Life insurance contract

Insurance of persons – general rules and excluded risks

The Law of Contract and Torts by the provisions of Articles 942 to 953 governs general rules as well as risks that are not covered by the life insurance contract.

General rules

Determination of the Insured Amount

In contracts of insurance of persons (life insurance and accident insurance), the amount of insurance to be paid by the insurer on the occurrence of the insured event, shall be determined in the insurance policy by agreement between the contracting parties. 

Life Insurance Policy

In addition to elements which are constituent for every insurance policy, the life insurance policy shall include indications of the name and last name of a person whose life is insured, his date of birth and event or time limit being a prerequisite for requesting payment of the amount insured.

The life insurance policy may be made out to a specific person or to order, but it shall not be made out to bearer.

For an endorsement of the insurance policy made out to order to be full and valid, it must contain an indication of the name of the beneficiary, the date of endorsing and the signature of the endorser.

Incorrect Reporting of Age of the Insured Person

As an exception to the general provisions of the Law of Contract and Torts concerning insurance of persons and consequences of incorrect applications or of suppressing the circumstances relevant for the assessment of risk, the following rules shall apply regarding incorrect reporting of age in life insurance contracts:

  • a life insurance contract shall be void and the insurer shall be obliged in any case to repay all received premiums, should at the moment of its conclusion the age of the insured person has been incorrectly stated, while his real age exceeded the limit up to which the insurer, by his terms and tariffs, normally enters into life insurance transactions
  • should it be incorrectly reported that the insured person is of a lower age, but his real age does not exceed the limit up to which the insurer normally enters into life insurance transactions, the contract shall be valid, but the insured amount shall be reduced in proportion to the stipulated insurance premium and the insurance premium provided for the life insurance of a person of the age of the insured person
  • Should the insured person be of lower age than reported in the application to enter into contract, the insurance premium shall be reduced by a corresponding amount, while the insurer shall be obliged to repay the difference between the insurance premiums received and the premiums he is entitled to.

Consequences of Failing to Pay Insurance Premium and Reduction of the Insured Amount

Should a negotiator of life insurance fail to pay some of the insurance premiums when due, the insurer shall not be entitled to demand payment by instituting legal proceedings.

Should a negotiator of insurance, invited by the insurer by means of registered mail, fail to pay an insurance premium due within the time limit indicated in insurer’s letter – such time limit being shorter than one month, counting from the day of delivery of the letter – or should such payment not be made by another interested party, the insurer shall be entitled, if at least three annual insurance premiums have been paid by then, only to state to the negotiator of insurance that he is going to reduce the amount of insurance to the level of the re-purchase value of insurance, or that, in a contrary case, he shall repudiate the contract.

Should the insured event occur prior to repudiation of contract or of reduction of the insured amount, the insured amount shall be considered reduced, or as if the contract is repudiated – depending on whether insurance premiums were paid for at least three years or not.

Insuring a Third Party

Life insurance and accident insurance may relate to the life of the negotiator of insurance, and it may relate to the life of a third party.

Should insurance relate to the death of a third party, the validity of contract shall depend on his written consent, indicated on the face of the insurance policy, or in a separate letter at the moment of signing the insurance policy, with an indication of the insured amount.

Insurance in Case of Death of a Minor and of Persons Deprived of Business Capacity

An insurance shall be void relating to the death of a third party younger than fourteen, or to a person completely deprived of business capacity, so that the insurer shall be bound to repay to the negotiator of insurance all insurance premiums received under such contract.

The validity of insurance in case of death of a third party older than fourteen shall depend on the written consent by his legal representative, and the written consent of the insured person himself.

Cumulating Compensation and the Insured Amount

In the case of life insurance, an insurer paying the insured amount shall have no right whatsoever to compensation against a third party liable for the occurrence of the insured event.

The right to compensation against a third party liable for the occurrence of the insured event shall belong to the insured person, or beneficiary, independently of his right to the insured amount.

Provisions of the preceding paragraphs shall not apply to insurance covering the consequences of accident stipulated as liability insurance.

Excluded risks

Suicide of the Insured Person

The contract of insurance covering the case of death shall not include the risk of suicide of the insured person, if it happened in the first year of the insurance period.

If the suicide happens within a three year period from the day of entering into contract, the insurer shall not be obliged to pay to the beneficiary the insured amount, but only the mathematical reserve of the contract.

Premeditated Murder of the Insured Person

An insurer shall be released from obligation to pay to the beneficiary the insured amount if he wilfully caused the death of the insured person, but if until then at least three annual insurance premiums have been paid, he shall be obliged to pay the mathematical reserve to the negotiator of insurance, and should he be the insured person, the payment shall be made to his successors.

Wilful Causing of Accident

An insurer shall be released from obligation in the insurance contract covering an accident, if the insured person wilfully caused the accident.

War Operations

Hould death of the insured person be caused by war operations, the insurer – unless otherwise provided by contract – shall not be bound to pay to the beneficiary the insured amount, but shall be obliged to pay to him the mathematical reserve from the contract.

Unless otherwise provided by contract, the insurer shall be released from obligation from the accident insurance contract, if the accident was caused by war operations.

Contractual Exclusion of Risk

Other risks may also be excluded by contract covering cases of death or accident.

Read more:
Compensation »
Compulsory insurance against liability »
Professional liability insurance in Serbia »

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