Page 15 - IC23 life insurance application

the mere fact that the assurance company had him examined by its own doctor, will

not relieve him from the legal consequence of the false statement.

"To avoid a policy, simply showing inaccuracy or falsity of a statement made in the

proposal or in any report of the doctor or any other document leading to the issuance

of the policy is not enough. It is for the insurer to prove that the declaration on the

basis of which the policy is sought to be avoided was material for the policyholder to

disclose. The insurer has further to prove that the declaration was fraudulently made

by the policyholder with the knowledge of the falsity of the declaration at the time

when it was made or that the suppression was of material facts which had not been

disclosed". Laxmi Insurance Company Ltd. vs Bibi Padmevati. ILR (1961).

Consideration of the contract consists in the premium which has to be paid by the

insured on the stipulated dates as per the terms of contract and in lieu of this, the

insurer promises the payment of sum assured as stated in the schedule of the

policy. There is a grace period mentioned in the policy document and it is

normally 30 days from the due date except in monthly mode of payment where it is

15 days. If the premium is not paid, during the grace period, the policy lapses and

the life cover stops, unless it is protected by the claim concession clause as stated in

the conditions of the policy.

The parties to the contract must be of one mind. In otherwords, the objective of the

contract and the terms of the contract must be clearly understood by both the

parties. Here the life insurance agent plays a very important role to explain to the

life insured the various clauses mentioned in the policy conditions. Most of the

terms used in the policy conditions are technical in nature and need careful

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