Life Insurance

630. Notions. Among the diverse contracts of insurance, life insurance, both because of its great frequency and because of the moral difficulties which it contains, merits special consideration.

a. A twofold diverse mode is especially distinguished according to which this contract is customarily entered: alpha. The one to be insured pays each year to an insurance society a certain sum of money under this condition, that immediately after his death a determined sum of money be repaid to his heirs or to a third person. beta. The one to be insured pays each year to the society a sum of money under this condition, that a determined sum be repaid to himself or to a third person if he arrives at a certain year of age, for example, the sixty-fifth year. But if he dies before the year determined in the agreement, the obligation of the society is extinguished.²

b. For the equality between the insurance society and the insured, on which the justice of the contract depends, it is required that the danger which the society assumes equal the premium which the insured pays. In the former mode the danger consists in this, that the insured dies before the premiums which the society accepts are equivalent to the sum to be paid. In the latter mode the danger consists in this, that the society must repay a sum which exceeds the premiums received, where the insured attains the determined year of age.

c. For forestalling detriment arising from this contract, the insurance society is accustomed to propose several questions to those to be insured, from which it tries to gather what duration of life the one to be insured can hope for. Now it is asked whether the contract of insurance must be held as valid or invalid if at any time a false response has been made to the proposed questions, whether by fraud or from error.

Concerning the question which the insurance society proposes about hidden sins committed from a depraved habit, it seems that one must say that the insurer does not have the right of questioning about moral defects, and therefore the one to be insured is not bound to manifest his hidden vices. Therefore denial of these is neither a lie nor makes the contract void. Nor is the society deceived or harmed by this: for it belongs to the physician to examine whether perhaps health has been affected by such a vice; but if this is not the case, there is no reason why the sum to be paid should be increased on that account.

¹ These things are taken from the excellent little work of Ph. Huppert, Der Lebensversicherungsvertrag (Mainz: Kirchheim, 1896).

² Huppert, l.c., p. 15 ss.

631. On the validity of the contract. 1. The contract is invalid if a circumstance is denied or kept silent by which the probability of life being prolonged for a longer time by the one to be insured is notably diminished, as if he were to keep silent about a vomiting of blood which he had previously suffered: for substantial error intervenes concerning the object of the contract, namely concerning the life to be insured.

a. The contract must be considered valid if the notable defect of health was hidden both from the one to be insured and from the physician: for the society must undertake upon itself dangers of life which arise from altogether unknown causes.

b. If the one to be insured concealed in good faith a notable circumstance, he has the right of recovering the premiums paid by him; but those in whose favor the insurance was made acquire no right of receiving the determined sum. If in bad faith he kept silent about a notable defect of health, he not only loses the right of receiving the insured sum, but he must also repair the damages which the society suffered by entering this invalid contract, for example, because of expenses. Yet societies are accustomed to declare that the annual premiums paid in this case pertain to them.

c. There are societies which in their statutes declare that a contract of insurance void because of false declarations is to be held as valid after it has lasted for five years. Therefore after this time has elapsed the contract can be held as valid, whether the false declaration was made in good faith or in bad faith.

2. The contract is valid, but must be reduced to equality, if a circumstance is denied or kept silent by which, had it been known, the insurer would indeed have made the contract, but would have demanded a greater premium, as if an illness is kept silent by which hope of prolonging life is diminished not altogether lightly only. Therefore there must be given to the society the premium which it would have demanded had the truth been known.

If therefore in the case of misfortune the entire insured sum is paid to an insured person who falsely declared accidental circumstances, he himself must restore a proportionate part from the sum accepted to the insurance society, or, according to the measure of the circumstances, to the poor.

3. The contract is valid and must be observed by each party if a circumstance of very slight moment is denied or kept silent, as if the one to be insured falsely denies that homeopathic remedies were used by him: for the insurer, even with the truth known, would have made the contract under the same conditions.

The statutes of societies which declare that any error in the responses invalidates the contract are opposed to justice in this matter; for the insured cannot be deprived of every right of his own because of a light error which does not harm the society in any way.¹

Note. By these things are presented the principles from which one must establish the obligations and rights of the insured if the matter is not brought to a judge. When the matter has been brought to a judge, one must stand by the judicial sentence even in conscience, unless the contract is invalid on the part of the insurance society.

a. The judge gives sentence according to the statutes of the insurance society, which generally declare the contract void because of false declarations made in bad faith and, as a penalty for the fraud committed, deprive the insured of every right in the premiums paid.

b. On the part of the insurance society the contract can be unjust and invalid, both because there is not a just proportion between the annual tax and the insured sum to be paid after the death of the insured, and because the procurators of the society fraudulently deceived the one to be insured.

