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Legal Objective;
The objective will be legal only when there is
insurable interest and when the object is legal.
2. Insurable Interest
Pecuniary interest arises out of the
pecuniary relationship that exists between the
policy-holder and the life assured.
Categories;
Own life
Others life;
Where proof is not required
Proof is required
Business relationship
Family relationship
Own Life
Others Life
Proof Required
Business Relation
Family Relation
2. Insurable Interest
Insurable Interest in Owns Life
The person will continue to gain financially while
surviving.
Will suffer loss if he is dead because he will be
unable to earn or to protect the property.
Unlimited insurable interest
Loss cannot be measured in terms of money
So no limit can be placed
2. Insurable Interest
Insurable Interest in Others Life;
Proof not Required
Wife has insurable interest in the life of her husband
Husband has insurable interest in the life of wife
Proof required
Business relationship
A creditor has in the life or his debtor
A trustee has insurable interest in respect of the interest of which
he is trustee
A surety has insurable interest in the life of his principal
A partner has insurable interest in life of each partner
An employer has in the life of a key-person
An insurer has in the life assured.
2. Insurable Interest
Family Relationship;
The insurable interest may arise due to family
relationship if pecuniary interest exists between
the policy-holders and life assured.
Mere relationship or ties of blood and of affection
does not constitute insurable interest.
The proposer must have a reasonable expectation
of financial benefit from the continuance of the
life of the person to be insured or financial loss
from the his death.
Services;
Only to spouse, not to relatives
Must have a financial relationship between the
proposer and the assured.
Should be Valid;
The Legal Responsibility May be Basis;
Must be Definite;
Legal Consequence;
Legal Consequence;
Non-disclosure leads to a voidable contract
Indisputability;
Contest provision
3. Warranties
Representation;
Information given by a proposer for insurance to the
insurer during the negotiations is a representation.
False or untrue representation may lead to a voidable
contract
Warranties;
Informative warranties the proposer is expected to
disclose all the material facts to the best of knowledge and
belief.
Promissory warranties relating to the future may be
statements about his expectations or intentions
Breach of Warranties;
5. Proximate Cause
The efficient or effective cause which causes
the loss (peril)
If the peril is insured, the insurer will pay
In life insurance the doctrine of Causa Proxima
is not applicable.
War-risk
Suicide
Accident benefit
Nomination;
Nomination can be assigned at any time by the holder
of the insurance
Can be cancelled before maturity but notice must be
given to the insurer
7. Return of Premium
Generally cannot be refunded unless;
The insurer is incapable to run the risk
A void contract on account of misrepresentation
or breach of warranties
The insured can claim the return of premiums
paid
8. Other Features
Aleatory Contract;
Unilateral Contract;
Conditional Contract;
Contract of Adhesion;
Not a Contract of Indemnity;