RESEARCH PAPER SUBMITTED IN THE FULFILLMENT OF THE COURSE TITLED INSURANCE LAW

FOR OBTAINING THE DEGREE B.A. LL.B. (HONS) DURING THE ACADEMIC YEAR 2023 - 2024

“ASSIGNMENT ON LIFE INSURANCE DOCUMENTS REQUIRED”

SUBMITTED TO:
MR. MANI PRATAP
ASSISTANT PROFESSOR
DEPARTMENT OF LAW
SCHOOL OF LAW & GOVERNANCE
CENTRAL UNIVERSITY OF SOUTH BIHAR

SUBMITTED BY:
MITALI ARYAN
CUSB2013125070
SECTION: B
8TH SEMESTER
B.A L.L.B (HONS)
SESSION: 2020 – 2025

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 ACKNOWLEDGEMENT
I would like to express my thanks and gratitude to our faculty of Insurance Law, Mr. Mani
Pratap for providing me the chance to work on this particular assignment on the topic “Life
Insurance – Documents Required”. I am obliged to thank our faculty in the respective
subject to provide me with the necessary support required while making this assignment and
for mentoring me throughout this assignment. The whole journey of completing the
assignment was quite interesting, I was completely engrossed and dived deeper to seek more
information related to the topic. I would not have been able to complete this assignment
without the help of my friends, colleagues, and my family members, so I would like to
express my gratitude and thank them as well.

Thank you!!

Mitali Aryan
CUSB2013125070
8TH SEMESTER
B.A. LL.B. (Hons.)

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 INTRODUCTION
Life is unpredictable, so we buy insurance to protect ourselves and our loved ones from the
financial consequences of unexpected events. When the policyholder passes away, the
beneficiaries of their life insurance policy can claim the death benefit, the sum of money the
insurer pays out. However, filing a life insurance claim can be daunting, especially if you're
grieving and unsure what to do.

Documents play a vital role at the time of policy issuance and at the time of filing a claim. It
is very important to provide the necessary documents under both circumstances. Any missing
documents or details in the process of buying a life insurance policy can cause a big problem
for the policyholder.

In case the policyholder fails to provide the necessary documents and important details, the
insurance provider could deny the claim or terminate the policy in the worst cases. Also,
remember that all the KYC Documents are necessary for purchasing a life insurance policy.

Documents are necessary to evidence the existence of a contract. In life insurance several
documents are in vogue. The documents stand as a proof of the contract between the insurer
and the insured. The major documents in vogue in life insurance are premium receipt,
insurance policy, endorsements etc.

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NEED FOR INSURANCE DOCUMENTATION

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 Adidem 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 means an acceptance.

But as the insurer is a legal personality entitled to contract verbal discussion between parties
to the contract is not possible and hence there is a need for documentation. Insurance is also a
contract of utmost good faith and enforced only in the distant future. It is therefore necessary
that the declarations made by both the parties should be put in black and white for future
reference. Any suppression, wilful 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 the various kinds of documents which become necessary at three stages of a
policy –

1. at the stage of proposal, which if accepted result into a policy,

2. during the duration of the policy where several alterations may become necessary
3. at the end of the policy contract when insurer pays the final claim.

Documents needed at the stage of the proposal1

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 insurance.

Insurers have standard proposal form which can be adopted for different types of cases, like
whole life and endowment insurance with and without medical examination, children's
policies, annuities and so on. As the first step for the formation of a contract of insurance, the

1
Sachin Rastogi, Insurance Law & Principles, 1st Edition, 2014

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proposer is required to indicate the amount kind and term of policy desired and to supply all
material information by way of written answers to questions in a proposal form which will be
supplemented by a personal statement and a medical report, agent's report, etc.

The first and the most important source of risk information is the application form Proposal
form, in which the application for insurance is to be made, is printed by the and made
available through agents. The proposer (customer) is required to disclose all the material facts
truly and fully. Even if the insurer does not ask any information, the proponent must still
reveal the information, which he thinks, is material to the insurance contract. Usually, the
agent asks all the questions which are written in the proposal form.