¹ Huppert, l.c., p. 176 ss.

631*. On insurance of workers. Declarations. 1. This insurance tends to this, that workers, for the time in which they become unfit for labors and can no longer provide for themselves and their own, receive a certain revenue. Since the wage received for labor does not suffice for them to provide for themselves for times of this kind, poverty is guarded against by this means of insurance.

2. According as the causes are diverse on account of which workers cannot be free for labor, diverse insurances are distinguished: of the sick, of misfortune, of old age, etc.; Kranken-, Unfall-, Alters-Versicherung. In Germany, Austria, and Switzerland public laws compel either all workers, or at least those laboring in workshops in which there is greater danger of misfortune, to be insured. Therefore insurance of this kind is governed by public law, not by a contract privately entered. The tax of insurance is paid partly by the workers, partly by the masters; from this the workers acquire a right to the insured sum of money.

For the solution of cases. If in a particular case there is question of the worker's right to the insured sum, attention must be given to the words of the law, which, since it was made for the assistance of workers, admits as broad an interpretation in their favor as can be made.

a. The annual pension is paid only to those to whom a misfortune happens in the exercise of work (beim Betriebe); but that is considered to have happened in the exercise of work which has occurred in an action which in some way coheres with the exercise of the work, for example, in access to the place of labor, during lunch which is taken in the place of labor, during leisure which is taken in the place of labor.

b. Workers do not receive an annual pension if the misfortune happened by their fault; but those misfortunes alone are considered to have happened by the fault of the worker which have been caused deliberately or from great negligence, by no means those which have been caused from carelessness, rashness, or some light negligence.

c. He who unjustly received an annual pension, for example, by falsely narrating the cause of the misfortune, of himself is bound to return the sum received and cannot licitly receive a further one. But since he cannot confess the fraud committed without danger of grave damage, he licitly receives the annual sum under this condition, that the money received be distributed to the poor. But if the worker himself is truly poor and cannot be sustained in another way, he can retain for himself the pension, or at least part of it. That restitution be made not to the society but to the poor can more easily be permitted because the damage which has occurred to the contributors themselves by this fraud is light, since many concur for the insurance. Wherefore that restitution be made to those damaged is an obligation only under light obligation; but restitution which obliges only under light obligation can from a reasonable cause be made to the poor.

631**. Note. Lehmkuhl judges that contracts void by natural law because of false declarations can probably be held from the very statutes of insurance societies as valid until they are declared invalid by the society or by the judge; therefore the insured can licitly accept the insured sum if the contract is not rescinded by the society. Yet he is bound to repair the damage which he efficaciously inflicted on the society by his mode of acting. Hence:

a. Because he pays a tax less than the just amount, he is bound to increase this up to that quantity which the insurer would have demanded if he had known the defect, and he must restore the increase to the society.

b. Reparation of damage must be made also in the case in which the false declarations proceeded from inculpable error, because the error is the efficacious cause on account of which the society accepted an annual tax less than the just amount.

c. But if the death of the insured follows not because of the defect concealed, but from another cause, the increase of the annual tax is not to be enjoined, because the fraud is not the efficacious cause of the damage.

d. Indeed even in this case damage is not efficaciously inflicted on the society, in which the insured actually lived as long as, probably from statistics, it was foreseen that he would live: for there is present a proportion of equality between the annual tax and the sum of insurance.¹

¹ Lehmkuhl, Casus consc. I, n. 919 ss.

594. Insurance (assurance; verzekering) is the taking upon oneself of another's danger; whence the contract of insurance is that by which someone takes upon himself the danger of another's thing or person, obliging himself, for a determined price, to compensate it if by chance it should perish. Hence it can be defined: a real aleatory contract by which one, for a certain price paid, obliges himself to compensate damages which another can suffer on account of a fortuitous event or a superior force.¹

¹ Cf. Belgian law 11 June 1874 in the Commercial Code, l. 1, tit. X.

