Page 301 - Ebook health insurance IC27

Sashi Publications

effecting the insurance has some legally recognized relationships to the object of the
insurance (e.g. health of the insured person). That is the insured must lose financially if a
loss occurs, or must incur some other kind of harm if the loss takes place. For example,
a husband has an insurable interest in the health of wife or dependents, since he may
suffer loss financially if they get sick. Any person, obviously have an insurable interest in
his health.

Q. Why insurable interest must exist?
A. If no insurable interest exists at the time of loss, there will not be any financial loss.
Hence, the principle of indemnity would be violated if any payment were made.

Q. Give example of others who have insurable interest in the health of an
insured?
A. Close ties of blood or marriage or employment

Utmost Good Faith
The principle of utmost good faith imposes a high degree of honesty on the applicant for
insurance. The following are an example of a utmost good faith clause wording in a
medical insurance policy:

"This Policy shall be voidable by the Company in the event of misrepresentation,
misdescription or non-disclosurein any material particular by the insured person/member."

The principle of utmost good faith is supported by the legal doctrines of representations

Website : www.bimabazaar.com, PH: 033 22184184/40078428 305