introduction:

 

The applicant has the right to terminate the insurance contract at will. In a life insurance contract, once the applicant exercises this right and terminates the insurance contract, the insurer shall, in accordance with the law, return the cash value of the policy to the applicant within a certain period of time. In recent years, with the enhancement of people's insurance awareness and the recognition of the cash value of life insurance policies, attention has been paid to whether the person subjected to execution has taken out life insurance in civil enforcement cases. In enforcement cases, some applicants for enforcement have voluntarily requested the court to enforce the cash value of the life insurance policy of the person subjected to enforcement, while some courts have taken the initiative to take different enforcement measures against this emerging subject matter of enforcement. Some courts have incorporated insurance information into the enforcement data system. However, whether the cash value of a policy can be enforced as the subject matter of enforcement is not explicitly stipulated in Chinese law. In practice, different courts have different opinions. This article will briefly review and analyze the judicial practice of policy cash value enforcement in China, and summarize the latest judicial trends in policy cash value enforcement.

 

1、 Legislative Status Quo of Policy Cash Value Enforcement

 

In China's Insurance Law, Civil Procedure Law, and related judicial interpretations, there are no clear provisions on whether the cash value of insurance policies can be enforced. During the drafting process of the Third Interpretation of the Insurance Law, the legislative department "proposed to provide for this issue, but due to the fact that this issue belongs to procedural law, it is not appropriate to provide for it in the judicial interpretation of substantive law, so the relevant content has not been retained.".

 

Due to the emergence of cases of enforcing the cash value of insurance policies, some regional courts have issued local judicial documents to regulate the enforcement of the cash value of insurance policies, but the content of regulations in various regions is not uniform.

 

In 2015, the Higher People's Court of Zhejiang Province issued the "Notice on Strengthening and Regulating the Enforcement of Property Interests in Personal Insurance Products Owned by Enforced Persons" (ZGFZ [2015] No. 8), which stipulates in Article 1, "The property rights of the policyholder, the insured, or the beneficiary when purchasing traditional, dividend, investment connected, or universal personal insurance products, the survival insurance benefits that can be obtained according to the policy agreement, or the policy dividends paid in cash, or the cash value of the policy after surrender belong to the property rights of the policyholder, the insured, or the beneficiary. When the policyholder, the insured, or the beneficiary is the enforced person, the property rights belong to the responsible property and can be enforced by the people's court." In 2018, the Higher People's Court of Jiangsu Province issued the "Notice on Strengthening and Regulating the Enforcement of Property Rights and Interests in Personal Insurance Products Owned by the Enforced Person", which stipulates in Article 1, "During the duration of an insurance contract, if the property rights and interests of a personal insurance product belong to the person subjected to enforcement in accordance with laws and regulations, or in accordance with the insurance contract, the people's court may enforce them. The property rights and interests of a personal insurance product include the living insurance benefits, cash dividends, and the cash value (account value, undue premiums) available for surrender in accordance with the insurance contract." "The insurance benefits that can be confirmed but have not yet been paid according to the insurance contract, and other property rights and interests with clear ownership."

 

On the contrary, the Beijing Higher People's Court and the Guangdong Higher People's Court issued documents clarifying that the cash value of the insurance policy cannot be enforced. Article 449 of the "Rules for the Implementation of Beijing Municipal Courts" (revised in 2013) stipulates that "the people's court may freeze and dispose of the commercial insurance invested by the person subjected to execution based on the insurance contract, but may not forcibly terminate the legal relationship of the insurance contract." In March 2016, the Guangdong Provincial Higher People's Court issued the "Opinions on Answering Difficult Issues Concerning the Application of Law in Enforcement Cases", Regarding whether the court can enforce the cash value of the insurance policy, the opinion is: "Although the cash value of the personal insurance product belongs to the person subjected to enforcement, the life value of the related person can be enforced by the court. If the person subjected to enforcement agrees to surrender, the court can enforce the cash value of the insurance policy. If the person subjected to enforcement does not agree to surrender, the court cannot force the person subjected to enforcement to surrender."

