Life Insurance Act 1978

[13 June 1978]

[preamble and words of enactment omitted]

Interpretation

1 In this Act, except where the context otherwise requires—

"accident insurance" means insurance by which the insurer un dertakes, otherwise than incidentally to some other class of insurance, to pay insurance money in the event of accident to the person insured but does not include insurance by which the insurer undertakes to pay insurance money both in the event of death by accident and in the event of death from any other cause;

"accidental death insurance" means insurance undertaken by an insurer as part of a contract of life insurance whereby the in surer undertakes to pay an additional amount of insurance money in the event of death by accident of the person whose life is insured;

"application" means an application for insurance or for the rein statement of insurance;

"beneficiary" means a person, other than the insured or his es tate representative, to whom or for whose benefit insurance money is made payable in a contract or by a declaration;

"contract" means a contract of life insurance,

"Court" means the Supreme Court;

"creditor's group insurance" means insurance effected by a cred itor in respect of the lives of his debtors whereby the lives of the debtors are insured severally under a single contract;

"declaration" means an instrument signed by the insured —

(i) with respect to which an endorsement is made on the policy; or

(ii) that identifies the contract; or

(iii) that describes the insurance, insurance fund, in surance money or a part thereof,

in which he designates, or alters or revokes the designation of, his personal representative or a beneficiary as one to whom or for whose benefit insurance money is to be payable;

"disability insurance" means insurance undertaken by an in surer as part of a contract of life insurance whereby the in surer undertakes to pay insurance money or to provide other benefits in the event that the person whose life is insured be comes disabled as a result of bodily injury or disease;

"family insurance" means insurance whereby the lives of the in sured and one or more persons related to him by blood, mar riage or adoption and insured under a simple contract be tween an insurer and an insured;

"fraternal society" means a society, order or association incorpo rated for the purpose of making with its members only, and not for profit, contracts of life, accident or sickness insurance in accordance with its constitution, bye-laws and rules and any applicable statutory provision;

"group insurance" means insurance, other than creditor's group insurance and family insurance, whereby the lives of a num ber of persons are insured severally under a single contract between an insurer and an employer or other person;

"group life insured" means a person whose life is insured by a contract of group insurance but does not include a person whose life is insured under the contract as a person depen dent upon, or related to, him;

"insurance money" means the amount payable by an insurer under a contract, and includes all benefits, surplus, profits, dividends, bonuses, and annuities payable under the con tract;

"insured" —

(i) except as provided in paragraph (ii) means the per son who makes a contract with an insurer; and

(ii) in the case of group insurance when the right of the group lives insured to designate persons to receive insurance money is not removed or restricted means in relation to the designation of beneficiaries or other person to receive insurance money or in relation to the status of beneficiaries, the group life insured;

"insurer" means the person who undertakes or agrees or offers to undertake a contract;

"life insurance" means insurance whereby an insurer undertakes to pay insurance money, —

(i) on death; or

(ii) on the happening of an event or contingency de pendent on human life; or

(iii) at a fixed or determinable future time; or

(iv) for a term dependent on human life,

and, without restricting the generality of the foregoing, in cludes accidental death insurance but not accident insur ance;

"will" includes codicil.

Application

2 (1) This Act applies —

(a) only to contracts made after its commencement; and

(b) to all contracts made in Bermuda unless the parties agree that some other law shall apply.

(2) Where the person who would have been entitled to the payment of insurance money, if the money had become payable immedi ately prior to 13 June 1978 was the object of a trust within the meaning of section 15 of the Married Women's Property Act 1901, as it existed immediately prior to that day, that person shall be deemed to have been designated a beneficiary irrevocably, and the insured may not, except in accordance with this Act —

(a) alter or revoke the designation of that beneficiary; or

(b) assign, exercise rights under or in respect of, surrender or otherwise deal with the contract,

but this subsection does not apply after the time at which the insurance money becomes payable wholly to a person other than a person deemed to be designated a beneficiary irrevocably.

Insurer to issue policy

3 (1) An insurer entering into a contract shall issue a policy.

(2) Subject to subsection (3), the provisions in —

(a) the application;

(b) the policy;

(d) any amendment to the contract agreed upon in writing after the policy is issued; and

(e) in the case of group insurance and creditor's group in surance any information in writing material to the in surance that is furnished to the insurer pursuant to the policy or the application,

shall constitute the entire contract.