Hence: a) the object of this contract is the danger of damage, taken upon oneself and estimable by price; whence b) the matter about which it turns is whatever, whether a thing or a person, is subject to danger and at the same time is estimable by price. Thus ships and goods are customarily insured against the danger of the sea, buildings and movables against the danger of fire, crops against the danger of hail, fragile things against the danger of breakage, precious things against robbers, even persons against death, military service, infirmity, etc., either singly or collectively, either as they come under such a name, or insofar as they pertain to this or that social order. c) But the danger is estimated by a determined price: for although insurance can be made gratuitously, nevertheless someone is not accustomed to take upon himself the danger and compensation of a thing, and thus to furnish to another something estimable by price, except for an equivalent price. Hence the contract is of itself onerous, and is reduced to sale.

In antiquity almost unknown, in modern times this contract has widely prevailed among all nations. It is related that in the fourteenth century it was first introduced as regards goods to be carried over the sea; in the seventeenth century the first society of insurance against fires was founded at London; in the nineteenth century innumerable societies of this kind already appeared as regards things of every kind, whence it is a contract of great moment. It certainly is not lacking in social utility: for it pertains to the public and private good that damages arising from fortuitous event and the ruin of men of moderate fortune be foreseen and guarded against; otherwise a) industry and commerce would often be retarded; b) owners and workmen also would often be brought to the extreme of want and poverty; c) but now the providence and thrift of individuals is promoted for their greater security.

The contract is lawful, provided:

1. Each of the contracting parties is uncertain concerning the danger of the thing; otherwise there would be malice. Hence the contract would be null if someone wished to insure a ship which he certainly knows already to have perished or already to be in port;

2. The price is just according to the value of the things and the gravity of the danger: for there must be equality of price and danger;

3. The insurer is capable of paying what he promised, and the insured observes all the conditions and does nothing by which the danger is greater or the hope less than the insurer ought to have expected, considering the agreement, custom, or circumstances.

595. Moral principles which rule insurance and the obligations arising from it. The obligations pertaining to the contract of insurance are customarily determined by laws and by the special statutes of societies; these must be stood by, unless they are manifestly unjust. Now some obligations are common to each contracting party, namely, as regards the just price; but others are special to the insured or to the insurer.

I. Common obligations concerning the just price. The price of insurance ought to correspond to the service furnished, and therefore to be proportioned to the gravity and probability of the danger or hope, account being taken of expenses; this is to be determined not from the event, but from the danger at the time the contract was entered into, by the judgment of prudent men. In this, namely, is situated the equality of justice in this contract: that, all things having been carefully weighed, there be an equal proportion between the probability and extension of the danger and the price which is to be paid by the insured, so that, from those things which commonly happen, the insuring society, after all damages have been compensated, may receive some moderate gain for its labor and expenses and for the utility procured.

The proportion today is customarily determined according to statistical computations, which now are made sufficiently accurately; whence the contract is now less aleatory. But since there are many competing societies, even international ones, generally the current price is legitimate: for if it were immoderate, soon other societies would arise, or would be instituted by the insured themselves, which would furnish insurance of the same danger at a lower price; unless, however, almost all societies were to constitute a monopoly and agree not to diminish the price.

Nevertheless gain, from the fact that it is rather great, must not immediately be held as unjust: for it must first be examined whether it does not proceed from a great number of insured persons, or from the skill of administrators who prudently employed the money received for fruitful uses, and whether there is not danger of losing all gains if a common calamity occurs.

II. Special obligations of the insured. He is held from justice:

1. To declare sincerely the true value of the thing and the gravity of the danger;

2. Not to neglect the conservation of the insured thing;

3. To manifest defects of the thing or person, if he is questioned, and not to conceal them deceitfully.

Hence:

a) The contract is invalid if, in declaring the danger of the insured thing, a notable circumstance is kept silent, which, if known, the contract would not have been entered into: for the danger is the very object of the contract; whence a notable error in it is substantial. But if the circumstance is not notable, so that the contract would nevertheless have been entered into, but at another price, it is valid, but the insured is held to increase the price by reason of the danger; likewise, if, when insurance has already been entered into, the danger is increased, this certainly must be declared.

Thus Belgian law, in art. 9, invalidates the contract whenever something is kept silent or falsely declared, even without bad faith, which diminishes the estimation of the danger or changes its object, so that the insurer, if he had known these things, would not have contracted in the same circumstances.

