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Report No. 82

1.2. Multiple parties.-

In broad general terms, a life insurance contract is a legally enforceable agreement between the applicant (proposer) and the insurer. Payment to the insurer in accordance with the contract (subject to statutory requirement, if any) fulfils the basic promise and discharges the insurer from the contractual obligations.

But such payment does not necessarily close all legal controversies. Where the insured person has dealt with the policy in any one of the modes of dealing1 with it as permitted by law-or, even where he has not resorted to any of these modes-more than one party may, from the legal point of view, be interested in the money paid or to become payable. In the first place, there is the insured person, now represented by his legal representative. Secondly, the persons entitled to the estate on intestacy or otherwise may be legally interested. Thirdly, there are persons who claim the right conferred by the particular mode of dealing, if any, adopted by the insured person before his death. And finally, there is the insurer.

As to the insurer, payment made by him under the policy is not a matter with which we are concerned in the present Report. The provisions of the Insurance Act as applicable to each mode of dealing with the sum payable under the policy may, for our purpose, be treated as adequately taking care of the matter from the point of view of the insurer. We are primarily concerned with the second and third groups of parties mentioned above.

The multiplicity of parties so involved leads to the possibility of conflict of interests amongst them, and a desire on the part of the Legislature to avoid such conflicts so far as possible has necessitated the enactment of a set of provisions in the statute law. It is obviously desirable that legislation dealing with the respective rights of the parties should, from time to time, be reviewed, in order to make it conform to the changing needs of society and expectations of its members.

1. Para. 1.3, infra.



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