(3) In the case of a contract made by a fraternal society, the policy, the Act or instrument of incorporation of the society, its constitu tion, bye-laws and rules, and the amendments made from time to time to any of them, the application for the contract and the medical statement of the applicant shall constitute the entire contract.

(4) An insurer shall, upon request, furnish to the insured or to a claimant under the contract a copy of the application.

Contents of policy

4 (1) This section does not apply to a contract —

(a) of group insurance; or

(b) of creditor's group insurance; or

(2) An insurer shall set forth the following particulars the pol icy:

1 The name or a sufficient description of the insured and of the person whose life is insured.

2 The amount, or the method of determining the amount, of the insurance money payable, and the conditions un der which it becomes payable.

3 The amount, or the method of determining the amount of the premium and the period of grace, if any, within which it may be paid.

4 Whether the contract provides for participation in a dis tribution of surplus or profits that may be declared by the insurer.

5 The conditions upon which the contract may be rein stated if it lapses.

6 The options, if any —

(a) of surrendering the contract for cash;

(b) of obtaining a loan or an advance payment of the insurance money; and

Contents of group policy

5 In the case of a contract of group insurance or of creditor's group insurance, an insurer shall set forth the following particulars in the pol icy:

1 The name or a sufficient description of the insured.

2 The method of determining the persons whose lives are insured.

3 The amount, or the method of determining the amount, of the insurance money payable, and the conditions un der which it becomes payable.

4 Any removal or restriction of the right of the group lives insured to designate a beneficiary and where such re strictions exist, a description of the persons eligible to receive the money.

5 The period of grace, if any, within which the premium may be paid.

6 Whether the contract provides for participation in a dis-
tribution of surplus or profits that may be declared by the insurer.

Contents of group certificate

6 In the case of a contract of group insurance, an insurer shall is sue, for delivery by the insured to each group life insured, a certificate or other document in which are set forth the following particulars:

1 The name of the insurer and an identification of the contract.

2 The amount, or the method of determining the amount, of insurance on the group life insured and on any person whose life is insured under the contract dependent upon, or related to, him.

3 The circumstances in which the insurance terminates and the rights, if any, upon such termination, of the group life insured or of any person whose life is insured under the contract as a person dependent upon, or re lated to, him.

Insurable interest

7 (1) Subject to subsection (2), where at the time a contract would otherwise take effect the insured has no insurable interest in the person whose life is insured the contract is void.

(2) A contract is not void for lack of insurable interest—

(a) if it is a contract of group insurance; or

(b) if the person whose life is insured has consented in writing to the insurance being placed on his life.

(3) Where the person whose life is insured is under the age of sixteen years, consent to insurance being placed on his life may be given by one of his parents or by a person standing in loco parentis to him.

Insurable interest; definition

8 Without restricting the meaning of "insurable interest", a person has an insurable interest in his own life and in the life of —

(a) a child or grandchild including illegitimate children or grandchildren;

(b) his spouse or a parent;

(d) his employee; and

(e) any person in the duration of whose life he has a pecu niary interest.

Contract taking effect

9 (1) Subject to any provision to the contrary in the application or the policy, a contract does not take effect unless —

(a) the policy is delivered to an insured, his assign or agent, or to a beneficiary; or

(b) payment of the first premium is made to the insurer or its authorized agent; and

(c) no change has taken place in the insurability of the life to be insured between the time the application was com pleted and the time the policy was delivered.

(2) Where a policy is issued on the terms applied for and is de livered to an agent of the insurer for unconditional delivery to a person referred to in subsection (1)(a), it shall be deemed, but not to the preju dice of the insured, to have been delivered to the insured.

Default in paying premium

10 (1) Where a cheque or other bill of exchange, or a promissory note or other written promise to pay, is given for the whole or part of a premium and payment is not made according to its tenor, the premium or part thereof shall be deemed not to have been paid.

(2) Where a remittance for or on account of a premium is sent in a registered letter to an insurer and is received by him, the remittance shall be deemed to have been received at the time of the registration of the letter.

Payment of premiums

11 (1) Except in the case of group insurance, an assignee of a contract, a beneficiary or a person acting on behalf of one of them or of the insured may pay any premium that the insured is entitled to pay.

