1

CIVIL DEATH IN INSURANCE CONTRACT

SUBMITTED BY-NILESH BELIRAYA K

2239 B.B.A. LL.B., (HONS.)

SUBMITTED TO- Nandita S Jha

FACULTY OF INSURANCE LAW

This final draft is submitted in the partial fulfilment of the course B.B.A. LL.B.,

March 2023

Chanakya National Law University, Patna

2

TABLE OF CONTENTS

DECLARATION BY CANDIDATE ..........................................................................................3

ACKNOWLEDGEMENT ...........................................................................................................4
1. MEANING AND SCOPE OF ‘CIVIL DEATH’ WITH RESPECT TO INSURANCE
LAW IN INDIA ......................................................................................................................5
2. INSURANCE ACT, 1938 VIS-À-VIS CIVIL DEATH .....................................................7
3. NOTABLE CASES ON CIVIL DEATH IN INSURANCE CONTRACT IN INDIA ........9
4. WHO CAN CLAIM THE POLICY BENEFITS IN CASE OF CIVIL DEATH OF THE
INSURER? ........................................................................................................................... 11
5. CONCLUSION .............................................................................................................. 12
INDEX OF AUTHORITIES ................................................................................................. 13
3

DECLARATION BY CANDIDATE

I hereby declare that the work report in the B.B.A., LL.B. (HONS.) project report entitled “Civil
death in Insurance contracts” at Chanakya National Law University is an authentic report of my
work carried out under guidance of Nandita S Jha. I have not submitted this work anywhere for
any other degree or diploma. I am fully responsible for my project report.

NAME OF THE CANDIDATE: NILESH BELIRAYA K

ROLL NUMBER: 2239

SIGNATURE OF THE CANDIDATE:

4

ACKNOWLEDGEMENT

The present project on the “Civil death in Insurance Contracts” has been able to get its final shape
with the support and help from various quarters. My sincere thanks to Nandita S Jha, without
whom the study could not have come to its final shape. I would like to acknowledge the help of
my friends and family from whom I have learnt various intricacies regarding submission of a
detailed report. With immense pleasure, I express my deepest sense of gratitude to Chanakya
National Law University for providing me such an opportunity. I would also like to thank all who
have generously helped me by lending remote access without which I would have not been to
conduct a thorough research. I would also like to thank the CNLU library for its access to various
search engines which have played a pivotal role in this document taking its final shape.
5

1. MEANING AND SCOPE OF ‘CIVIL DEATH’ WITH RESPECT TO

INSURANCE LAW IN INDIA

The term ‘civil death’ has not been defined under the Insurance Act, 1938. 1A standard dictionary
provides the meaning of civil death as the status of a living person equivalent in its legal
consequences to natural death. specifically : deprivation of certain civil rights upon conviction for
a serious crime. 2.3 Death is usually considered “natural” if it wasn't caused by an external factor.
Simply put, a “natural” death is one that occurs due to an internal factor that causes the body to
shut down, such as cancer, heart disease or diabetes. It means there was no external reason for the
death, such as a traumatic injury. 4 Civil death has been covered under different type of Insurance
policies and adequate protection has been provided to the policy holder with regard to the same.
In Policies such as Endowment policies, the assured amount is paid either on the maturity of the
policy to the assured, or on his death to his nominee , heirs and dependents. 5Even in Term
Insurance Policy, if the policy holder dies within the assured term full amount is payable. We shall
look into all of them with special reference in further chapters.

Civil death is a legal term that describes the situation where a person is declared legally dead while
still alive. This is usually due to mental or physical incapacity that renders the individual unable
to manage their affairs. In insurance law, civil death is significant because it affects how insurance
policies are executed, and claims are processed.

Impact of Civil Death on Insurance Policies:

When a policyholder is declared civilly dead, their insurance policy may be impacted in several
ways. For example:

1. The policy may be terminated, depending on the terms of the contract.

1
See Sec 2, Insurance Act, 1938.
2
Civil Death meaning, Merriam Webster, Available at https://www.merriam-
webster.com/dictionary/civil%20death#:~:text=Legal%20Definition-
,civil%20death,conviction%20for%20a%20serious%20crime
3
Ram Dhari v. State of Haryana, (1997) 116 PLR 353.
4
Alexander Fitzthum, What does it mean to die of natural causes? Available at
https://health.osu.edu/wellness/aging/what-does-it-mean-to-die-of-natural-
causes#:~:text=Death%20is%20usually%20considered%20%E2%80%9Cnatural,such%20as%20a%20traumatic%2
0injury. (Last visited on 14th March 2023)
5
2 J.V.N Jaiswal, Law of Insurance, Sumeet Malik 2 14 (2Ed.)
6

2. The policy may be transferred to a court-appointed guardian or trustee.

3. The policy may be paid out to the policyholder's estate or designated beneficiaries.

Legal Framework Governing Civil Death in Insurance Law: The legal framework governing civil
death in insurance law varies depending on the jurisdiction. However, most jurisdictions have
statutes that define civil death and its implications for insurance policies. For example, in the
United States, the Uniform Probate Code provides guidance on how insurance policies should be
managed when a policyholder is declared civilly dead.

