that is designated to receive insurance payout as agreed upon in an insurance contract.”
The compulsory content of an insurance contract:
“a) The policyholder, the insured, the beneficiary (if any), the insurer or the foreign non-life insurer’s branch;
b) Subject matter insured;
c) Amount insured or property value insured or limit of liability insured;
d) Scope of insurance coverage and insurance benefits; insurance rules, terms and conditions;
đ) Rights and obligations of the insurer, the foreign non-life insurer’s branch and the policyholder;
e) Insurance policy period, date of entry into force of the insurance contract;
g) Insurance premium, premium payment option;
h) Insurance coverage and payment option;
i) Dispute resolution method.”
The current provisions also detailed that the subject matter of a life insurance contract is lifespan and/or human life. It should be noted that in the case where the policyholders enter into a contract in light of the death of another person, the written consent of that person as well as the specific amount of the beneficiary and the amount of insurance is requested.
II. The right to unilaterally terminate the life insurance policy of the policyholder
The policyholders have the right to unilaterally terminate the insurance contract in the following cases:
To begin with, insurers and branches of foreign insurance companies do not accept the requirement for changes in risk level when there is a change in the factors serving as the basis for premium calculation, leading to a reduction in risks insured.
Moreover, when there is a transfer of the portfolio of insurance contracts, the policyholders have the right to unilaterally terminate the insurance contract if the transfer is not accepted.
Finally, for insurance contracts with a term of more than 1 year, within 21 days from the date of receipt of the insurance contract, the policyholders have the right to refuse to continue participating in insurance relationship.
III. Legal consequences
In case that the insurance contract is unilaterally terminated for the reason of not accepting the request for a change in the level of risk according to the demand of policyholders, “the insurer or the foreign non-life insurer’s branch shall be responsible for refunding insurance premiums paid in advance for days left to the expiry date of the insurance contract as agreed upon in the insurance contract. The insurer or the foreign non-life insurer’s branch shall be responsible for paying insurance indemnity or coverage as agreed upon in the insurance contract if the policy event occurs before the time of unilateral termination of the insurance contract”.
Regarding the situation where the insurance contract is unilaterally terminated due to the transfer of the insurance contract portfolio, the policyholders may be “refunded the cash surrender value or insurance premiums that he/she already pays in advance in proportion to the days left to the expiry date of the policy term, depending on specific types of insurance products. Where the property value is less than technical provisions in the transferred portfolio of insurance contracts, the refund that the policyholder receives shall be calculated according to the proportion of property value to technical provisions in the transferred portfolio of insurance contracts”.
Note: The cash surrender value of the insurance contract must be agreed upon by the parties and only applied when the parties consent.
In the situation that policyholders do not want to stick with the insurance contract within 21 days from the time of receiving the contract, they shall be “the policyholder may refuse to continue to participate in insurance. Where the policyholder refuses to continue to participate in insurance, the insurance contract shall be terminated and the policyholder shall be refunded insurance premiums that they have paid after deducting reasonable costs and expenses (if any) as agreed upon in the insurance contract; the insurer shall not be obliged to pay insurance indemnity or coverage in case of occurrence of a policy event.”. Nonetheless, it is considered the right to revoke the contract rather than the right to unilaterally terminate the contract and just valid only for contracts with a term of more than 1 year.
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