The Japanese eat very little fat and suffer fewer

heart attacks than the British or Americans.

On the other hand, the French eat a lot of fat and
also suffer fewer heart attacks than the British or
Americans.
The Chinese drink very little red wine and suffer
fewer heart attacks than the British or Americans.
The Italians drink excessive amounts of red wine
and also suffer fewer heart attacks than the British
or Americans.
Conclusion: Eat & drink what you like.
It's English that kills you .
1

Part Two: Life Insurance

Nature of Life Insurance

Classification of Policies
Annuities
Selection of Risk
Measurement of Risk & Mortality
Table
Calculation of Premium
Treatment of Substandard Risks
Investment of Funds
Surrender Value
Valuation and Surplus
Policy Condition

Nature of Life Insurance Contract

Life insurance may be defined as the
contract, whereby the insurer, in
consideration of a premium,
undertakes to pay a certain sum of
money either on the death of the
insured or on the expiry of a fixed
period.

Features of Life Insurance Contract

Nature of General Contract

Insurable Interest
Utmost Good Faith
Warranties
Proximate Cause
Assignment and Nomination
Return of Premium
Other Features

1. Nature of General Contract

A valid contract must have the following
essentials;
Agreement (Offer and Acceptance)
Competency of the Parties
Free Consent of the Parties
Legal Consideration
Legal Objective

1. Nature of General Contract

Offer and Acceptance;
Deals begin when one person makes a proposal to
exchange something of value with another
person. The proposal to make an exchange is
called the offer.
If the second person agrees to the exchange, this
is called acceptance.

Nature of General Contract

Competency of the Parties;
Majority
Persons of Sound Mind
Other Disqualification

Free Consent of the Parties;

Both parties must be of the same mind at the time of
consent.
If they do not meet in this respect, there is no perfect
agreement.
Free from coercion, undue influence, fraud,
misrepresentation, or mistake

1. Nature of General Contract

Legal Consideration;
The presence of a lawful consideration is essential
for a legal contract.
The insurer must have some consideration
(premium) in return of his promise to pay a fixed
sum (sum insured) at maturity or death.

Legal Objective;
The objective will be legal only when there is
insurable interest and when the object is legal.

2. Insurable Interest
Pecuniary interest arises out of the
pecuniary relationship that exists between the
policy-holder and the life assured.
Categories;
Own life
Others life;
Where proof is not required
Proof is required
Business relationship
Family relationship

Insurable Interest Classification

Insurable Interest

Own Life

Others Life

Proof not Required

Proof Required

Business Relation

Family Relation

2. Insurable Interest
Insurable Interest in Owns Life
The person will continue to gain financially while
surviving.
Will suffer loss if he is dead because he will be
unable to earn or to protect the property.
Unlimited insurable interest
Loss cannot be measured in terms of money
So no limit can be placed

2. Insurable Interest
Insurable Interest in Others Life;
Proof not Required
Wife has insurable interest in the life of her husband
Husband has insurable interest in the life of wife

Proof required
Business relationship
A creditor has in the life or his debtor
A trustee has insurable interest in respect of the interest of which
he is trustee
A surety has insurable interest in the life of his principal
A partner has insurable interest in life of each partner
An employer has in the life of a key-person
An insurer has in the life assured.

2. Insurable Interest
Family Relationship;
The insurable interest may arise due to family
relationship if pecuniary interest exists between
the policy-holders and life assured.
Mere relationship or ties of blood and of affection
does not constitute insurable interest.
The proposer must have a reasonable expectation
of financial benefit from the continuance of the
life of the person to be insured or financial loss
from the his death.

General Rule of Insurable Interest in

Life Insurance
Time of Insurable Interest;
Must exist at the time of proposal
But not essential at the time of claim

Services;
Only to spouse, not to relatives
Must have a financial relationship between the
proposer and the assured.

General Rule of Insurable Interest in

Life Insurance
Must be Valuable;
The value must be determined

Should be Valid;
The Legal Responsibility May be Basis;
Must be Definite;
Legal Consequence;

3. Utmost Good Faith

Material facts;
Age, income, occupation, health, habits, residence, family
history, and plan of insurance

Duty of Both Parties;

Full and True Disclosure;
No concealment, misrepresentation, half disclosure, fraud

Extent of the Duty;

A full disclosure and correctly fulfilled

Legal Consequence;
Non-disclosure leads to a voidable contract

Indisputability;
Contest provision

3. Utmost Good Faith

Facts not Required to be Disclosed;
Circumstances which are diminishing the risk
Facts which are known to the insurer
Facts which the insurer should infer from the
information given
Facts which are waived by the insurer
Facts which are superfluous to disclose by reason
of a condition or warranty
Facts of public knowledge

3. Warranties
Representation;
Information given by a proposer for insurance to the
insurer during the negotiations is a representation.
False or untrue representation may lead to a voidable
contract

Warranties;
Informative warranties the proposer is expected to
disclose all the material facts to the best of knowledge and
belief.
Promissory warranties relating to the future may be
statements about his expectations or intentions

Breach of Warranties;

5. Proximate Cause
The efficient or effective cause which causes
the loss (peril)
If the peril is insured, the insurer will pay
In life insurance the doctrine of Causa Proxima
is not applicable.
War-risk
Suicide
Accident benefit

6. Assignment and Nomination

Assignment;
Freely endorsed in the policy or by a separate deed
Notice must be given to the insurer
Once the assignment is completed, it cannot be
revoked

Nomination;
Nomination can be assigned at any time by the holder
of the insurance
Can be cancelled before maturity but notice must be
given to the insurer

7. Return of Premium
Generally cannot be refunded unless;
The insurer is incapable to run the risk
A void contract on account of misrepresentation
or breach of warranties
The insured can claim the return of premiums
paid

8. Other Features

Aleatory Contract;
Unilateral Contract;
Conditional Contract;
Contract of Adhesion;
Not a Contract of Indemnity;