Civil death has practical implications for insurance claims, particularly when the policyholder's
beneficiaries are involved. For example, if the policyholder did not designate beneficiaries or their
estate, the court may appoint a trustee or guardian to manage the policy's proceeds. This can cause
delays and additional legal expenses for the policyholder's beneficiaries.
7

2. INSURANCE ACT, 1938 VIS-À-VIS CIVIL DEATH

The Insurance Act, 1938 does not specifically deal with civil death. However, it provides
provisions for the payment of insurance proceeds in case of the death of the policyholder or the
person insured. The relevant sections of the Insurance Act, 1938 that are applicable to civil death
in insurance contracts are:

1. Section 38: Nomination6

This section provides for the nomination of a person to receive the insurance proceeds in case of
the policyholder's death. The nominee can be changed by the policyholder at any time during the
policy's term. If the nominee is a minor, the policyholder can appoint a trustee to receive the
proceeds on the minor's behalf.

2. Section 48 Policy not to be called in question on ground of misstatement after two years 7

This section provides that a policy cannot be called into question on the ground of misstatement
after two years from the date of the policy or the date of the last endorsement. This section is
relevant in case of civil death, as the policy may continue to be in force even if the policyholder is
declared civilly dead.

3. Section 39A Payment to nominees8

This section provides that if a nominee is validly appointed, the insurance company will pay the
insurance proceeds to the nominee, and the company will be discharged from its liability under the
policy. 4 Section 398 Payment in case of no nomination or nomination invalid. This section
provides for the payment of insurance proceeds in case there is no valid nomination or the

6
Section 38, The Insurance Act, 1938.
7
Section 48, The Insurance Act, 1938.
8
Section 39A, The Insurance Act, 1938.
8

nomination is invalid. The insurance company will pay the proceeds to the legal heirs of the
policyholder, as determined by a court of law. These sections provide a framework for the payment
of insurance proceeds in case of the death of the policyholder or the person insured. In case of civil
death, the provisions of these sections may be applicable depending on the terms of the insurance
policy and the jurisdiction's legal framework.
9

3. NOTABLE CASES ON CIVIL DEATH IN INSURANCE CONTRACT IN INDIA

1. Life Insurance Corporation of India v. Smt. Asha Goel & Ors. 9- In this case, the
policyholder was declared civilly dead due to mental incapacity, and the court appointed his
wife as the legal guardian to manage his affairs. The policy had a provision for payment to the
policyholder's legal heirs in case of death, and the insurance company argued that the policy
should be terminated since the policyholder was civilly dead. However, the court held that the
policy should be paid out to the policyholder's legal heirs since he was not physically dead,
and the policy did not have a provision for termination in case of civil death.

2. Oriental Insurance Co. Ltd. v. RV Manjula Devi10 - In this case, the policyholder was
declared civilly dead due to mental incapacity, and the court appointed her son as the legal
guardian to manage her affairs. The policy had a provision for payment to the policyholder's
designated beneficiary in case of death, and the insurance company argued that the policy
should be paid out to the legal guardian since the policyholder was civilly dead. However, the
court held that the policy should be paid out to the designated beneficiary since the
policyholder had designated a beneficiary and had not revoked the designation.

3. Ashok Kumar v. Oriental Insurance Co. Ltd11 In this case, the policyholder was declared
civilly dead due to mental incapacity, and the court appointed his brother as the legal guardian
to manage his affairs. The policy had a provision for payment to the policyholder's legal heirs
in case of death, and the insurance company argued that the policy should be terminated since
the policyholder was civilly dead. However, the court held that the policy should be paid out
to the legal heirs since the policy did not have a provision for termination in case of civil
death.12

9
Life Insurance Corporation of India v. Smt Asha Goel, AIR 1986 Bom 412.
10
Oriental Insurance Co. Ltd v. RV Manjuala Devi, MFA 4781/2009.
11
Ashok Kumar v. Oriental Insurance Co Ltd, AIR 2004 Delhi 161.
12
Gaurav Varshey, Insurance Law, Lexis Nexis (2016).
10