 

2、 Trial Practice of Executing the Cash Value of Insurance Policies

 

（1） Main referee opinions

 

In judicial practice, there are three main views on whether the cash value of a policy can be enforced:

 

1. The cash value of the policy is executable

 

The main reasons for holding the view that the cash value of the policy is executable are: First, the cash value of the policy belongs to the property rights and interests of the policyholder, specifically reflected in the fact that the cash value of the policy has a saving and valuable nature, and the policyholder can withdraw the cash value of the policy through the termination of the insurance contract. 2、 The cash value of the insurance policy does not belong to the property that cannot be sealed up, detained, or frozen according to the law. 3、 "The amount of the cash value of the policy is deterministic, and the policyholder can withdraw it unconditionally at any time. If the policyholder does not agree to terminate the insurance contract according to the court's request, the court can forcibly terminate the insurance contract and withdraw it instead of the enforced person.".

 

2. The cash value of the policy is not enforceable

 

The main reasons for holding the view that the cash value of the insurance policy is unenforceable are: First, the right to terminate the insurance contract can only be owned by the applicant. If the applicant does not terminate the contract, that is, they do not have the due creditor's rights to claim the cash value of the insurance policy. In the absence of a statutory or agreed insurance company that can exercise the right to terminate the insurance contract, the court should not directly require the insurance company to terminate the insurance contract and withdraw the cash value of the insurance policy. 2、 The life insurance of the insured requires that the life of the insured be the subject matter of the insurance. Therefore, the insurance contract has the function of personal protection and has personal dependency. The court has infringed upon the survival rights and interests of the insured by forcibly terminating the insurance contract.

 

3. The cash value of the policy can be frozen and cannot be deducted

 

In addition to the above two views, there are courts that hold that the cash value of insurance policies can be frozen, but cannot be deducted. The main reason is that although the court cannot force the insurance company to terminate the contract, the cash value of the policy belongs to the expected income of the person subjected to enforcement. The court's freezing of the cash value of the policy can prevent the person subjected to enforcement from transferring property when the conditions for obtaining the cash value of the policy are met.

 

Among the three viewpoints mentioned above, the majority of cases hold the view that the cash value of the insurance policy is executable.

 

（2） Developments and changes in the views of court decisions

 

The author once paid attention to the issue of implementing the cash value of insurance policies in early 2018. By the end of 2017, under the "Causes of Enforcement" category of Peking University's magic weapon cases, through full-text keyword search, he searched for "insurance contract"+"cash value", and retrieved 88 judicial documents; Under the "Enforcement Cases" column of the China Judicial Document Network, 121 judicial documents were retrieved by searching for the keywords "insurance contract"+"cash value". A few days ago, using the same search method, PKU Magic Treasure retrieved 1226 referee documents, and China Judicial Documents Network retrieved 1230 referee documents.

 

As of the end of 2017, the sample cases were distributed in only 17 provincial administrative regions, with no precedents in Beijing or Shanghai, and 1 case in Guangdong. Most of the trial court levels were grassroots and intermediate courts, while there were a few reconsideration cases in higher courts. So far, the distribution of cases has involved 28 provincial administrative regions, including 47 cases in Beijing, and the level of the trial court has reached the Supreme People's Court, with a total of 3 cases.

 

1. Latest Judgment Opinions of Beijing Municipal Court

 

As mentioned earlier, in accordance with Article 449 of the "Rules for the Implementation of Beijing Municipal Courts" (revised in 2013), "the people's court may freeze and dispose of the rights and interests of the person subjected to execution based on the insurance contract for the commercial insurance invested by the person subjected to execution, but shall not forcibly terminate the legal relationship of the insurance contract." The cash value of the policy shall not be enforced. As of the end of 2017, there was no precedent on the enforcement of cash value of insurance policies in Beijing. However, since the beginning of 2019, many courts in Beijing have begun to enforce the cash value of insurance policies as the subject matter of enforcement. Among the 47 judicial documents retrieved in Beijing, there are mainly the following categories:

 

The first category is cases of enforcement measures.

 

The court directly withdrew the cash value of the insurance policy and returned more than 20 cases to the applicant for enforcement by serving a notice of assistance in enforcement to the insurance company. For example, in the enforcement case of No. 4407 (2020) Jing 0101 issued by the People's Court of Dongcheng District, Beijing, the court withdrew the cash value of the insurance contract under the name of Xiao, the person subjected to enforcement, of 165338.6 yuan.

 

In another 7 enforcement cases, due to the low cash value of the insurance policy, the applicant explicitly requested not to enforce it, and the court granted permission. For example, in the enforcement case of No. 8846 (2020) Jing 0101 issued by the People's Court of Dongcheng District, Beijing, the court investigated that the person subjected to enforcement, Gao, had a life insurance policy of Ping An Life Insurance Co., Ltd. under his name, and Liu, had three life insurance policies of AIA Insurance Co., Ltd. under his name. The cash value of the above-mentioned policies after the insurance contract was terminated was relatively low, and the applicant for enforcement did not require deduction for the time being.

