No CrossRef data available.
Article contents
Life Assurance and the Cohabitant: The Law Commission's Reforms on Privity
Published online by Cambridge University Press: 09 November 2009
Extract
In its recent report on privity of contract the Law Commission considered, inter alia, whether reform of section 11 of the Married Women's Property Act 1882 should be entertained at this time. The title of that Act is somewhat misleading but in essence section 11 provides that a life assurance policy on the life of a man or woman for the expressed benefit of his/her spouse and or children, creates a trust in favour of the named spouse or child. Thus the beneficial interest in the policy never forms part of the assured's estate, which result may be of particular importance to the beneficiary in the event of the assured's insolvency because by section 283 of the Insolvency Act 1986 trust assets are expressly excluded from the bankrupt's estate capable of vesting in the trustee in bankruptey and thereafter being available for distribution to creditors.
- Type
- Shorter Articles
- Information
- Copyright
- Copyright © Cambridge Law Journal and Contributors 1998
References
1 Contracts for the benefit of Third Parties, Law Commission No. 242 (1996).
2 Ibid., paras 12.22–12.27.
3 A Policy may also be taken out before marriage in anticipation of that marriage.
4 This includes adopted and illegitimate children: Adoption Act 1976, s. 39; Family Law Reform Act 1969, ss. 16–19 but does not include grandchildren: Bowen v. Lewis (1884) 9 App.Cas. 890. 915.
5 Consultation Paper No. 121. para. 5.38 and Report, para. 12.26.
6 Sixth Interim Report, para. 49.
7 Summary at Part XV of the Report.
8 Law Commission Report, paras. 7.6 and 7.16 and summary, Part XV at (8).
9 A.M. Tettenborn [1996] J.B.L. 602.
10 It is submitted that for the avoidance of doubt there needs to be express provision on the position of contingent benefits.
11 The Policy Studies Institute has reportedly predicted that by 2010 most couples will cohabit before marriage. They also add that most marriages will end in divorce followed by remarriage, Law Society's Gazette, 18 June 1997, p. 24.
12 Law Commission Report, notes 1 and 2, para. 7.34.
13 For example, Birds, Modern Insurance Law, 4th ed., chapter 3; Clarke, The Law of Insurance Contracts, 3rd ed., discussion at chapter 3; Merkin (1980) Anglo American LR 331; McGee, , The Law and Practice of Life Assurance Contracts (1995), chapter 2.Google Scholar
14 Ibid.
15 Dolby v. The India and London Life (1874) 15 C.B. 365.
16 A similar approach is taken by the Commission's proposals under both limbs.
17 Wainwright v. Bland (1835) 1 M. & Rob. 481.
18 MacGillivray, and Parkington, , Insurance Law, 8th ed., para. 71.Google Scholar
19 Wainwright v. Bland (1835) 1 M. & Rob. 481; M'Farlane v. Royal London Friendly Society (1886) 2 T.L.R. 755.
20 Reed v. Royal Exchange Assurance Co. (1795) Peake Add.Cas. 70; Griffiths v. Fleming [1901] 1 K.B. 805.
21 Halford v. Kymer (1830) 10 B. & C. 724; Harse v. Pearl Life [1903] 2 K.B. 92.
22 See for example Clarke, note 13 above-at p. 87 where there appears to be cases going both ways in some States of the United States. These decisions may, it seems, be based not on any presumption but on proof of actual support and expectation of such support.
23 Ss. 18–19 set out a list of relationships where insurance for the benefit of another is possible and includes a person likely to suffer pecuniary or economic loss as a result of the death of some person. This could, for example, be satisfied by showing dependence in whole or in part by way of maintenance and support. The amount of the deemed interest is unlimited.
24 Scottish Law Commission No. 135, Report on Family Law, para. 16.41.
25 Annual Reports 1988 p. 27 and 1989 paras. 2.31–2.37.
26 The Law of Life Insurance, 10th ed., p. 20. This appears not to be repeated in the 11th ed. (1994).
27 A view echoed by Birds, , Modern Insurance Law, 4th ed., p. 41.Google Scholar
28 For example, MacGillivray, and Parkington, , Insurance Law, 8th ed., para. 90.Google Scholar
29 Insurers appear to take technical points particularly when they have other reasons for rejecting a claim where those reasons are hard to prove, for example fraud. There is no suggestion in the case here discussed that there were concerns other than lack of insurable interest.
30 Waiver has been said to apply against the insurer. The cases sometimes cited being Worthington v. Curtis (1875) 1 Ch.D. 419 and A-G v. Murray [1904] 1 KB 165. These cases however did not concern the insurer's right of recovery nor any right to resist payment. Once payment has been made by the insurer it is no doubt too late to seek its recovery on the basis of lack of insurable interest since the payment will have been made either where the insurer has full knowledge or has declined to investigate and the insurer should be estopped from demanding repayment; Kelly v. Solari (1841) 9 M. and W. 24 (payment made where policy had lapsed). The position may be different if the assured has warranted or misrepresented the position on interest, as is likely because of specific questions and declarations as to the truth of the answers within proposal forms.
31 See Current Terms of Reference for the Ombudsman's Bureau in Annual Reports. A decision in favour of the policyholder is binding only up to £100,000 although insurers appear to follow recommendations made above this sum. Membership of the scheme is voluntary.