Page 16 - IC23 life insurance application

explaining. For example, the suicide clause in an insurance policy clearly says that if

the life assured commits suicide within a stipulated period, which is for L.I.C.I.

policies one year, no death claim is payable. Similarly if the death happens due to

accident, when the life assured is involved in any illegal activity, or in war or

occupation like aviation unless specifically permitted, the claim due to death is not

payable.

Insurable Interest:-

Last, but not the least, the object of insurance should be legal. For example there

cannot be a valid contract between two persons to commit murder or theft. Life

insurance, to some is gambling, benefiting from death which is uncertain. Nothing

can be far from truth. Life insurance would be gambling, if the beneficiary of the

insurance has no interest in the life of the insured. Such an insurance is not

permitted. Insurable interest is the very basis of a life insurance contract. Insurable

interest is said to exist when the beneficiary benefits by its existence and is

prejudiced by damage or loss of it. For example, a person has unlimited insurable

interest in his own life. Husband or wife has insurable interest in each other's life.

Parents have insurable interest in the life of their children if they are dependant on

them. Similarly the parents have insurable interest in the children, as they are likely

to depend upon them in their old age. Two partners in business would like to live

together for the business to prosper. The creditor would stand to lose the money

lent, if the debtor would die. The key employees are valuable to the enterprise and

hence can be insured.

Copyright Dr Rakesh Agarwal Sashi Publications Private Limited

Sashi Publications Pvt Ltd Call 8443808873/ 8232083010