Life Insurance Vs Ad Idem

Life insurance is a legally enforceable contract between two parties both of whom are legally qualified to contract. It is therefore, necessary that the terms and conditions of the agreement must be suitably documented in a manner that would make it clear that both parties to the contract are Ad-idem i.e., of the same mind. Ad-Idem means that both the parties understand the same thing in the same sense or are of the same mind on the same subject. There must be consensus or Ad-Idem between the parties to the contract.

This is possible provided all the terms and conditions, rights and duties - privileges and obligations are properly documented in terms which can be clearly interpreted in a court of law. Between two human beings sometime silence

It is therefore necessary that the declarations made by both the parties should be put in black and white for future reference. Any suppression, willful and material shall make the contract void. The insured, therefore, has a duty to declare all that he knows about himself, his health, his financial status in answering questions contained in the proposal form and other ancillary documents which may be required by the insurer.

We shall discuss in this chapter the various kinds of documents which become necessary at three stages of a policy –

2) at the stage of proposal, which if accepted result into a policy,

3) during the duration of the policy where several alterations may become necessary

4) at the end of the policy contract when insurer pays the final claim.

6.2 DOCUMENTS NEEDED AT THE STAGE OF THE PROPOSAL

Proposal form is the basic format which is filled in by the proposer who wants to take an insurance policy. It can be defined as the application for

Another safeguard is to offer a reduced term of policy so that the policy matures at a comparatively early age. The maximum age of maturity may be fixed at a lower age. The insurer even may charge an extra premium to compensate for the possible understatement of age in such age proof.

Such non–standard age proofs are (1) Horoscope, (2) service records of employers other than those mentioned above (3) ESI card, (4) Marriage Certificate in case of a Muslim proposer., 5) Elders Declaration, 6) Self Declaration, 7) Driving Licence, 8) Certificate issued by village panchayat, 9) Electoral role, 10) Ration card.

Age proof is insisted upon for completion of propsoal if the declared age of the proposer is less than 20 or more than 50 or if the sum proposed is quite high, say above one lakh.

Proof of income

This document may become necessary whenever the sum proposed is very high. Normally a sum proposed which is seven to eight times of the declared income is acceptable for insurance. But proposals do come to the insurer when the known source of income of the proposer is much less compared to the amount of insurance desired. A service holder normally does not face this problem as his sources of income are