EVENT INSURED AGAINST IN LIFE INSURANCE -

Event insured –
The event insured against in ordinary life insurance is the death of the life assured from
disease or accident. It is immaterial whether the death is caused by me accidental causes or
even due to the criminal act of a third party. A contract to be valid must satisfy the element
of legality of consideration and object. Courts of Law enforce contracts, the objects of which
are not against public policy. One of the cardinal rules of legal theory based on public policy
is that no man shall be allowed to take advantage of his own wrong and this rule is expressed
in the maxim ex turpi causa non oritur that is, no cause of action arises out of a wrong.

Based on this principle, in law of insurance, to the above general rule that the legal
representatives of the assured can recover on a life policy of the assured on his death,
whether the death is due to natural or accidental causes including death caused by a criminal
act of a third party.

Insured was murdered by a group of persons belonging to the other faction. It was held that
the repudiation of the claim by the insurer on the ground that the insured belong to a group of
faction and was involved in criminal cases was not tenable and the death of the insured
should only be understood as an accident‖ for the purpose of contractual obligation by
insurance company for awarding compensation.

Two exceptions have been laid down, namely:

(i) where death of the assured is caused due to the violation of a rule of criminal law
by the assured himself; and
(ii) Where death is the result of a suicide.

Murder is one of the most serious offences and therefore on principles of justice, equity and
good conscience, the law lays down that a murderer cannot inherit the property of murdered
person and to hold otherwise, it would be allowing a person to take advantage his own
wrong.

For example, in the case of fire insurance where the fire is caused by the wilful misconduct
of the assured, he is debarred from recovering on the policy. Similarly where a person takes a
life on the life of another and later kills him neither, he nor any person claiming und assured
is entitled to recover under the policy either on the ground that there is an exception or it is
against public policy.

In Liberty National Life Insurance v Weldon where a registered nurse effected three
policies from different companies on the life of her niece without the knowledge of the
parents of the life assured.

The niece was a child of two years. One day the nurse visited the child‘s house and gave her
soft drink containing arsenic as a result of which the child died within few hours.

The nurse was prosecuted and convicted for murder.

Not only this, but the companies were held to pay damages to the parents of the child for
their in issuing policies to one who had no interest in the life of the assured1.

Where the misconduct which resulted in the loss is caused even by a willful act of an
independent third party, the implied exception does not apply and the assured or his
representatives are not deprived of their right to recover under the policy provided the
assured is not a party to the misconduct. The major source of the risk is from the willful or
negligent conduct of the third parties.

Again if the insured violates the law or commits an act punishable with a capital punishment
and if he is sentenced to death, he is said to ought death on himself and the rule of public
policy that no one can make a profit This own wrongful or culpable conduct comes into play
and debars the assured or his representatives to recover under the policy.

For example, in Amicable Insurance Society v Bolland, where a person is sentenced to

death for committing the murder of other person and loses his life in execution of the
sentence, it was held that all persons on whom the right to recover devolves by operation of
law and who claim through such a convict are debarred from claiming under the policy.

It may be noted that what shall not be done directly cannot be done indirectly. It shall be
seen presenting that when the assured commits suicide the claims under the policy are
denied. In the above case, it was pointed out that it would be contrary to public policy to
insure a man to benefit upon his death, by the hands of justice. Death resulting from illegal
1
1957 Alabama 100 So 2d 696.
operations or death in a fight or duel falls within this principle and the insurance company is
absolved from liability in such cases.

Suicide or Felo De Se -
The risk insured against in a life policy is death and death may be caused by disease,
accident, negligence or willful acts of himself or of a third person.

When the event insured against, namely death occurs, the insurer is liable to pay normally
under the contract.

As death is natural to a human being so also a human being is always susceptible to disease
and even without disease as age advances the body is bound to lose strength and this may be
likened to 'inherent vice' and 'wear and tear of the subject matter in other branches of
insurance; but these exceptions of ‘Inherent vice' and 'wear and tear' are not applicable in life
insurance. When death occurs, which is an inevitable event in the course of every human life,
in all life policies, the insurer must pay.

But as in other branches of insurance when the event insured against happens due to the
willful and wrongful acts of the assured or his agent, the implied term theory comes in and it
absolves the insurer from liability.

When a person is insane the sense that he does not know the nature of his act, or when he is
acting under irresistible impulse, it is an act, though done by him apparently, is not one done
by him when he is not within himself and such an act is not culpable and cannot come within
the exception based on the rule that no one can benefit himself out of his own wrong.

The question whether suicide is against public policy depends upon the system of
jurisprudence prevailing in that country and upon the conception of public policy as
embodied therein. It is, for example, in England a crime not to send a child to school while it
is not a crime in India. In India, law would unhesitatingly hold that suicide is not against
public policy as exhibited by the normal conception of society or as conceived by its laws.

It is submitted that the correctness of these decisions is open to doubt because of the
following reasons:
 1. Suicide is condemned according to the personal law of Hindus as well as
Mohammedans and it is declared to be a sinful and immoral act.
2. It is because of the above principle, on principles of justice, equity and good
conscience, a murderer has been disqualified from succeeding to the estate of the
deceased person.

3. It is wrong to think that an attempt to suicide' only is an offence while 'suicide' is not,
considering morality of the act.

In fact such a contention was raised in a different situation in a case before the Madras High
Court in Amiraju v Seshamma where it was contended that attempt to commit suicide is an
offence while suicide is not an offence and therefore a consent of wife obtained by the
husband by threatening to commit suicide cannot be held to one obtained by coercion and
held that suicide is not punished not because it is not a detachable or immoral act, but
because of physical impossibility of punishing such a commission.

Exception to suicide -
A clause is generally inserted in the policy that if any third party has acquired bona fide
interest for valuable consideration he will be entitled to recover the amount not exceeding the
sum assured.

In City Bank v Sovereign Assurance Co, the assured deposited the policy and received a
loan on the security of the policy. Later on, he committed suicide. There were other
securities also. It was held that the debt might be paid out of the insurance amounts, because
a bona fide assignee for valuable consideration is not subjected to the disabilities incurred by
 the assured subsequent to the assignment2.

The bona fide assignee as noted in the general principles of insurance law, is subjected only
to the equities the assignor was liable by the date of assignment. But it may be noted that this
benefit is not and cannot be extended to persons who obtained an interest in the policy by
operation of law or bankruptcy and likewise to voluntary assignments.

** sec 23- Consideration in contract is lawful unless it is forbidden by law or defeat the
provisions of law or u in moral an imposed to public policy.

2
(1884) 32 WR 658