The proposal form is normally divided into two parts:

(1) Application Form

(2) Personal Statement

Part I: The Application includes questions pertaining to:

Name, address, term of insurance, sum to be assured, mode of premium payment, date of
birth, object of insurance, name of the nominee, previous insurance history, acceptance or
rejection of proposal, engagement in navy, air forces, or military services or the intention to
be engaged in these services. Whether double accident benefit is sought or not? There may
be additional questions related to education, income, occupation and insurance of the spouse.
There is a declaration at the end of proposal form, which forms the basis of contract between
the insured and the insurer.2

Part II: The second part of the proposal form is called Personal Statement which is filled by:

a) Either the life to be assured, or

b) The agent or the development officer, writing at the dictation of the life to be assured.

This statement mentions the name of the life to be assured, family history of the Father,
mother, brother and sisters in connection with their health and illness and cause of death.
Questions about bodily impairment, serious diseases, habits, operations undergone, injuries
and accidents are asked in this part.3

2
Sachin Rastogi, Insurance Law & Principles, 1st Edition, 2014
3
IBID

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In case of female proposer additional questions such as observing of period date, conceptions,
miscarriages and abortion for female proposers and her husband. Declaration by proposer is
also crucial. Previous insurance particulars are required:

a) For comparison
b) To determine total insurance
c) To determine whether accident and extended disability benefit can be given.

The proposal form is an important document not only because it contains valuable
information, but also because the proposer declares at the end of the proposal form that the
answers and statements are given by him after fully understanding the questions, that they are
true and complete. The statements in the proposal form constitute the basis of the contract. If
any declaration is known to be untrue, the contract shall be null and void. In Pearl Life v.
Johnson4, it was held that the proposal was the basis of the contract. It was stated that there
was no contract between the insurer and insured because misrepresentative statement was
there the proposal was not signed by the assured of his authority. In India, the proposal is
incorporated into the policy only by reference and the insurer is required by Section 51,
Insurance Act to furnish on application of the policy-holder and payment of a fee not
exceeding one rupee.5

The proposal form itself, does not constitute the offer, for only that is an offer which if
accepted according to its terms creates a binding contract. It is in the nature of an invitation to
the insurer to make an offer if the proposal is acceptable. On the basis of this information the
insurer assesses the insurability of the proposal. All of this is the part of the preliminary
negotiations. The proposal and the usual letter of acceptance are in the nature of preliminary
expressions of mutual willingness to enter into the contract of insurance. If the proposal is
insurable, the insurer makes what truly the offer which is also called the counter offer that the
insurer is prepared accept the proposal and that the assurance may be completed by payment
of the fine premium within a particular date. The proposer is free to accept or reject this offer.
By accepting it according to its terms, the proposer brings about the binding contract of
insurance. Where the proposal is accompanied with the initial premium and is

4
AIR (1909) 2 KB 288
5
MN Mishra, Law of Insurance, 9th Edition, Central Law Agency, Allahabad

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unconditionally accepted, the insurer may once for all issue a policy in conformity with the
proposal instead of issuing any letter of acceptance.6

The proposal form is important because statements in it are made the basis of the contract
between the parties and their correctness will be declared to be a condition precedent to the
validity of the contract. Being part of the preliminary negotiations, is not a legal requirement
but a requirement of insurance practice. It is thus possible for an insurance contract to be
formed which is not affected by anything which is said or done at the preliminary
negotiations stage7. Thus, in Pearl Life v. Johnson8, the policy was issued on the life of the
assured's husband and it was agreed that the proposal was the basis of the contract. When the
claim arose, it was observed that the proposal had not in fact been signed by the assured or
under her authority. The company denied liability urging that there was no contract and also
that there was a misrepresentation contained in the proposal. However, the Court held, that:

(1) it was not competent to the company to contend that there was no contract as the
assured had never signed any proposal.
(2) both parties were estopped from denying that the policy was granted on the basis of a
proposal, but,
(3) that the assured could contend that she was not responsible for any misstatements of
fact in the proposal.