But by civil law or by special stipulations of the pact itself, sometimes because of a rather non-notable circumstance kept silent the contract is declared void, or at least rescindable at the will of the insurer; or it is even further added that the insurer can retain the price already paid, although he is not held to compensate the damage. Yet these things which are added to natural law do not oblige except after the sentence of a judge. But if the insurer does not rescind the contract but demands a greater price, then equality will have to be restored and the greater price paid.

b) When the error turns upon the value of the thing, one must distinguish: if the value of the thing was exaggerated, the contract is indeed invalid as regards the excess of value, but remains valid for the true value of the thing, which therefore must be compensated: for then the error is not substantial and therefore does not void the whole contract. On the contrary, if the value of the thing was too much diminished, the insurer must compensate only according to the proportionate part of the price paid, for in this case the insured himself is held as insurer for the remaining part. But if the value of the thing was diminished at the time when the thing perished, the insurer is held only to compensate the damage truly suffered (a. 20, Belgian law).

Yet it could happen that each contracting party knowingly and willingly agreed concerning the excess of value: then, however, the contract assumes another nature, namely, that of wagering, concerning which it will be said below, n. 601.

c) Fraud is committed: 1. if the thing to be insured is not declared as it is; 2. if from grave negligence or direct purpose it is guarded badly so that it perishes; 3. if changes are made in it which increase the danger of damage. This per se obliges to restitution, and indeed under grave obligation if grave damage was caused.

Hence he commits open injustice: a) who burns his own thing or certainly exposes it to destruction, in order that he may receive compensation for the thing; b) who asks and receives compensation for damage which he did not undergo, or for greater damage than he underwent, or for that whose compensation is excluded in the contract; c) who demands compensation which surpasses the price of the thing or the insured value. But not if he asks greater compensation with this intention alone, that by settlement he may obtain repair of the true damage; or if, having used no fraud, he accepts an excessive compensation spontaneously offered or established by arbiters.

d) He must restore: 1. who voluntarily destroyed the insured thing, and moreover repair all damages unjustly inflicted; 2. who by frauds obtained compensation to which he has no right; 3. who, in the fortuitous event of a fire, deliberately does not try to restrain the conflagration or rescue the things, for by ordinary diligence he ought to protect his own things, and this also from positive law (a. 17); 4. a fortiori, who prohibits others from extinguishing the fire.

III. Special obligations of the insurer. He ought from justice:

1. To be capable of compensating all damages concerning which he is held, or for whose compensation he obligated himself. For this it is by no means necessary that he possess money equal to all the goods whose danger he has taken upon himself, but only that he have as much as is probably required for compensating the damages which are accustomed to happen from those things which commonly occur: for it is improbable that all goods whose danger he has undertaken will perish at the same time. But those societies act unjustly which take upon themselves more dangers than they can probably compensate, unless they reduce the danger to just limits by reinsurance, or a second insurance, by which, through a federation entered into among themselves or through a new society, they divide greater dangers among themselves.

In the case in which the insurer is unequal to repairing the whole damage:

1. The insured can rescind the contract and demand back the price paid, because he had not consented to the contract except for obtaining perfect security;

2. If the insured does not demand back the price, the insurer must restore the price at least partially, retaining the part corresponding to the value for which he truly furnished security;

3. If after the price has been paid the insured thing perishes, the insured has the right of pursuing by all legitimate means the complete repair of the damage: for the insurer is held partly from the contract, partly from fraud.

2. He is held to repair the whole damage truly inflicted on the insured thing, and indeed: a) according to the conditions explicitly or implicitly stipulated in the contract itself; b) as soon as morally possible after the thing has perished by fortuitous event or has become worse, and this is sufficiently established; otherwise he is held concerning damages; c) according to the value of the consumed thing at the time at which it perished (a. 20, Belgian law).

For repairing the damage, both civil law and the very tenor of the contract must be observed (a. 2). According to our civil law, the insurer is not held to compensate damage caused by grave fault of the insured, or of his relatives (a. 16); and, unless an express contrary agreement is made, he is not held to compensate damages arising from war or popular tumult (a. 19), indeed from an intrinsic defect of the thing (a. 18); yet for fire it must be clear that the defect was known at the moment the contract was entered into (a. 35).

If grave moral fault was present, the insured can in conscience demand back or accept nothing; on the contrary, if there was only juridical fault, not except after the sentence of a judge.

