VEER NARMAD SOUTH GUJARAT UNIVERSITY

• NAME: Shikha Ajmera (04)

 Neha Mukherjee (29)

 Shruti Panicker (33)

• B.Com LL.B (Hons.) Sem 8

• ACADEMIC YEAR: 2021-2022

• SUBJECT: Insurance Law

• DATE OF SUBMISSION : 08 – 04 - 2021

• SUBMITTED TO: Prof. Monika Brahmbhatt

NATURE OF LIFE INSURANCE
  Life insurance is a contract to a certain sum of money on
the death of a person in consideration of the certain
annuity for his life calculated according to the probable
duration of life.
MEANING OF LIFE  A life insurance is a contract in which one party agrees to
INSURANCE pay a given sum of money upon the happening of ai
particular event contingent upon the duration of human
life in consideration of immediate payment of smaller
sum.
  Nature of life insurance are broadly
divided into :
NATURE: 1. Economic nature of life insurance
2. Legal nature life insurance
ECONOMIC NATURE LIFE
INSURANCE  There are the following factors need for insurance:
The family need of food, shelter and clothing are meet out of the
current income of the bread income The current income of
everybody depend upon the earning the make a person may reach an
age when he cannot earn due to old age, disability etc. The insured
saving will help in meeting the necessities and other needs.

LEGAL NATURE LIFE As per life insurance act, life insurance is the business of effecting
INSURANCE  contracts of insurance upon human life, including any contract
whereby they payment of money is insured on death or the
happening of any contingent, dependent on human life and shall be
deemed to include:
Granting of annuilities on human life Granting of compensation on
the happening of specified contingencies.
 1) Standard form of contract

2) Contract of utmost good faith

3) Conditional contract
NATURE OF LIFE
INSURANCE MAINLY 4) Aleatory Contract
CLASSIFIED AS:
5) Contract of adhesion

