11 main Conditions Relating To the Continue Policies (Insurance)

1. Indisputable Clause :

In order to protect the interests of the assured, indisputable clause is added which provides that the policies shall be indisputable after a state period, viz., two years from the date of issue except for non­payment of premiums or for fraud.

Section 45 of the insurance Act has provided that the policy will not be disputed on ground of unintentional misstatement, misrepresentation or non-disclosure of a material fact after two years of the issue of the policy. However, on ground of fraud it can be disputed at any time during the currency of the policy.

ADVERTISEMENTS:

2. Alterations in Policies :

The insurer permits certain alterations in terms and conditions of the policies at the request of the policyholders. The insurer reserves the right to decline such requests without assigning any reason.

Alteration may be change: in class or term, reduction in sum assured, increase in sum assured, change in mode of premium payment, splitting up of a policy into two or more policies and so on. The insurer, generally, does not permit alterations which increase the amount of risk to the insurer.

3. Exclusion :

ADVERTISEMENTS:

Ordinarily, the insurer does not assure the hazardous occupation. If any insured person has taken up or intends to take up hazardous occupation, he has to pay extra-premium. The hazardous occupations have been listed, by the Corporation in India. The policies issued at standard rates are free from all restrictions to change in occupation.

However, the policies issued to students are on the term of hazardous occupation because a student’s occupation is not determined till he completes his education and hence the degree of risk is not known.

Standard premium rates are not sufficient to cover the risk of war mortality, therefore, war clause is included in such policies where it is mentioned that if the death will occur due to war the liability of the insurer is limited to the premium paid or surrender value whichever is higher. The total sum assured will not be paid in this case.

4. Lost Policy :

ADVERTISEMENTS:

The insured must inform to the insurer whenever the policy is lost or destroyed. On the satisfactory evidence of loss or destruction, the insurer will issue a duplicate copy after advertising the fact and will charge the assured the fee for issuing the duplicate copy.

5. Loans :

The insurer may grant loan on the security of the surrender value of the policies. In India, loans are granted on unencumbered policies up to 90 per cent of the surrender value in case of policies which are in force for full sum assured and 85 per cent of the surrender value in the case of policies which are paid up being in force for reduced sum assured.

In case, policies are due to mature within three years a larger percentage may be granted. The minimum amount for which a loan can be granted is Rs. 150 and the rate of interest is 714 per cent per annum payable half-yearly. Loans are not granted on certain type of policies where surrender values are not accumulated.

ADVERTISEMENTS:

6. Nomination :

According to Section 39 of the Insurance Act, 1938, the holder of a policy of life insurance on his own life may, when affecting the policy or at any time before the policy matures for payment, nominate a person or persons to whom the policy money secured by the policy shall be paid in the event of his death.

Nominee is the person named by the policyholder to whom the policy amount may be paid if the policy amount is payable on death and the nominee is alive when the life assured expires. In absence of any of these, the nominee does not acquire a right in the policy. If policy matures by expiry of time, the policy amount is payable to the insured himself and not to the nominee.

Notice of Nomination :

ADVERTISEMENTS:

When such nomination is made for the first time, the corporation will register it even if no notice is served, provided the nomination is in order. But for all cancellation, changes and for all nominations subsequent to the first, the Corporation insists on a notice of nomination in the light of Sec. 39 of the Ins. Act, 1938, otherwise it will not be liable for any payment.

7. Assignment :

A transfer or assignment of a policy of life insurance, whether with or without consideration, may be made only by an endorsement upon the policy itself or by a separate instrument, signed in either case by the transferor or by the assignor or has duly authorised agent and attested at least by one witness, specifically setting forth the fact of transfer or assignment.

The transfer or assignment shall be complete and effectual upon the execution of such endorsement or instrument only attested until a notice in writing of the transfer or assignment and either the said endorsement or instrument itself or a copy thereof have been delivered to the insurer.

ADVERTISEMENTS:

The priority of claims will go by the date on which the notice of assignment is served on the Corporation. The insurer has to record the fact of the transfer or assignment and has to give a written acknowledgment of receipt of such notice.

As a result of the assignment, all the rights and liabilities under the policy will be transferred to the assignee subject to any condition contained in the assignment. The assignment can be of two kinds

1. Absolute and 2. Condition, An absolute assignment is an assignment where all rights, title and interest of assignor in the policy pass to assignee without reversion to the former or his estate in any event. Under such an assignment, the policy rests absolutely in the assignee and forms part of his estate on his death.

A conditional assignment provides that on the happening of a specified event which does not depend on the will of the owner, the assignment shall be either wholly or partially inoperative. An example of the conditional assignment is one which reverts to the assured in the event of his surviving the date of maturity or in the event of his being alive on the death of the assignee.

8. Suicide :

In the event of suicide committed by the assured within one year from the date of commencement, whether insured or not, at the time, the liability of the Corporation shall be limited to the extent of the beneficial interest which any person shall prove to the satisfaction of the, Corporation to have been acquired in the policy bona fide and for valuable consideration, of which notice in writing shall, at least one calendar months previous to death, have been given to the, within mentioned, divisional office of the Corporation and save and except to that extent, this policy shall be void and all claims to any benefit, advantage or interest in the funds of the Corporation by virtue of this policy shall cease.

9. Double Accident Benefit :

This provides for payment of double of the sum assured on death by accident. If the life assured sustain any bodily injury resulting solely and directly from accident caused by outward violent and visible means.

If such injury within 90 days of its occurrence, solely directly and independently of all other intervening causes results in the death of the life assured, double of the sum assured will become payable.

The benefit is available only to limited proposals. The aggregate limit of assurance under this policy is Rs. 1, 00,000.

10. Disability Benefit :

This benefit will be granted to all lives assured under all plans except pure endowment, term assurances, children’s Differed Endowment, Deferred and Retirement Annuities. Life assured disabled by accident from earning his livelihood, will be exempted from paying premiums on his policy, falling due after the date of disablement.

This benefit is granted on the first Rs. 20,000 of assurance. The examples of permanent disablement are loss of sight of both eyes or amputation of both hands at or above the wrists or amputation of both feet and hands.

11. Extended Disability Benefit :

It provides for waiver of premiums and also for payment of an amount equal to the sum assured on permanent total disability as a result of an accident. The example of permanent total disability is given above. This benefit is available by paying extra premium of Rs. 2/- per thousand of sum assured.