A person who affixes his signature to a proposal which contains a statement which hot true,
cannot ordinarily escape from the consequences arising there from by pleading that he chose
to sign the proposal containing such statement without either reading or understanding it.9

The proposer further agrees to keep the insurer informed of any changes in the position
relating to his health or his occupation between now and the issuance of the first premium
receipt. It is thus clear that after the insurer has issued the first premium receipt, the contract
is said to have concluded and thereafter the insurer has no right to change the terms of the
contract.

However, the insurer has a right to offer any term and condition before the final acceptance of
the insurance. For example, in case of a female proposer, the insurer may not agree to accept

6
General Accident Insce vs Cronk, AIR (1901) 17 TLR 233
7
Dunn vs. Campwell AIR (1920) 4 LI LR 36
8
Supra note 4
99
V.K Srinivasa Setty vs. Premiere Life & General Ins. Co ltd AIR (1958) Mys 53 (60)

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the risk of the childbirth. In case of certain hazardous occupation like commercial pilots, the
insurer may like to exclude the risk to life due to such occupation.

In case of certain deformity, the risk of accident can be excluded. These exclusions of risks
are not normal terms of the policy contract and therefore have to elicit consent of the
proposer. In case of a substandard health, the insurer may like to accept a reduced risk during
the first one or two years of the insurance. The consent of the insured is a must for such
limitations to be imposed.

All such special conditions or riders are mentioned in the policy either by an endorsement or
attachment to the document. If the insurer has taken a Convertible Whole Life Plan which is
to be converted to an endowment plan after 5 years, the necessary condition is endorsed on
the policy.

The terms and conditions as mentioned in the policy along with such endorsements as made
at the back of the policy govern the insurance contract and are open to be interpreted by a
court. However, it may be noted that agents confidential report and the medical examination
(confidential) report are not part of the contract for insurance.

AGE PROOF

Age is an important factor in deciding the quantum of premium against a policy. The
document proving the age, i.e. age proof must be reliable and the insured has to undertake as
to its truthfulness. An insurer accepts these documents as standard age proof10 –

(1) Certified extract from municipal records, recorded at the time of birth.
(2) Certificate of baptism or extract from Family Bible
(3) Extract from school or college records.
(4) Extract from service register in case of employees - Government or semi government
or such other reputed institutions which insist on conclusive evidence of age at the
time of recruitment.
(5) Identity card issued by Defence department.
(6) Marriage certificates issued by Roman Catholic Church.
(7) Domicile certificate.
(8) Passport.

10
Supra note 2

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Non-standard age proofs are those which are comparatively less reliable and therefore the
insurer accepts them with a pinch of salt. In other words, the insurer takes certain precautions
before accepting such age proofs as final.

For example, such age proofs are examined by a senior officer and not accepted as a matter of
routine. 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 proposal 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 verifiable.

In case of business people, the assessed income is at times much less compared to what is a
desirable income for the amount of insurance desired. In such cases the insurer at times calls
for assessed income tax returns, or Chartered Accountant’s certificate etc. Such precautions
are necessary to eliminate the possibility of moral hazard.11

11
R N Choudhary, General Principles of Insurance Law, 1st edition, Central Law Agency (2012)

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DOCUMENTS NEEDED DURING THE CONTINUANCE OF THE
POLICY:

a) First Premium Receipts and Renewal Premium Receipts: The First Premium Receipt
(FPR) is the confirmation of insurance. This document is important as it gives the date of
assumption of the risk but its value is nil once the policy document has been issued.
Premium is the consideration for which the insurer gives his promise to the insured.
Premiums under Life Insurance contracts are not all alike. The first premium is the
consideration for the insurer’s promise and brings the contract into force, for the
insurance contract becomes binding only on the tender of the first premium to the
insurers after their acceptance of the insured proposal.12
b) Policy Contract: Policy document is a detailed document and it is the Evidence of the
insurance contract which mentions all the terms and conditions of the insurance. The
insured buys not the policy contract, but the right to the sum of money and its future
delivery. The insurer on its part promises to pay a sum of money, provided of course the
insured keeps its part of promise of paying the instalments of premium as scheduled.