(2) Where a premium, other than the initial premium, is not paid at the time it is due, the premium may be paid within a period of grace of —

(a) twenty-eight days from and excluding the day on which the premium is due; or

(b) the number of days, if any, specified in the contract for payment of an overdue premium,

whichever is the longer period.

(3) Where the happening of the event upon which the insur ance money becomes payable occurs on the due date or during the pe riod of grace and before the overdue premium is paid, the contract shall be deemed to be in effect as if the premium had been paid at the time it was due, but except in the case of group insurance or creditor's group insurance the amount of the premium, together with interest, if any, at the rate specified in the contract, but not exceeding the statutory rate as fixed by the Interest and Credit Charges (Regulation) Act 1975 [title 17 item 22], and any instalments of premium payable for the balance of the current policy year may be deducted from the insurance money.

Duty to disclose

12 (1) An applicant for insurance, a person whose life is to be in sured and a person who consents to the insurance shall each disclose to the insurer in the application, on a medical examination, if any, and in any written statements or answers furnished as evidence of insurability, every fact which within his knowledge and belief is material to the insur ance and is not so disclosed by any of the others.

(2) Subject to section 13, a failure to disclose, or a misrepre sentation of, such a fact renders the contract voidable by the insurer.

Incontestability

13 (1) This section does not apply to a mis-statement of age.

(2) Subject to subsections (3) and (4), where a contract has been in effect for two years during the lifetime of the person whose life is insured, a failure to disclose or a mis-representation of a fact required to be disclosed by section 12 does not, in the absence of fraud, render the contract voidable.

(3) In the case of a contract of group insurance or creditor's group insurance, a failure to disclose or a mis-representation of such a fact in respect of a person whose life is insured under the contract does not render the contract voidable, but, if evidence of insurability is specifically requested by the insurer, the insurance in respect of that person is voidable by the insurer unless it has been in effect for two years during the lifetime of that person, in which event it is not, in ab sence of fraud, voidable.

(4) In the case of disability insurance, when a claim arises from a disability beginning before a contract, including renewals thereof, has been in force for two years with respect to the person in respect of whom the claim is made, subsection (2) does not apply to that claim.

Pre-existing conditions

14 Where a contract contains a general exception or reduction re lating to disability insurance with respect to pre-existing disease or physical conditions and the person in respect of whom the disability in surance exists suffers or has suffered from a disease or physical condi tion that existed before the date the disability insurance came into force with respect to that person and the disease or physical condition is not by name or specific description excluded from the insurance respecting that person —

(a) the prior existence of the disease or physical condition is not except in the case of fraud, available as a defence against liability in whole or in part for a loss incurred or a disability beginning after the disability insurance in cluding renewals thereof, has been in force continuously with respect to that person for two years prior to the date of the loss incurred or the commencement of the disability; and

(b) the existence of the disease or physical condition is not, except in the case of fraud, available as a defence against liability in whole or in part if the disease or physical condition was disclosed in the application for the disability insurance.

Non-disclosure by insurer

15 Where an insurer fails to disclose or misrepresents a fact mate rial to the contract, the contract is voidable by the insured, but, in the absence of fraud, the contract is not by reason of such failure or mis-representation voidable after the contract has been in effect for two years.

Age of insured

16 (1) This section does not apply to a contract of group insurance or of creditor's group insurance.

(2) Subject to subsection (3), where the age of a person whose life is insured is mis-stated to the insurer, the insurance money provided by the contract shall be increased or decreased to the amount
that would have been provided for the same premium at the correct age.

(3) Where a contract limits the insurable age and the correct age of the person whose life is insured at the date of the application ex ceeds the age so limited, the contract is, during the lifetime of that per son but not later than five years from the date the contract takes effect, voidable by the insurer within sixty days after the insurer discovers the error.

Mis-statement of age in group insurance

17 In the case of a contract of group insurance or of creditor's group insurance, a mis-statement to the insurer of the age of a person whose life is insured does not of itself render the contract voidable, and the pro visions, if any, of the contract with respect to age or mis-statement of age apply.

Effect of suicide

18 (1) Where a contract contains an undertaking, express or im plied, that insurance money will be paid if a person whose life is insured commits suicide, the undertaking is lawful and enforceable.

(2) Where a contract provides that in case a person whose life is insured commits suicide within a certain period of time the contract is void or the amount payable under it is reduced, if the contract lapses and is subsequently reinstated on one or more occasions, the period of time commences to run from the date of the latest reinstatement.

