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Report No. 66

8.21. Point (a)-endowment policies.-

The first question that has arisen is whether the word "policy" in section 6 includes an endowment policy. To some extent, this question is1 connected with the other question whether a contingent provision is permissible under section 6; but the question has also an importance of its own. In a Calcutta case2 reported in 1970, there are dicta to the effect that the section does not apply to endowment policies whereunder the amount was not payable on death. On the other hand, there is a Bombay rulings of 1967, taking a different view, and there are judgments of other High Courts also3 which place a wide construction on the section. It should be noted that endowment insurance is also an insurance of life. In Gould v. Curtis, (1913) 3 KR 84 (94) it was stated-

"What then is the true meaning of the words 'insurance on his life'? There would, to my mind, be a significant difference if the proposition were 'of' and not 'on'. I can agree that the phrase 'insurance of the life' may, as a matter of English mean a guarantee of a sum to be paid if the life drops. Insurance 'on' it is, to my mind, a different thing. It means the insurance of a sum dependent upon it. The life is mentioned as a contingency upon which the insurance is to be paid. The contingency is death or no death-death or life. Insurance 'on' life is an insurance of a sum payable or not payable according as the contingency of life or death is answered one way or the other.

Regarded thus, it is plain that an insurance 'on' life includes as much an obligation to pay a sum of money if life continuous at a date, as an obligation to pay a sum of money if life ceases. An insurance 'on' life expresses an obligation to pay a sum of money on an event dependent upon the contingency of human life. If that be sound, it follows that the whole of this premium is deductible, because this is altogether an insurance 'on' life."

1. See discussion in para. 8.44, infra.

2. M.A. Rodrigues v. B.R. Baliga, AIR 1967 Boni 465.

3. See discussion under point (f), infra, paras. 8.44 to 8.46.

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