 

The second category is enforcement review cases.

 

Among them, there were 15 cases where an insurance company raised an objection to execution after receiving the notice of assistance in execution and was rejected, such as the (2020) J0101 Zhiyi No. 497 enforcement objection review case by the People's Court of Dongcheng District, Beijing. The court held that Article 242 of the Civil Procedure Law of the People's Republic of China stipulates that the person subjected to execution failed to fulfill the obligations specified in the legal documents according to the enforcement notice, and the people's court has the right to inquire about the deposits, bonds Assets such as stocks and fund units. The people's court has the power to seize, freeze, transfer, and change the property of the person subjected to execution according to different circumstances. In this case, our court served an execution ruling and a notice of assistance in execution to Ping An Life Insurance Beijing Branch in accordance with the law, requesting that the execution of the insurance contract signed between the executed person Yang Mou and Ping An Life Insurance Beijing Branch comply with legal provisions. The above insurance contracts also do not fall within the scope that the people's court cannot seal up, distrain, or freeze property as stipulated in Article 5 of the "Provisions of the Supreme People's Court on the Sealing up, Seizure, and Freeze of Property in Civil Enforcement by the People's Court". Accordingly, the objection request of Ping An Life Insurance Beijing Branch has no basis in law, and our court will not support it.

 

In addition, there were two cases where insurance companies raised enforcement objections after receiving the enforcement assistance notice and received support, such as the (2021) Jing 0113 Zhi Yi No. 84 enforcement objection review case by the People's Court of Shunyi District, Beijing. The court held that commercial insurance products fall within the scope of other property rights stipulated by the aforementioned laws. Although personal insurance products such as accidental injury and disability protection have certain personal protection functions, their fundamental purpose and function are economic compensation. In essence, they still belong to a kind of property rights, with a certain degree of savings and value. In addition to the exempted property such as the daily necessities of the person subjected to execution and their dependent family members specified in Article 244 of the Civil Procedure Law of the People's Republic of China and Article 5 of the Provisions of the Supreme People's Court on the Sealing up, Seizure, and Freezing of Property in Civil Enforcement by the People's Court, the people's court has the power to enforce the interests of such property. However, in this case, the annual premium paid by the person subjected to execution is only 1814 yuan, which does not fall within the circumstances of Article 3, Item 8, of the Several Provisions of the Supreme People's Court on Restricting High Consumption and Related Consumption by the Person subjected to execution, which states that if the person subjected to execution is a natural person, it is not allowed to pay a high premium to purchase insurance and financial products; "As of now, the insured's premium has been paid and is still in the insurance period. Once the cash value is deducted, the insured will lose future insurance benefits, which will have a significant impact on the insured (especially after the occurrence of an insurance accident).". Therefore, from the perspective of bona fide execution and safeguarding the people's livelihood, the insurance refund of the person subjected to execution should not be deducted. Ruling to annul the execution of (2020) J0113Z No. 8845 ruling to deduct the insurance policy refund under Zhang's name to the account designated by the court.

 

The above precedents indicate that the provisions on the non enforceability of the cash value of insurance policies in the original Beijing Municipal Court Enforcement Work Regulations (revised in 2013) are no longer strictly applicable in judicial practice. Beijing courts have held an enforceable view on the cash value of insurance policies since 2019.

 

2. Latest Judgment Views of the Supreme People's Court

 

In July 2020, the Supreme People's Court made a judgment on three cases of objection to the implementation of the cash value of insurance policies at the same time. These three cases are all based on the same effective legal document, involving different insurance contract numbers, but the parties involved in the case and the nature of the case are identical. Take the (2020) Supreme Law Enforcement No. 71 as an example:

 

Basic Case: In the execution case between the applicant and the person to be executed, Deng and Xu, the Jiangxi High Court froze and deducted the cash value, dividends, interests, and other property rights and interests of the insurance contract insurance products purchased by Xu from Huaxia Insurance Company. The insured Deng raised an objection to execution, stating that the act of freezing and deducting the cash value of insurance products by the Jiangxi High Court was essentially to terminate the insurance contract of the applicant through execution procedures, which had no legal basis. After hearing, the Jiangxi High Court ruled to reject Deng's objection request. Deng applied to the Supreme People's Court for reconsideration.