Reinstatement

19 (1) This section does not apply to a contract of group insurance or of creditor's group insurance or to a contract made by a fraternal soci ety.

(2) Where a contract lapses and the insured within two years ap plies for reinstatement of the contract, if within that time he —

(a) pays the overdue premiums and other indebtedness un der the contract to the insurer, together with interest at the rate specified in the contract, but not exceeding the statutory rate as fixed by the Interest and Credit Charges (Regulation) Act 1975 [title 17 item 22], com pounded annually; and

(b) produces —

(i) evidence which satisfies the insurer as to the good health; and

(ii) other evidence which satisfies the insurer as to other aspects of the insurability,

of the person whose life was insured,

the insurer shall reinstate the contract.

(3) Subsection (2) does not apply where the cash surrender value has been paid or an option of taking paid-up or extended insur ance has been exercised.

(4) Sections 12, 13, 14 and 15 shall apply mutatis mutandis to a failure at the time of reinstatement of a contract to disclose, or a mis-representation at that time, and the period of two years to which refer ence is made in sections 13, 14 and 15 shall commence to run in respect of a reinstatement from the date of the reinstatement:

Provided that the contract shall be voidable on account of fraud at any time before or after reinstatement.

Designation of beneficiary

20 (1) Subject to subsection (4) an insured may in a contract or by a declaration filed with the insurer designate himself, his estate repre sentative or a beneficiary to receive insurance money.

(2) Subject to section 21, the insured may from time to time alter or revoke the designation by a declaration filed with the insurer.

(3) A designation in favour of "heirs", "next of kin" or "estate", or the use of words of like import in a designation, shall be deemed to be a designation of the estate representative of the insured.

(4) A provision in a group insurance policy which removes or restricts the right of a group life insured to make a designation is valid.

(5) When a beneficiary is designated by the insured as "wife" or "husband" then the designation shall mean the wife or husband, as the case may be, at the time of the happening of the event upon which the insurance money becomes payable.

(6) When a beneficiary is designated by the insured as a "wife" or "husband" and is further identified by name then the designation shall mean that particular person whether or not that person is still the wife or husband at the time of the happening of the event upon which the in surance money becomes payable.

(7) When a beneficiary is designated by the insured as a child and is further identified by name then the designation shall mean that particular child.

Designation of beneficiary irrevocably

21 (1) An insured may in a contract, or by a declaration other than a declaration that is part of a will, filed with the insurer during the lifetime of the person whose life is insured designate by name a benefi ciary irrevocably and in that event during the lifetime of the beneficiary, while the designation is in effect, may not alter or revoke the designation without the consent of the beneficiary and the interest of the beneficiary in the insurance money is not subject to the control of the insured or of his creditors and does not form part of the estate of the insured.

(2) Where the insured purports to designate a beneficiary irre vocably in a will or in a declaration that is not filed as provided in sub section (1), the designation has the same effect as if the insured had not purported to make it irrevocable.

Designation in invalid will

22 (1) A designation in an instrument purporting to be a will is not ineffective by reason only of the fact that the instrument is invalid as a will or that the designation is invalid as a bequest under the will.

(2) A designation in a will is of no effect against a designation made later than the making of the will.

(3) Where a designation is contained in a will, if subsequently the will is revoked by operation of law or otherwise, the designation is thereby revoked.

(4) Where a designation is contained in an instrument that purports to be a will, if subsequently the instrument if valid as a will would be revoked by operation of law or otherwise, the designation is thereby revoked.

Trustee for beneficiary

23 (1) An insured may notwithstanding section 21 (1) in a contract or by a declaration appoint a trustee for a beneficiary and may alter or revoke the appointment by a declaration.

(2) A payment made by an insurer to a trustee for a beneficiary discharges the insurer to the extent of the payment.

Beneficiary predeceasing life insured

24 (1) Where a beneficiary predeceases the person whose life is in sured, and no disposition of the share of the deceased beneficiary in the insurance money is provided in the contract or by a declaration, the share is payable —

(a) to the surviving beneficiary; or

(b) if there is more than one surviving beneficiary, to the surviving beneficiaries in equal shares; or

(2) Where two or more beneficiaries are designated otherwise than alternatively, but no division of the insurance money is made, the insurance money is payable to them in equal shares.

