Page 53 - IC23 life insurance application

cases where this point has been discussed. At times, the courts have decided

against the insurer advising payment of claim. However, the Supreme Court has

rightly held that unless the renewal premium has been received by the insurer in its

office and the renewal premium receipt issued, the insurer cannot be assumed to

have received the premium on the ground that the insurer's agent has received the

payment.

Receiving the initial deposit for insurance is not the same thing as receiving renewal

premium. When the initial deposit is paid, the insurer is not on risk and the decision

to cover the risk is yet to be taken. The contract of insurance has not come into

force. Without payment of the initial deposit, the acceptance of risk cannot be

considered. Therefore it is but correct that the agent should collect the initial deposit.

Renewal premium, on the other hand, must be deposited in the insurer’s office to be

treated a valid payment.

b) Policy Contract : Policy document is a detailed document which mentions all the

terms and conditions of the insurance. An insurance agent would do well to visit the

insured, to explain the contract, after the policy document has been received by him.

Few policyholders read the policy document from cover to cover, and even if they do,

they will not understand much of it. The terms and conditions will make sense if they

are properly explained. After all, these are the points which have been already

discussed while canvassing the insurance and it is but fair that the agent should

show by reference to the terms of the policy that those financial problems have been

taken care of and the policy promises to do all that which was planned.

The insured buys not the policy contract, but the right to the sum of money and its

future delivery. The insurer on its part promises to pay a sum of money, provided of

Copyright Dr Rakesh Agarwal Sashi Publications Private Limited

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