 

After trial, the Supreme People's Court held that the focus of dispute in the case was:

 

（1） On whether the cash value of the personal insurance product in this case can be enforced

 

Article 241 of the Civil Procedure Law of the People's Republic of China stipulates that if the person subjected to execution fails to fulfill the obligations specified in the legal document according to the execution notice, he/she shall report the current property situation and the year before the date of receiving the execution notice. Article 32 of the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Civil Procedure Law of the People's Republic of China" stipulates that the object of the property reporting obligation of the person subjected to enforcement includes "property rights such as creditor's rights, equity, investment rights, funds, intellectual property rights, and other property rights.". Article 2, paragraph 1, of the "Provisions of the Supreme People's Court on the Seizure, Seizure, and Freezing of Property by People's Courts in Civil Enforcement" stipulates that people's courts can seize, seize, and freeze immovable property, specific movable property, and other property rights registered in the name of the person subjected to enforcement. Commercial insurance products fall within the scope of other property rights stipulated by the aforementioned laws. Although disability insurance products have certain personal security functions, their fundamental purpose and function is economic compensation, which is essentially a property right and has a certain degree of savings and value, In addition to the exempted property such as the daily necessities of the person subjected to execution and their dependent family members specified in Article 244 of the Civil Procedure Law of the People's Republic of China and Article 5 of the Provisions of the Supreme People's Court on the Sealing up, Seizure, and Freezing of Property in Civil Enforcement by the People's Court, the people's court has the power to enforce the interests of such property. The cash value of the policy for personal insurance is the cost paid by the policyholder to cover the risks of the subsequent year. Unlike the insurance benefits that should be paid by the insurance company after the occurrence of the insurance event, it does not have the exclusive nature of personal dependency, nor is it necessary for the insured person and the family they support to provide for daily necessities and living expenses. According to the content of the insurance contract between Xu and Huaxia Life Insurance, as well as the provisions of Article 15 of the Insurance Law, before the payment of the insurance benefits, the applicant Xu enjoys a certain ownership of the cash value of the insurance. It is not improper for the Jiangxi High Court to freeze and forcibly deduct the cash value and interest and other property rights of the insurance policy.

 

（2） How to implement the cash value of personal insurance products

 

Jiangxi Gaoyuan (2019) Ganzhi No. 47ter Notice of Assistance in Execution requires Huaxia Insurance Company to assist in freezing the cash value, dividends, interests, and other property rights and interests of the insurance products purchased by the person subjected to execution Xu; Freeze the property rights and interests of the two insurance products with the insured Xu as the insured and the insured Shen as the income and interest of the survival fund. And deduct and transfer the above two property rights and interests to the hospital through cash transfer. First of all, the people's court can forcibly terminate the insurance contract. In accordance with the spirit of Article 3 (8) of the Several Provisions of the Supreme People's Court on Restricting High Consumption and Related Consumption by Persons Subject to Enforcement, which stipulates that if the person subject to enforcement is a natural person, it is not allowed to pay a high premium to purchase insurance and financial products. If the person subject to enforcement refuses to perform the obligations specified in the effective legal documents, it may unilaterally exercise the right to terminate the insurance contract without exercising it, resulting in the creditor's rights not being repaid, Under such circumstances, the people's court may compel the person subjected to execution to exercise it instead of the applicant to terminate the insurance contract purchased. Secondly, due to the fact that the executive ruling of the Jiangxi High Court did not explicitly require the insurance company to terminate the insurance contract, the cash value of the policy could be realized. Or the applicant may continue to negotiate with the insurance company and have the qualified third party exercise the intervention right. As for Deng's reason that the cash value of the insurance policy is relatively low compared to the realized value of the creditor's rights in this case, it is difficult to effectively protect the creditor's rights. Upon investigation, Xu and Deng, as the subject of the case, purchased multiple insurance products for both parties as policyholders, with a total cash value of tens of thousands of yuan, which does not belong to a situation where the cash value is low. Moreover, the creditor strongly advocates enforcement, and this reason alone is not sufficient to prevent enforcement. Deng's reason for reconsideration cannot be established.

 

Based on the above reasons, the Supreme People's Court finally ruled to reject Deng's request for reconsideration.

 

The above jurisprudence indicates that the Supreme People's Court holds the view that the cash value of the insurance policy can be enforced as the property of the person subjected to enforcement.

