NATURE OF LIFE INSURANCE CONTRACT. AN OVERVIEW. MEANING OF LIFE INSURANCE.
“ A contract of Life assurance is that I which one party agrees to pay given sum on the happening of a particular event contingent upon the duration of human life in consideration of the immediate payment of a smaller sum or certain equivalent periodical payments by another”.
Insurance contracts are governed by Indian contract act 1872 which states that to be legally valid following elements should be in order.
Agreement (Offer and acceptance)
Free consent of the parties
Competency of the parties
The greatest degree of good faith by law, is expected from the proposer, that is the main reason why good faith in case of Insurance contracts becomes UTMOST good faith.
It is the duty of the proposer to disclose all material facts not only already known but also extends to material facts which he ought to know.
LIFE: Material facts are : name , address and occupation of insured person, date of birth facts about health and habits, family history and plan of insurance
FIRE: Construction of building, type of occupancy, nature of good stored etc.
MARINE: method of packing, inherent vice etc.