Page 14 - IC23 life insurance application

highly technical in nature and it is not possible for a layman to examine all aspects

immediately, the vendor gives a warranty of a year or six months during which

period, if the object is found defective, it has to be replaced or money refunded.

UTMOST GOOD FAITH:-

In case of life insurance, the object of insurance is the prospect himself and he alone

knows how healthy he is. The insurer is not in a position to satisfy himself of the

quality of object, unless prospect co-operates. Life Insurance contract is therefore

called the contract of “utmost good faith”. Therefore there is warranty in all life

insurance policies. In case the prospect has withheld any information material to the

longevity of the insured, the insurer may treat the contract of insurance as void and

decline to pay the claim when it arises.

It is sometimes argued that when the insurer gets a medical report from its own

appointed doctor on the health of the proposer, the principle of utmost good faith is

violated. This is not true for the simple reason that medical report cannot reveal what

the prospect wants to conceal. For example a pain in the neck or abdomen, cannot

be detected by a medical examiner unless told by the sufferer. On the other hand it

is quite possible that the medical report through routine check up may reveal some

disease of which the prospect may be ignorant. For example diabetes through urine

examination or even blood pressure. Medical check up is thus an attempt to know

what is unknown to the prospect and is incapable of revealing what is intentionally

concealed by the proposer. The medical report can at best be a supplement to the

personal statement and not its verification. In the case of Mithoolal vs LIC (1962) the

court held where a person fradulently makes false statement relating to his health,

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