1. General contract Life insurance contract is just like a general contract where offer and acceptance is of typical nature. Submission of proposal along with premium is an offer and dispatch of acceptance letter is the acceptance. Like a general contract, a minor cannot enter into a contract without guardian acceptance. Person of sound mind can enter in to a contract and contract with alien enemy is void. To make a contract, both parties must have free consent, legal objectives and no chances of coercion. Undue influence, fraud and misrepresentation.
2. Investments
Insurer is liable to return premium along with some benefit to the insured person after the expire of time or the death of insured person. Thus premium paid by him regularly is like depositing money in a bank. In case of his premature death the fixed amount is paid to his nominee.
3. Conditional contract
Life Insurance is a conditional contract because the insurer shall pay the insured sum only when the contract is continuing by payment of premium. In addition, the insurer promise to pay the sum is also conditional upon the satisfactory proof of death and other condition as mentioned in the policy.
4. Assignment and nomination
Life insurance can be assigned freely for legal consideration, love or affection. The assignment shall be complete and effective only in accordance on the policy mention itself or by a separate deed. Life insurance policy holder can nominate a person or person to whom the money secured by the policy shall be paid in the event of his death. In case if nominee dies, the sum shall be paid to the policy holder or his legal representations.
5. Insurable interest
Life insurance must have insurable interest means monetary gain from the continuation of life or loss from its destruction. Although the loss of the insured cannot be measured in terms of money. But in practice certain sum of money, sometimes a bonus is fixed to be paid.
2. Investments
Insurer is liable to return premium along with some benefit to the insured person after the expire of time or the death of insured person. Thus premium paid by him regularly is like depositing money in a bank. In case of his premature death the fixed amount is paid to his nominee.
3. Conditional contract
Life Insurance is a conditional contract because the insurer shall pay the insured sum only when the contract is continuing by payment of premium. In addition, the insurer promise to pay the sum is also conditional upon the satisfactory proof of death and other condition as mentioned in the policy.
4. Assignment and nomination
Life insurance can be assigned freely for legal consideration, love or affection. The assignment shall be complete and effective only in accordance on the policy mention itself or by a separate deed. Life insurance policy holder can nominate a person or person to whom the money secured by the policy shall be paid in the event of his death. In case if nominee dies, the sum shall be paid to the policy holder or his legal representations.
5. Insurable interest
Life insurance must have insurable interest means monetary gain from the continuation of life or loss from its destruction. Although the loss of the insured cannot be measured in terms of money. But in practice certain sum of money, sometimes a bonus is fixed to be paid.
6. Utmost good faith
The life insurance requires the doctrine of utmost good faith. In life insurance, both the party insured and insurer should supply all the material facts to each other which help to ascertain the risk. Both the party has duty and responsibility to make full and true disclosure of all the material facts to the risk which can influence the decision of proposer whether to apply or not to apply for insurance.
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