Circumstances affecting the Risk in Life Insurance Risk in life insurance is the risk of death at an early date due to disease or distinguished from accident In. Thomson vs. Weems 1884 9 AC 671,681 Lord Blackburn observed “Those whose business is to insure lives calculate on the average rate of mortality and charge a premium which on that average will prevent their being loses. a. Age of the proponent. b. His family history. c. Personal health d. Moral history including habits of life past and present. e. Geographical position & occupation Age of the Proponent Age is an important material fact in life insurance as the rate of premium depends on theage of the assured. Case law:-Alliance and strutgarter Vs. Hemantha Kumar AIR 1938 Cal 641 Once it is written Then it is admitted In case of M.K. Shah V. Yorkshire Insurance Co. AIR 1938 Bom 161 Once the age is admitted by the insurer then correctness of the age cannot be questioned unless the insurer can prove that his admission was procured by the fraud of the assured. {Section 45 of the Insurance Act 1938 says After 2 years company have no right to reopen the things.} The section generally provides that the correctness of a representation shall not be questioned by an insurer after two years but the proviso specifically makes an exception with reference to the representation of the age in a proposal form. • According to this the insurer is entitled to call for proof of the age from the assured at any time if the same had not been proved and admitted as true by an endorsement on the policy notwithstanding the fact that the requisition of the proof has been made by insurer after two years. • When once a date is given as date of birth and on subsequesnt verification after the issue of the policy the date is found to be wrong it may result in either Overstatement of Age :---------- Overage Understatement of Age:---------Underage In either case the original representation becomes a misrepresentation, but effect on the validity of the policy is different. If it is overstatement:- it is considered to be an innocent misrepresentation as it will be against the interest of the maker and so in such cases the validity of the policy is not affected. In such cases if the insurer accepts the proof of age, he can be compelled to refund the excess payment towards the premium and to adjust the rate for future payment according to the proved age. But when it turns out to be an understatement of age, if is proved gross understatement or is proved to have been made willfully, it amounts to fraud and the policy become voidable. 1. The sum assured may be reduced to such amount 2. The assured may be required if he wants to continue the policy for the entire insured amount to pay the difference of premium with interest. Hemmin’s v/s Scetore (1905) ch 365 Misstated age as 41 years through in fact she was at that time forty-four years, of age. This fact was brought to notice of the insurers in 1997 and inspite of that the insurers accepted the premiums for two subsequent year later they demanded form the assignee a highter rate of premium ande also the difference of premiums accumulate to date at the revised rate premium and the insurers refused to receive the same. If after becoming acquainted with a breach of warranty the office continue to treat the policy as valid it will be held to have waived the breach. Family History The risk in life policies the assured and heredity throws sufficient light and play an important role in the determination or the probable longevity of a person. In Asia Assurance Company V/s Kartiya Devi 1936 Cal 437 The total numbers of bothers and sisters had to be filled in one column and the actual number alive in another column. The assured filled the first column but left the other b lank. It was helf that answer amounted to suppression of truth and hence amounted to misrepresentation and the policy was void. Personal Health and Moral History The habits of life, past and present and which tend to shorten the life must be disclosed ,e.g. the use of opium, tobacco or alcohol. • The present state of health is important. • The past illness also become important • Regulat habits regarding food, sleep etc. tend to increase the longevity. Geographical Position The place where the applicant lives is important as climate and environment have an appreciable effect on one’s health. Unhealthy surrounding have a tendency to shorten the life. Further, the particular, place may be subject to earthquake, volcanoes and floods. Huguenin v/s Rayley Where the assured gave his residential address but actually he was not there at that time. It was held that the omission of this fact was fatal to the policy and the insurance company was not liable. Occupation If it is a dangerous occupation like a soldier, sailor, airman or workman in an ammunition factory the insurers charge a higher rate of premium.
Thursday, April 21, 2016
Circumstances affecting the Risk in Life Insurance
Circumstances affecting the Risk in Life Insurance Risk in life insurance is the risk of death at an early date due to disease or distinguished from accident In. Thomson vs. Weems 1884 9 AC 671,681 Lord Blackburn observed “Those whose business is to insure lives calculate on the average rate of mortality and charge a premium which on that average will prevent their being loses. a. Age of the proponent. b. His family history. c. Personal health d. Moral history including habits of life past and present. e. Geographical position & occupation Age of the Proponent Age is an important material fact in life insurance as the rate of premium depends on theage of the assured. Case law:-Alliance and strutgarter Vs. Hemantha Kumar AIR 1938 Cal 641 Once it is written Then it is admitted In case of M.K. Shah V. Yorkshire Insurance Co. AIR 1938 Bom 161 Once the age is admitted by the insurer then correctness of the age cannot be questioned unless the insurer can prove that his admission was procured by the fraud of the assured. {Section 45 of the Insurance Act 1938 says After 2 years company have no right to reopen the things.} The section generally provides that the correctness of a representation shall not be questioned by an insurer after two years but the proviso specifically makes an exception with reference to the representation of the age in a proposal form. • According to this the insurer is entitled to call for proof of the age from the assured at any time if the same had not been proved and admitted as true by an endorsement on the policy notwithstanding the fact that the requisition of the proof has been made by insurer after two years. • When once a date is given as date of birth and on subsequesnt verification after the issue of the policy the date is found to be wrong it may result in either Overstatement of Age :---------- Overage Understatement of Age:---------Underage In either case the original representation becomes a misrepresentation, but effect on the validity of the policy is different. If it is overstatement:- it is considered to be an innocent misrepresentation as it will be against the interest of the maker and so in such cases the validity of the policy is not affected. In such cases if the insurer accepts the proof of age, he can be compelled to refund the excess payment towards the premium and to adjust the rate for future payment according to the proved age. But when it turns out to be an understatement of age, if is proved gross understatement or is proved to have been made willfully, it amounts to fraud and the policy become voidable. 1. The sum assured may be reduced to such amount 2. The assured may be required if he wants to continue the policy for the entire insured amount to pay the difference of premium with interest. Hemmin’s v/s Scetore (1905) ch 365 Misstated age as 41 years through in fact she was at that time forty-four years, of age. This fact was brought to notice of the insurers in 1997 and inspite of that the insurers accepted the premiums for two subsequent year later they demanded form the assignee a highter rate of premium ande also the difference of premiums accumulate to date at the revised rate premium and the insurers refused to receive the same. If after becoming acquainted with a breach of warranty the office continue to treat the policy as valid it will be held to have waived the breach. Family History The risk in life policies the assured and heredity throws sufficient light and play an important role in the determination or the probable longevity of a person. In Asia Assurance Company V/s Kartiya Devi 1936 Cal 437 The total numbers of bothers and sisters had to be filled in one column and the actual number alive in another column. The assured filled the first column but left the other b lank. It was helf that answer amounted to suppression of truth and hence amounted to misrepresentation and the policy was void. Personal Health and Moral History The habits of life, past and present and which tend to shorten the life must be disclosed ,e.g. the use of opium, tobacco or alcohol. • The present state of health is important. • The past illness also become important • Regulat habits regarding food, sleep etc. tend to increase the longevity. Geographical Position The place where the applicant lives is important as climate and environment have an appreciable effect on one’s health. Unhealthy surrounding have a tendency to shorten the life. Further, the particular, place may be subject to earthquake, volcanoes and floods. Huguenin v/s Rayley Where the assured gave his residential address but actually he was not there at that time. It was held that the omission of this fact was fatal to the policy and the insurance company was not liable. Occupation If it is a dangerous occupation like a soldier, sailor, airman or workman in an ammunition factory the insurers charge a higher rate of premium.