 

Article 2 of the Guiding Opinions of the Supreme People's Court on Unifying the Application of Law and Strengthening the Search of Similar Cases (for Trial Implementation), which came into effect on July 31, 2020, stipulates that "When a people's court handles a case, it should conduct a search of similar cases in any of the following circumstances:... (2) There are no clear rules of adjudication or uniform rules of adjudication have not yet been formed;..." Article 4 stipulates, "The search scope of similar cases generally includes: (1) guiding cases issued by the Supreme People's Court; (2) typical cases issued by the Supreme People's Court and cases with effective judgments;..." Article 9 stipulates, "If the retrieved category of cases is a guiding case, the people's court shall make decisions by reference, except for those that conflict with new laws, administrative regulations, or judicial interpretations, or are replaced by new guiding cases. If other categories of cases are retrieved, the people's court may serve as a reference for making decisions."

 

According to the above provisions, although up to now, China has not issued relevant judicial interpretations on whether the cash value of insurance policies can be enforced, the Supreme People's Court (2020) Supreme Law Enforcement Reply No. 71 case can be used as a reference for people's courts to hear cases of cash value enforcement of insurance policies. Under the existing legal framework, the issuance of three cases by the Supreme People's Court is conducive to unifying the judgment standards of courts at all levels and maintaining judicial credibility.

 

3、 Author's viewpoint

 

The author believes that the cash value of a policy refers to the property rights of the policyholder. When the policyholder is the subject of enforcement, enforcing the cash value of the policy conforms to the enforcement principle. However, based on the particularity of the insurance contract that is different from the general contract, when enforcing the cash value of the policy, the particularity of the cash value of the policy that is different from the general property or property rights should be fully considered.

 

Although the three insurance policy cash value enforcement cases of the Supreme People's Court can reduce the current phenomenon of different judgments in the same case to a certain extent, to truly achieve unified judgment standards, it is necessary to issue relevant judicial interpretations as soon as possible, clarify that the insurance policy cash value is the subject of enforcement, and refine specific enforcement measures.

 

First, it should be clear that the cash value of the policy should be included in the scope of searchable frozen property, and the life insurance coverage of the person subjected to enforcement should be included in the scope of the person's declared property status. The person subjected to enforcement should actively declare the insurance coverage. At the same time, the insurance situation of the person subjected to enforcement will be included in the scope of the court's ex officio inquiry and may be frozen. As mentioned earlier, the Higher People's Court of Jiangxi Province has incorporated insurance information into the execution data system.

 

Secondly, the principle of exhaustion of property should be followed. "The cash value of the policy as the subject matter of enforcement is different from ordinary property or property rights. The enforcement of the cash value of the policy may involve multiple interests of related parties other than the person subjected to enforcement, and the enforcement process is also more complex than ordinary property. Unless the court enforces the cash value of the policy and the person subjected to enforcement, as well as the insured and the beneficiary, do not object, if the person subjected to enforcement has other property, the other property should be executed first,", If other assets are insufficient to repay debts, the cash value of the policy shall be enforced.

 

Moreover, the insured and the beneficiary are given the right to intervene. If the insured, the insured, and the beneficiary are not the same subject, the court shall, after freezing the insured's policy, notify the insured, and the beneficiary, informing them that they have the right to deliver to the court an amount equivalent to the cash value of the policy in lieu of performance, in order to continue to maintain the effectiveness of the insurance contract, and the court shall no longer enforce the cash value of the policy. "If the insured or beneficiary waives this right, the people's court may enforce the cash value of the insurance.".

 

Finally, due to the complexity of insurance contracts, various special situations may occur during the execution process. For example, how to handle the insured's sudden occurrence of an insurance accident after sealing up and before deduction? At this point, the cash value of the policy is converted into insurance benefits. If the policyholder is the beneficiary, the implementation of the cash value of the policy will become the implementation of insurance benefits. If the applicant is not the beneficiary, can the judge coordinate the payment of an amount equivalent to the cash value of the policy from the insurance benefits obtained by the beneficiary to the creditor based on the amount of the claim, the amount of the insurance benefits, the relationship between the person subjected to enforcement and the beneficiary, and the living conditions of each party and interested parties? For these special situations, it is necessary for the executive judge to exercise his discretion according to the specific situation, to achieve a balance between the interests of the parties and the interests of the parties and the society.

 

(This article is translated by software translator for reference only.)