PRINCIPLES OF VALID CONTRACT

- SPECIAL PRINCIPLES OF LIFE

INSURANCE

Presented By ,

ARUNIMA RAJAN

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CONTRACT

In common low legal systems, a contract (or informally

known as an agreement in some jurisdictions) is an

agreement having a lawful object entered into voluntarily

by two or more parties, each of whom intends to create

one or more legal obligations between them.

The elements of a contract are "offer" and "acceptance"

by "competent persons" having legal capacity who

exchange "consideration" to create "mutuality of

obligation."

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ELEMENTS OF CONTRACT

Agreement

Consideration

Legally Competent Parties

Legal Purpose

Legal Form

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CONTRACT OR AGREEMENT

Every Agreement Is not a Contract

A Contract is enforceable by law while an Agreement is

not enforceable by law.

All Contract are Agreement but all Agreement are not

Contract.

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ESSENTIAL OF VALID CONTRACT

Offer and acceptance

meeting of the mind

Parties competent to contract

Lawful Consideration

Legal formalities

Free consent

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CLASSIFICATION OF CONTRACT

According to Validity

1. Valid Contact

2. Void Contract

3. Void Agreement

4. Voidable Contract

5. Illegal Agreement

6. Unenforceable Contract

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CONTD………..

According to Formation

1. Express Contract

2. Implied Contract

3. Quasi Contract

According to Performance

1. Executed Contract

2. Executory Contract

3. Bilateral Contract

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LIFE INSURANCE

Life insurance can be termed as an agreement between

the policy owner and the insurer, where the insurer for a

consideration agrees to pay a sum of money upon the

occurrence of the insured individual’s or individuals’

death or other event , such as terminal illness, critical

illness or maturity of the policy.

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PRINCIPLES OF LIFE INSURANCE

Special Features of Life Insurance Contracts:-

1. Principles of Insurable Interest

The object of insurance should be lawful. The person

proposing for insurance must have interest in the

continued life of the insured and would suffer pecuniary

loss if the insured person dies. This is known as

Insurable Interest.

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2. Principles of utmost good faith

In Life Insurance contracts, a very high degree of good

faith is required to exist between the parties to the

contract, viz., the insurer and the insured. This is called

the principle of utmost good faith.

It is the duty of the proposer to disclose the material

information for proper assessment of risk by the insurer

The proposer may not be having technical knowledge

about the insurance products, the benefits, pricing

aspects etc. and hence will have to rely upon the insurer

to ensure that the terms of the contract are fair and

equitable.

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3. Principle of Indemnity

Insurance contract other than life insurance contract are

contracts of indemnity in the sense that the amount

payable by the insurer in case of the contingency stated

in the policy occurring is limited to the loss that the

insured will suffer.

Principle of insurable interest determines if a loss is

suffered; the principle of indemnity measures the loss.

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4. Principle of Subrogation

Substitution of the insurer in place of the insured for the purpose of claiming indemnity from a third party wrongdoer for a loss covered by insurance.

The insurer is entitled only to the amount it has paid under the policy.

Subrogation does not apply to Life Insurance and most individual health insurance contract.

The insurer cannot Subrogate against its own insured.

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INSURANCE CLASSIFICATION

Insurance

Life Insurance General Insurance

Fire Marine Health Auto

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TYPES OF LIFE INSURANCE COMPANY

Terms insurance policy.

Whole life insurance policy.

Endowment policy.

Annuities and pension.

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DISTRIBUTION CHANNEL IN LIFE INSURANCE

BUSINESS

Following are the different distribution channel :-

Agents

Brokers

Corporate agents

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ROLE OF LIC IN INDIA

The LIC plays an important role in the

development of nation economy. The role of life

insurance corporation involves all the activates relating

to national economy, individuals and society. The

following are the important areas in which LIC plays an

important role:-

Investment.

Underwriting.

Giving loans.

Social orientation.

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LIFE INSURERS

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THANK YOU

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