(1) OFFER
AND ACCEPTANCE: There are at least two parties to life insurance contract
insurer . The proposal submitted by the proposer for life insurance is the offer. When it is a
accepted absolutely and unconditionally
it is a converted into a
contract. If the insurer on considering a proposal decides that it can be accepted on terms other than a
as proposed, he informs the proposer the modified terms. This is called
a counter offer. It is now for the proposer to accept the modified or counter offer. Once he accepts
such counter offer absolutely and unconditionally a contract comes in to a existence. (2) CAPACITY OF PARTIES: The essential of “
Competency” applies more to the proposer
than a life insurance company. A proposal from a minor is not
entertained by an insurance company. But under certain the company may issue a
policy on the life of a minor . But in such case is a the contract will be the with the guardian or
parent because a contract creating only rights or property in favour of a minor is valid.
(3) FREE CONSENT Freeconsent is present only when parties agree on a thing
in the same sense. If the consent is obtained by such means, I ,e, by coercion,
undue influence fraud, misrepresentation
or mistake then that will not be called
free consent .
A person whose consent it
is a not freely obtained may avoid or cancel the contract if
he desires. Importance of free consents and agent: Where a person signs a
proposal he gives his consent. But when the signs in a vernacular or a language
different from that the of form, he must
declare in his own hand that the contents of proposal were explained to him and
he has a signed the proposal after fully
understanding them. The witness to the
proposal should also certify that he has explained the contents of the form to the proposer only
than the consent is considered to be free. Agents are advised to be a careful
that proposal for assurance is given by the proposer with a free consent and agent should be not adopt unfair practice. (4) LEGALITY OF OBJECT: It is a very much
essential in a life insurance contract .
The life insurance contract should be not be based on a mere gambling instinct
and the object of insurance and premium consideration is not fraudulent immoral and forbidden by
low. ( 5) CONSIDERATION: Consideration
is a something that moves from one party to the other and in return for that party fulfils his part of obligation e. g. premium is a
consideration and is paid by insured a to insurer to bear risk of the insured’s
life. (6) UTMOST GOOD FAITH (PRINCIPLES
OF UBERRIMAE FIDEI) The contract of life insurance requires utmost good faith
on the part of both the parties so that the person undertaking to shoulder the burden or risk
may correctly ascertain the true nature and extent of it before
fixing its price. They must make
a full disclosure of all the facts
material to the risk. The words material to the risk mean any fact concerning
the health condition or physical history of the applicant which may
influence the insurer in
determining whether to issue the policy.