These case laws demonstrate the importance of reviewing insurance policies carefully and
understanding the provisions regarding civil death to ensure that the policyholder's wishes are
honoured and their beneficiaries are protected. They also highlight the need for clear policies
and procedures by insurance companies to manage civil death claims and ensure that the
policyholder's interests are protected.
11

4. WHO CAN CLAIM THE POLICY BENEFITS IN CASE OF CIVIL DEATH OF THE
INSURER?

In case of civil death, the person declared civilly dead is not legally dead, but is instead considered
to have lost their civil rights. Therefore, the question of who can claim insurance proceeds will
depend on the terms of the insurance policy, the legal framework governing civil death in the
jurisdiction, and the specific circumstances of the case. 13

Generally, in case of civil death, the insurance proceeds may be paid to the legal heirs of the person
declared civilly dead, as determined by a court of law. In the absence of a valid nomination or if
the nomination is invalid, the insurance company may pay the proceeds to the legal heirs of the
policyholder.

However, if the policyholder had designated a beneficiary and the designation is still valid, the
insurance proceeds may be paid to the designated beneficiary. This would be the case even if the
policyholder is declared civilly dead, as long as the beneficiary designation is still valid

It is important to note that insurance policies may have specific provisions regarding civil death,
and these provisions should be reviewed carefully to determine who is entitled to claim the
insurance proceeds in case of civil death. Additionally, the legal framework governing civil death
in the jurisdiction may also have a significant impact on who can claim the insurance proceeds in
such cases.14

13
Dr S.R Myneni, Law of Insurance, 2 43(2013).
14
Mohamed Imranullah S, Presumption of death not enough to claim insurance amount: HC, Available at
https://www.thehindu.com/news/national/tamil-nadu/presumption-of-death-not-enough-to-claim-insurance-amount-
hc/article6433928.ece. (Last visited on 14th March 2023).
12

5. CONCLUSION

To conclude, civil death is a legal concept that affects a person's civil rights, but does not signify
their actual death. In the context of insurance law, civil death can have important implications for
the payment of insurance proceeds. The legal framework governing civil death varies by
jurisdiction, and insurance policies may also have specific provisions regarding civil death.

In India, civil death is governed by the Hindu Succession Act, 1956 and the Indian Succession
Act, 1925. The Insurance Act, 1938 provides for the nomination of a person to receive insurance
proceeds in case of the policyholder's death, but in case of civil death, the nomination may be
invalid. The insurance company may pay the proceeds to the legal heirs of the policyholder, as
determined by a court of law.

The case laws and provisions related to civil death in insurance law highlight the need for
policyholders to carefully review and understand their insurance policies, especially in case of civil
death. Policyholders should also consider nominating beneficiaries and updating their nominations
as necessary to ensure that their wishes are carried out in case of their death or civil death.
13

INDEX OF AUTHORITIES

Cases

1. Ashok Kumar v. Oriental Insurance Co Ltd, AIR 2004 Delhi 161..........................................7

2. Life Insurance Corporation of India v. Smt Asha Goel, AIR 1986 Bom 412. .........................7
3. Oriental Insurance Co. Ltd v. RV Manjuala Devi, MFA 4781/2009. ......................................7
4. Ram Dhari v. State of Haryana, (1997) 116 PLR 353 ............................................................4

Statutes

1. Section 38, The Insurance Act, 1938. ....................................................................................6

2. Section 48, The Insurance Act, 1938. ....................................................................................6
3. See Sec 2, Insurance Act, 1938. .............................................................................................4
4. tion 39A, The Insurance Act, 1938. .......................................................................................6

Books

1. 2 J.V.N Jaiswal, Law of Insurance, Sumeet Malik 2 14 (2Ed.) ...............................................4

2. Dr S.R Myneni, Law of Insurance, 2 43(2013). .....................................................................8
3. Gaurav Varshey, Insurance Law, Lexis Nexis (2016). ...........................................................8

Online sources

1. Alexander Fitzthum, What does it mean to die of natural causes? Available at

https://health.osu.edu/wellness/aging/what-does-it-mean-to-die-of-natural-
causes#:~:text=Death%20is%20usually%20considered%20%E2%80%9Cnatural,such%20as
%20a%20traumatic%20injury. (Last visited on 14th March 2023)..........................................4
2. Civil Death meaning, Merriam Webster, Available at https://www.merriam-
webster.com/dictionary/civil%20death#:~:text=Legal%20Definition-
,civil%20death,conviction%20for%20a%20serious%20crime ...............................................4
3. Mohamed Imranullah S, Presumption of death not enough to claim insurance amount: HC,
Available at https://www.thehindu.com/news/national/tamil-nadu/presumption-of-death-not-
enough-to-claim-insurance-amount-hc/article6433928.ece. (Last visited on 14th March 2023).
..............................................................................................................................................9