The pre-amble to the insurance contract makes the above statement clear and states that
this policy is issued subject to the conditions and privileges printed on the back of the
policy. The endorsements placed on the policy shall also be part of the policy and it also
makes a reference to the proposal form saying that that the statements given in the
proposal form are the basis of the contract.
The schedule which is printed on the policy document identifies the office which has
issued the policy. It states the name of the policyholder, the date of commencement of the
policy, an identification number of the policy called policy number. This number is
extremely useful for making any reference to the insurer relating to this policy. This shall
avoid needless delay. 13
Beneficiary’s name is also mentioned along with address.
It is necessary to check that it is correct and any mistake should be immediately pointed
out for correction. A mistake in the address may misdirect the premium notices and any
other future correspondence. It also states the name of the nominee and the date upto
which premium has to be paid.

12
Canning vs Farquhar AIR (1886) 16 QBD 727
13
Supra note 2

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 The schedule goes on to mention, the type of policy, on the happening of which, the sum
assured is payable and to whom it is payable. It of course also mentions when and how
long the premium is to be paid. The policy document is signed by an official of the
insurer and dated and stamped as per the provision of the Stamp Act to make it a
completely legally enforceable document.14
c) Renewal Premium Receipts: Though it is the duty of the insured to pay the renewal
premium on the due date the insurer sends a renewal premium notice to the insured out
of courtesy and on receiving the premium issues a renewal premium receipt (RPR) which
is an important document and has to be preserved as it is the only documentary proof that
the due payment has been made.
d) Endorsement: Life insurance policy being a long - term contract, it is quite likely that
the conditions may so change over the time that an alteration or change in the policy
conditions may be required. The insurers normally permit such changes which are in the
interest of the policyholders and also simultaneously do not adversely affect the insurer’s
interest. 15
It has to be noted however, that the insurer is not authorized to make any change in the
conditions of the policy during its continuance except such which has been agreed to in
the beginning of the policy.
An insurance policy, in this sense is called the unilateral contract. All such alterations as
are discussed hereafter are affected by endorsements on the policy document.

The following alterations are not permitted.

(1) Alterations during the first year,

(2) Alteration from one class of assurance to another where the premium scale is
reduced.
(3) Alteration to another plan which is more risk oriented
(4) Increase in sum assured in the same policy.

The following alterations are allowed

1) Limiting the premium paying period, but date of maturity remaining unaltered;

14
NIOS, Insurance document; Available at: https://nios.ac.in/media/documents/VocInsServices/m3-f2.pdf (Last
visited on 17th April 2024)
15
IBID

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 2) Change in the mode of payment of premium e.g. Half yearly to yearly or half-yearly
to quarterly;
3) Alteration due to age admission, if required, has to be compulsorily done;
4) Alteration or correction in the name of the assured/ nominee;
5) Bringing the policy under salary savings scheme;
6) Replacing a limiting clause by an extra premium. For example, the first pregnancy
clause can be replaced by a one - time extra premium of Rs.5/- per thousand;
7) An extra premium imposed for specific impairment or occupational reasons can be
removed or reduced. For example, an extra premium imposed for hernia or hydrocele
can be removed after surgical operation. Similarly, an occupational extra premium can
be removed, if there is change in occupation to a less hazardous one. However an
occupational extra premium cannot be imposed, after the policy has been issued, even
if the policyholder takes up a more hazardous job.

