Report No. 66
8.19. Effect of term in policy without statutory provision.-
In the absence of any provisions contained in that behalf in the Married Women's Property Act, a term contained in the policy itself that the money shall be payable to the wife of the assured if she survives him, is, as between the executors and administrators of the estate of the assured and the wife, of no effect. This point is dealt with by Esher, M.R. in Cleaver v. Mutual Reserve Fund Life Association, 1892 QB 147 thus:
"Apart from the statute, what would be the effect of making the money payable to the wife? It seems to me that as between the executors and the defendants, it would have no effect-She is no party to the contract; and I do not think that the defendants could have any right to follow the money they were bound to pay and consider how the executors might apply it. It does not seem to me that, apart from the statute, such a policy would create any trust in favour of the wife: James Maybrick might have altered the destination of the money at any time, and might have dealt with it by will or enactment. It he had done so, the defendants could not have interfered I think that, apart from the statute, no interest would have passed to the wife by reason merely of her being named in the policy; and if the husband wishes any such interest to pass to her, be must have left the money to her by will or settled in upon her during his life, otherwise it would have passed to his executors or administrators."
It was held in a Madras case1 that where the assured does not, in his life-time, create a trust for the benefit of any person, such money, in cases where the provisions of the Married Women's. Property Act do not apply, forms part of his estate and is recoverable by his legal representatives. A contract between the company and the assured gives no right of action to the beneficiary named. Where the company refuses payment to the beneficiary on the death of the assured, the legal representatives, and not the beneficiary, will be entitled to enforce the contract.
In England, before 1870, the difficulty was sometimes overcome by getting the insurance company to declare themselves trustees for the wife.2 In India, before the passing of the Insurance Act, 1938, the assured could divest himself of his beneficial interest under the policy only by assignment in writing under section 130 of the Transfer of Property Act, or by signing a declaration of trust under section 5 of the Trusts Act. Where neither course is adopted, the policy, on his death, forms part of his estate, and no trust arises in favour of his wife as against his executors or, other representatives.3
Section 6 provides an alternative course, and that shows its significance.
1. Oriental Government Security Life Assurance Limited v. Ammiraju, 1911 ILR 35 Mad 162.
2. Shankar v. Umabai, 1913 ILR 37 Born 171 (479), citing Bunyan on Insurance, p. 463.
3. Para. 8.18, supra.
