1. Basics of Insurance

2. Principles of Life Insurance

3. The Indian Contract Act 1872 A contract is an agreement between two or more parties to do or to abstain from doing an act and which is intended to create a legally binding relationship

4. Is Life Insurance a Legal Contract? Intention is legal Proposer offers-insurer accepts Premium is consideration Insured must be major with sound mind-capacity to contract Insured and Insurer are in agreement –of same mind and free consent Yes, since all essentials of valid contract are present

5. Principles of Life Insurance Insurance Contract is based on Fair Play

6. Utmost Good Faith A Positive Duty to voluntarily disclose, accurately and fully, all facts material to risk being proposed, whether requested or not

7. What is a material Fact Which Influences The Mind of a Prudent Underwriter Any Fact or Circumstance In determining whether to take the risk In Fixing the premium

8. Materials facts that need not to be disclosed Facts Of Common Knowledge Facts Of Law Need not be Material Facts Disclosed Facts Which Lessen Risk Facts that can be discovered With reasonable diligence

9. Breach Of Utmost Good Faith Breach Of Utmost Good Faith Misrepresentation Non-Disclosure

10. Section 45 of the Insurance Act,1938 Policy Start Date 2 years If Material Facts discovered within 2 years of the policy then the insurer can declare the policy null and void The policy cannot be called in question after 2 years, on the grounds of inaccurate or false statement unless it is proved to be material and fraudulent.

11. What is Insurable Interest ? Recognized in Law and gives Legal Right to a person Relationship with subject Matter To insure that Subject Matter Insurable Interest is the monetary interest

12. What is Insurable Interest ? Insurable Interest is not defined in Insurance Act 1938 If No Insurable Interest .A contract is a Wagering Contract which is void Section 30 Indian Contract Act 1872 Insurable Interest is a Legal Pre Requisite

13. Who have insurable interest in each other Any person in himself Husband and wife in each other Creditor on Debtor(To the Extent of Outstanding Mortgage with Interest) Surety on Principal(To the extent of Debt) Partners in business Employer on its employees Parents in Lives of their Minor Children

14. When do these principles apply? Insurable Interest interest is required at the time of inception of the contract Utmost Good Faith is required Throughout the contract

15. Principle Of Indemnity Insurance is meant to compensate the losses The Mechanism of Insurance cannot be used to make profits Amount of claim cannot exceed the amount of loss incurred Insurance makes good the loss In Life Insurance, insurable interest on own life is unlimited hence Principle of indeminity does not apply but it does apply in General Insurance

16. Risk Management Avoidance Transfer Risk can Be managed Retention

17. Risks Management You can avoid accidents by driving safely Avoidance You have your own resources to take care of needs; (savings for rainy days) Retention Buying insurance; transfer your risk to insurer Transfer

18. Classification of Needs Protection of the standard of living of family incase of early death Future Expenses eg. Children Education Income incase of Retirement or Disability Helps by facilitating borrowing

19. Key Learnings Life Insurance contract is also a legal contract The proposer must declare all the facts properly in utmost good faith Proposal Form is the basis of Contract Section 45 of Indian Insurance Act, stipulates that a policy cannot be called for question after 2 years Insurable Interest is a legal pre-requisite

20. Thank You