All such alterations are affected by an endorsement on the back of the policy or by a separate
memo which becomes a part of the policy.

e) Duplicate policy: A policy document is a valuable document and can be used for
mortgage etc. Loss of policy document does not absolve the insurer from the liability of
payment of policy proceeds when the claim arises. The claim can be settled on the
claimants, furnishing an indemnity bond jointly with one surety. If a policy is irrevocably
lost, a duplicate policy can be issued, after following a certain procedure. The insurer
satisfies itself of the circumstances leading to loss. Being so satisfied the insurer insists
upon an advertisement in a newspaper, production of an indemnity bond and payment of
policy preparation charges and there after a duplicate policy is issued. The duplicate
policy is stamped “Duplicate Policy”16.

NOMINATION:17

Generally, nomination is made at the time of taking a policy. In case it is not done, it is
possible to make nomination subsequently by an endorsement on the policy. It is also
possible to change a nomination subsequently by an endorsement. After marriage, such
change in nomination is normally required.

ASSIGNMENT:
16
Sachin Rastogi, Insurance Law & Principles, 1st Edition, 2014
17
Supra note 14

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An assignment of a policy in favour of another person or institution can be, effected by an
endorsement on the policy. Re-assignment can also be done by a subsequent endorsement on
the same policy. As a nomination is automatically cancelled due to an assignment, after re-
assignment, it is necessary to make a fresh nomination.

RENEWAL NOTICE:18

Keeping the policy in force is in the interest of the policyholder and also of the insurer. The
insured loses the valuable protection that the life assurance policy ensures. The insurer loses
because without the renewal premium coming, the heavy expenses which it incurs in the
beginning of a policy cannot be compensated. Every insurer will, therefore, take all possible
actions to reduce policy-lapses and if lapsed, to get the policy revived.

An insurer therefore sends out regular premium notices even though it is not a legal
requirement.

1) Premium notice is usually sent before the due date of the premium. An insurer is not
legally obliged to send a premium notice. It is a matter of courtesy and greatly helps
the life assured for timely payment of premium.
2) Premium default notice: This notice is sent within 3 months after the due date
reminding the policyholder to pay the premium to prevent the policy-lapses.
3) Issue of Final lapse notice: If the premium is not paid within six months of the due
date, and the policy is allowed to lapse, this notice is issued to the policyholder
requesting him to revive the policy to restore the full insurance cover.
4) Intimation to agent: Agent being vitally concerned with the continuance of a policy,
he is also suitably informed every time so that he can contact the policyholder for
payment of the premium.

18
Sachin Rastogi, Insurance Law & Principles, 1st Edition, 2014

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 CONCLUSION:

Life insurance being a legally enforceable contract, needs to be documented with details of
the rights and obligations of the parties to the contract. Proposal form duly filled in and
signed by the proposer is the first document which forms the basis of the contract.

Every time, the insured pays the premium, he receives a premium receipt. The premium
needs to be paid in time, nonpayment of premium leads to policy-lapses. Re-instatement of
the cover is called revival of the policy. If the policy is not revived, the policy can become a
paid - up policy for a reduced sum assured under certain conditions. The policy document
mentions in detail all the rights and obligations of the policyholder.

The agent is advised to explain the various provisions of the policy to the policyholder. The
wordings in the policy document are of technical nature and hence the need for explaining. If
there are certain endorsements on the policy, that need to be explained too.

It needs to be explained that the policy is a valuable document and needs to be kept in safe
custody and in the knowledge of the close relatives.

BIBLIOGRAPHY

1) BOOKS:

• Sachin Rastogi, Insurance Law & Principles, 1st Edition, 2014

2) WEBSITES:
• https://nios.ac.in/media/documents/VocInsServices/m3-f2.pdf
• https://www.investopedia.com/terms/l/lifeinsurance.asp
• https://life.futuregenerali.in/life-insurance-made-simple/life-insurance/what-is-
assignment-and-nomination-in-life-insurance/
• https://www.lawctopus.com/academike/assignment-insurance-policies/

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