Section 4. Definition of Terms. — Whenever used in this Code, the following terms shall have their respective meanings:
"Commission" refers to the Insurance Commission.
"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.
"Pre-need company" refers to any corporation registered with the Commission and authorized/licensed to sell or offer to sell pre-need plans. The term "pre-need company" also refers to schools, memorial chapels, banks, nonbank financial institutions and other entities which have also been authorized/licensed to sell or offer to sell pre-need plans insofar as their pre-need activities or business are concerned.
"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. The term includes the assignee, transferee and any successor-in-interest of the planholder.
"Beneficiary" refers to the person designated by the planholder as the recipient of the benefits in the pre-need plan.
"Contract price" refers to the stipulated price in the pre-need plan.
"Benefits" refers to the payment of monetary considerations and/or performance of future services which the pre-need company undertakes to deliver either to the planholder or his beneficiary at the time of actual need or agreed maturity date, as specified in the pre-need plan.
"Sales counselors" refers to natural persons who are engaged in the sale of, or offer to sell, or counsel of prospective planholders for the purpose of selling, whether or not on commission basis, pre-need plans upon the authority of the pre-need company.
"Affiliate of, or affiliated with, a specified person" refers to a person that directly or indirectly, through one (1) or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. Exercising control over a legal entity shall mean any one of the following: (1) owning either solely or together with affiliated persons more than twenty-five percent (25%) of the outstanding capital stock of a legal entity; and (2) being an officer or director of such legal entity.
"Trust fund" refers to a fund set up from the planholders' payments to pay for the cost of benefits and services, termination values payable to planholders and other costs necessary to ensure the delivery of benefits or services to planholders as provided for in the contracts.
"Pre-need reserve liabilities" refers to the measure of the liabilities of the pre-need company for its in-force plans or lapsed plans as of valuation date.
"Liquidity reserve" refers to a portion of the trust fund set aside by the trustee to cover benefits due to planholders for the ensuing year.
"Fixed value plans" refers to pre-need plans whose benefits and costs are fixed and predetermined at the inception or purchase of the plan.
"In-force plan" refers to a plan for which the pre-need company has an outstanding obligation for the delivery of benefits or services or payment of termination value.
"Lapsed plan" refers to a plan that is delinquent in payment of installments provided for in the contract, the delinquency of which extends beyond the grace period provided for in the plan or contract.
"Cancelled plan" refers to a plan that can no longer be reinstated by reason of delinquency in the payment of installments for more than two (2) years or a longer period as provided in the contract, counted from the expiry of the grace period provided for in the plan or contract.
"Scheduled benefit plans" refers to plans the date of availment of the benefits of which is set at the inception or purchase of the plan.
"Contingent benefit plans" refers to plans the timing of the provision of the benefits of which is conditional on the occurrence of the contingency.
"Risk-based capital" refers to a method to measure the minimum amount of capital that a pre-need company needs to support its overall business operation. It is used to set capital requirements, considering the size and degree of risk taken by the pre-need company.
"BSP" refers to "Bangko Sentral ng Pilipinas".
The terms not otherwise defined under this Code shall be construed in their usual and commonly understood trade, business, commercial or investment meaning.