Page 140 - Ebook health insurance IC27

The Insurance Times

Questions and Answers

Q1. Discuss the important features of health insurance contract.
Ans. Health Insurance Policy is a contract between the insurer and the insured. The

word Contract is derived from the word 'Contrahere' , which means 'draw together'
and it stresses the importance of mutuality in the use of the particle or subject,
more than the word 'Agreement'. That is why Insurance policies are known as
contracts rather than Insurance Agreements.

The Mutuality of both the parties are stressed, based on the principle of 'Utmost
Good Faith', not only at the time of initiation of the contract but also at the time of
execution or termination of contract. A contract is a legally enforceable binding
agreement between two or more parties. A Contract is supposed to have
mandatory elements like Offer and Acceptance, Consideration, Capacity to
Contract, and Legality of form.

Insurance contracts are based on the product features offered by the Insurance
Company. The product mentions the benefits offered in the event of loss or the
happening of the insured event, specific terms & conditions governing the product,
consideration (i.e, premium) and other inputs in the form of declarations expected
from the insured. A Health Insurance Contract is based on the principles of Contract
Law and Provisions of the Insurance Contract.

Health Insurance policies offer the benefits of providing coverage in the event of
hospitalization/illness for a premium that is required to be paid by the customer.
The extent of consideration (i.e premium) depends on the inputs and declarations
provided by the customer about their age, health status etc. So, when a customer

144 Guide for Health Insurance