6) Contract of certain amount

7) Unilateral contract
1. STANDARD FORM  Valid offer and acceptance: There should be a valid offer and
OF CONTRACT acceptance.
 An Agreement: Agreement must be an important element of the
insurance contract. Without an agreement a contract is not valid.
 Valid Parties to the contract: The parties must have legal
capacity to contract. Minors, lunatics, insolvents, intoxicated
persons, etc. do not have the legal capacity and cannot have the
legal capacity and cannot enter into an insurance contract.
 Valid Consideration: there must be exchange of consideration
in response to an agreement which defines the quantum of
possible losses to the insured. The premium amount paid by the
Insured by way of consideration on the basis of policy risk insured.
The Insurer’s consideration will be a promise to indemnify the loss
of the insured on the occurrence of the insured’s risk
Lawful Object -  
         The object of the life insurance contract should not be unlawful.
According to Section 23 of the Indian Contract Act 1872 the object is
unlawful which is -
(i) Forbidden by law
(ii) Immoral
(iii) Opposed to public policy or
(iv) which defeats the provision of any law
Consensus ad idem (Meeting of Mind) -
 The understanding between the insurer and the insured person
should be of the same thinking or mind. The reasons for taking the
insurance policy should be understandable to both the parties.
Free Consent - 
         It can not be Free consent, Where the consent is obtained through
coercion, fraud, undue influence, misrepresentation or mistake about
an essential fact, the contract becomes voidable at the option of the
party whose consent was so caused, except fraud.
  RATAN LAL AND ANR. Vs. METROPOLITAN
INSURANCE CO. LTD.
 Facts Of The Case: Pyare Lal (insured) died on 19-4-1946, plaintiff in
this case were his sons (successors and heirs). On accord of his policy, it
so happened that before the acceptance could be supplemented with
regular policy, the assured died on 19-4-1946. But the amount which had
been paid up by the deceased was first kept in suspense account and
thereafter on 28-3-1946 was adjusted it first annual premium. Therefore
CASE LAW it could be said that on the date of adjustment of account, the policy was
deemed to be a binding contract between the parties.
 Arguments Raised: But the company contended that though
deceased died after the acceptance of policy but illness which was
responsible for bringing about his death had already set in since 23-3-
1946, much within the time the policy was still under consideration
before the company. On this, plaintiff replied that the illness had set in
for the first time on 23-3-1946 and not anytime before that, and the
intimation was made to the company about the illness.
 Judgment: Trial court held the company liable to pay the
sum to the insured, but defendants didn't find their way to
make any payment to the plaintiffs and hence this appeal
came before the High Court. Court on the facts observed that:
-Principle of uberrima fidea would follow till the conclusion
of the contract is made by the company. And if breach occurs
the contract would be voidable the instance of the party to
whom ubarrima fides is due.
  Uberrima fides is a Latin phrase meaning "utmost good
faith". It is the name of a legal doctrine which governs
insurance contracts. This means that all parties to an
insurance contract must deal in good faith, making a full
2. CONTRACT OF declaration of all material facts in the insurance proposal.
UTMOST  The parties to an insurance contract must be honest with
GOODFAITH each other and must not hide any information relevant to the
contract from each other. This is known as the principle of
Utmost Good Faith. It is important to the insurer that they
have a full and accurate picture of the risk that is proposed to
them
  LIFE INSURANCE CORPORATION OF INDIA vs.
SHAKUNTALA.
 Facts Of The Case: Jamanadas died of jaundice on 4-11-1986
who had an insurance policy with appellants, one and half
years after he died. This policy was taken on the grounds of his
personal statement that he had not suffered from any illness
and had not consulted any medical practitioner within last five
CASE LAW years, but had once suffered from indigestion for few days and
had taken chooranam from an ayurvedic practitioner.
 Arguments Raised: Learned Counsel for respondents as
usually relied on Section 45 of the Insurance Act and stated
that insurer had right to repudiate a policy on the grounds that
statement made in proposal for insurance or any documents
which leads to policy was inaccurate or false.
 Judgment:
 Court was of the view that, treating occasional headaches or a
bout of indigestion as a ‘material fact' which an insured was
under an obligation to disclose would be extremely
unreasonable. No reasonable man would deem it material to tell
an insurance company of all the casual headaches he had in his
life, and if he knew that it was an ordinary casual headache,
there would be no breach of his duty towards the insurance
company in not disclosing it. The confidential report made by
the medical officer of the insurance Company shows that the
appellant was in ‘first class life'. And the jaundice of which he
died had nothing to do with the undisclosed indigestion from
which he suffered 18 months earlier. And the only connection
between them would be the advantage life insurance was
seeking. Therefore non-disclosure would not amount to an
untrue statement and Life Insurance Company was held not
justified in repudiating the policy. And therefore his wife was
entitled to the insurance claim.
3. CONDITIONAL
CONTRACT  An insurance contract in which the insurer’s promise is
conditioned upon (dependent upon) certain things occurring
or being done.
 Conditional Receipt :
A form normally required to be signed by an agent and given to
a prospective life insurance policy insured/owner at the time a
new application is completed
  An aleatory contract refers to an agreement between two parties
in which the parties do not have to perform any actions until a
certain trigger event occurs. Such trigger events cannot be
controlled by either of the parties, such as natural disasters and
death.
 Such contracts are common in insurance policies where the
insurer doesn't have to pay to the insured until a triggering event
occurs, such as the vehicle being stolen or damaged due to natural
4. ALEATORY disaster. Aleatory contracts, also known as aleatory insurance,
CONTRACT turn out to be helpful because they support the insured person to
deal with the financial risk.
 In another case, if the insured happens to miss the premium
payments, the insurer may not be obliged to pay the policy
benefit. In the case of life insurance policies, if the insured doesn't
die during the policy term, the insurer will not pay anything on
policy maturity.
5. CONTRACT OF
 Adhesion Contract — a contract (also known as a contract of
ADHESION adhesion) between two parties, where the terms and conditions are
drafted by the party with superior bargaining power (typically a
business) and the other party (typically a consumer) has little or no
ability to negotiate more favorable terms, and, as a result, the
consumer is placed in a "take-it-or-leave it" position. The courts
carefully scrutinize adhesion contracts and will sometimes void
certain provisions on the basis that the provisions are
unconscionable or the product of unequal bargaining power.
 In the insurance world, a contract of adhesion – also known as an
adhesion contract – is a contract where one party has significantly
more power than the other when creating the contract. ... Few – if
any – insurance companies allow you to negotiate your contract or
change the terms. You either take it or leave it
  USHA INTERNATIONAL LTD. vs. UNITED INDIA
ASSURANCE CO. LTD.
 The decision of the Delhi High Court explained the principles
of interpretation that are to be applied to an adhesion
contract of insurance. The court observed that prospective
policyholders usually do not read the policy carefully which is
CASE LAW in standard form. This results in the insured being the weaker
party in the insurance contract due to non-reading of the
terms in the contract. The insurance corporation becomes the
stronger party with greater bargaining power. Therefore, the
contracts are to be understood in their ordinary meaning
unless the terms of the contract are shown to have been
negotiated equally between the contracting parties
  A contract between the policy
holder and the insurance company,
where the life insurance company
6.CONTRACT OF pays a specific sum to the insured
CERTAIN AMOUNT individual's family upon his death.
The life insurance sum is paid in
exchange for a specific amount of
premium.
  A unilateral contract is a contract agreement in which an
offeror promises to pay after the occurrence of a specified act.
In general, unilateral contracts are most often used when an
offeror has an open request in which they are willing to pay for
a specified act.
7.UNILATERAL  An insurance contract is a unilateral contract because the
CONTRACT insurer promises coverage to the insured when the former
recognizes the latter as an official policyholder.
 This means that only one party (the insurer) makes any kind
of enforceable promise. Insurers promise to pay benefits upon
the occurrence of a specific event, such as death or disability.
The applicant makes no such promise.
  https://taxguru.in/finance/concepts-insurance.html
 https://www.slideshare.net/AniketKumar32/life-insurance-c
BIBLIOGRAPHY oncept-nature-amp-use-of-life-insurance-distinguishing-char
acteristics-of-life-insurance-contracts