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What are the elements of life insurance?

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The life insurance contract must

have all the essentials of a valid

contract. Certain elements like offer

and acceptance, free consent,

capacity to enter into a contract,

lawful consideration and lawful

object must be present for the

contract to be valid;

(ii) The contract of life insurance is a

contract of utmost good faith. The

assured should be honest and

truthful in giving information to the

insurance company. He must

disclose all material facts about his

health to the insurer. It is his duty

to disclose accurately all material

facts known to him even if the

insurer does not ask him;

(iii) In life insurance, the insured must

have insurable interest in the life

assured. Without insurable interest

the contract of insurance is void. In

case of life insurance, insurable

interest must be present at the time

when the insurance is affected. It is

not necessary that the assured

should have insurable interest at

the time of maturity also. For

example, a person is presumed to

have an interest in his own life and

every part of it, a creditor has an

insurable interest in the life of his

debtor, and a proprietor of a drama

company has an insurable interest

in the lives of the actors;

(iv) Life insurance contract is not a

contract of indemnity. The life

of a human being cannot be

compensated and only a specified

sum of money is paid. That is why

the amount payable in life

insurance on the happening of the

event is fixed in advance. The sum

of money payable is fixed, at the

time of entering into the contract. A

contract of life insurance, therefore,

is not a contract of indemnity.

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