Right to sue

25 A beneficiary may enforce in his own name, and a trustee ap pointed pursuant to section 23 may enforce as trustee, the payment of insurance money made payable to him in the contract or by a declaration and in accordance with the provisions thereof, but the insurer may set up any defence that it could have set up against the insured or his estate representative.

Insurance money free from creditors

26 (1) Where a beneficiary is designated, the insurance money, from the time of the happening of the event upon which the insurance money becomes payable, is not part of the estate of the insured and is not subject to the claims of the creditors of the insured.

(2) While a designation in favour of a child or grandchild as de fined in section 8 or a spouse or parent of a person whose life is insured, or any of them, is in effect, the rights and interests of the insured in the insurance money and in the contract are exempt from execution or seizure.

Insured dealing with contract

27 Notwithstanding the designation of a beneficiary the insured may assign, exercise rights under or in respect of, surrender or otherwise deal with the contract as provided therein or as provided in this Act or as may be agreed with the insurer; but not so as to affect the rights of a benefi ciary designated irrevocably unless the beneficiary has reached the age of majority and has consented.

Insured entitled to dividends

28 (1) Notwithstanding the designation of a beneficiary irrevoca bly, the insured is entitled during the lifetime of the person whose life is insured to the dividends or bonuses declared on a contract and to the
premiums paid in advance thereon unless the contract otherwise pro vides.

(2) Unless the insured otherwise directs, the insurer may apply the dividends or bonuses declared on the contract for the purpose of keeping the contract in force.

(3) Subject to the contract and to any direction by the insured to the contrary, dividends, bonuses and premiums paid in advance but unused held to the credit of the insured shall, upon the happening of the event upon which the insurance money becomes payable, be added to and form part of the insurance money then payable.

Transfer of ownership

29 (1) Where in a contract or in an agreement in writing between an insurer and an insured it is provided that a person named in the contract or in the agreement has, upon the death of the insured, the rights and interests of the insured in the contract—

(a) the rights and interests of the insured in the contract do not, upon the death of the insured, form part of his es tate; and

(b) upon the death of the insured, the person named in the contract or in the agreement has the rights and interests given to the insured by the contract and by this Act and shall be deemed to be the insured.

(2) Where the contract or agreement provides that two or more persons named in the contract or in the agreement shall, upon the death of the insured, have successively, on the death of each of them, the rights and interests of the insured in the contract, this section applies successively, mutatis mutandis, to each of such persons and to his rights and interests in the contract.

(3) Notwithstanding any nomination made pursuant to this section, the insured may, prior to his death, assign, exercise rights under or in respect of, surrender or otherwise deal with the contracts as if the nomination had not been made, and may alter or revoke the nomination by agreement in writing with the insurer.

Assignment of contract

30 (1) Where an assignee of a contract gives notice in writing of the assignment to the insurer, he has priority of interest as against—

(a) any assignee other than one who gave notice earlier in like manner; and

(b) a beneficiary other than one designated irrevocably as provided in section 21 prior to the time the assignee gave notice to the insurer of the assignment in the manner prescribed in this subsection.

(2) Where a contract is assigned as security, rights under the contract are affected only to the extent necessary to give effect to the rights and interests of the assignee.

(3) Where a contract is assigned unconditionally and otherwise than as security, the assignee has all the rights and interests given to the insured by the contract and by this Act and shall be deemed to be the insured and any subsisting designation of a beneficiary not made ir revocably is revoked.

Contract may be unassignable

31 A provision in a contract to the effect that the rights or interests of the insured, or, in the case of group insurance, the group life insured, are not assignable is valid.

Rights of group life insured normally assignable

32 Subject to section 31 the rights and interests of a group life in sured given to him under a contract or under this Act are assignable and if they are assigned unconditionally and otherwise than as security the assignee shall be deemed to be the group life insured and any subsisting designation of a beneficiary not made irrevocably is revoked.

Group life insured enforcing rights

33 A group life insured may enforce in his own name and for his own benefit a right given to him under a contract, subject to any defence available to the insurer against him or against the insured.

Proof of claim and place of payment

34 (1) When an insurer receives sufficient evidence of the hap pening of the event upon which the insurance money becomes payable and of —

(a) the cause and circumstances upon which insurance money becomes payable;

(b) the age of the person whose life is insured;

(d) the name and age of the beneficiary, if there is a benefi-

Bermuda Consolidated Legislation

Life Insurance Act 1978