596. Insurance of workers merits special attention.² This tends to this: that workers be insured both against accidents which cause bodily injury, and against any cases whatever in which their powers for working are rendered invalid, as in sickness or old age; so that then the workers, or the wife or surviving children, may receive a certain subsidy or periodical revenues.

² Cf. Lehmkuhl, Th. M. I, n. 1365-66; Noldin-Schmitt, Th. M. II, n. 631.

As regards accidents caused on the occasion of labor and damages arising therefrom, insurance is to be furnished by employers; this will be done more conveniently if, united in associations, with an annual contribution made by each, they have money sufficient for the cases which occur. This also could be prescribed by civil law, and sometimes is prescribed. As regards other cases, various associations have been instituted, whose money is collected partly from a tax imposed on workers, partly from a tax to be paid by employers, or even from a contribution of the public treasury; once their tax has been paid, the workers acquire a right to the insured sum. Concerning these things it is to be noted:

1. An annual pension is paid only to those to whom an accident happens in the exercise of work; yet this seems able to be understood broadly, so that what happens in an action which in some way is connected with the exercise of work is judged to have happened thus, as in access to the place of labor, or during a meal which is taken in the place of labor, or during leisure which is taken there, unless, however, the law or statute positively excludes this.

2. Workers ought not to receive compensation if the accident happens by their fault; this fault is to be understood as grave, so that the accident was caused deliberately or from great negligence. Indeed, in certain regions, as in Belgium and in France, only an accident deliberately and deceitfully caused is excluded by law.

3. He who unjustly received compensation or an annual subsidy, for example, by falsely narrating the cause of the accident or by bringing in false witnesses, is held to restore the sum received, nor can he receive further payment. But if he cannot restore to the society or revoke the matter without graver danger, let him restore to the poor.

597. Life insurance can present special difficulties.³ Invented in the seventeenth century by the Italian banker Tonti, it properly tends to this: that the insurer, for certain annual payments or premiums, obliges himself, upon the death of someone occurring, to pay a determined sum of money to heirs or to a third person. But now it is also entered into in the contrary way, so that the insurer must pay the sum to the insured himself or to a third person, if he reaches a certain age, for example, 20 years or 65; indeed each way can be mixed, in which case there is mixed insurance.

³ Cf. Huppert, Der Lebensversicherungsvertrag; Lehmkuhl, Th. M. I, n. 1360 sq.; Genicot-Salsmans, Th. M. I, 658, VIII; Noldin, Th. M. II, n. 630-631.

In this contract the danger for the insurers is that they must pay back a sum which exceeds the premiums received; to guard against this, they are accustomed to take precautions by questions or examinations. There are, however, societies which, with the price increased, demand no declaration or medical examination; but ordinarily many questions are customarily proposed by insurers to clients, in order to discern with probability how much duration of life the insured can hope for. If these are answered incorrectly from error, fraud, or malice, or by a too favorable declaration of the physician, doubt sometimes arises concerning the value of the contract.

Insurance is a contract by which one of the contracting parties takes upon himself the danger of some thing, and the other obliges himself to a certain determinate price for this kind of danger taken up. Thus, for example, life is insured against death, a house against fire, a ship against shipwreck, etc.

On life insurance. There is certainly need of great prudence in entering upon and interpreting this contract. For some things concern the validity, and some only the liceity, of the contract. Here we regard the obligations and rights of the insured. 1st. The person examined ought to be the person insured. 2nd. There are certain diseases, certain degrees of diseases, whose existence precludes every contract. 3rd. There is a determined age below and above which the company does not make a pact. If all or one of these conditions are not observed, the contract is null. But there are 4th. other things which leave the contract valid, yet, if known, would have caused the companies to bring forward another pact; for example, if the true age is not given, but some age is given within the years generally required. There are 5th. other things of lesser moment which leave the pact as it lies. Finally 6th. companies often set down other annulling clauses which nevertheless we can regard as obliging in the forum of conscience to restitution only when the sentence of a judge has then been given. In entering upon these contracts the only method to be used is the sincere method. Therefore if some damage has been unjustly inflicted on the company, this certainly must be repaired. If someone substitutes another to be examined for himself, he does not have a right to the money concerning which agreement was made. If someone has a very advanced disease, with which existing the company would not have entered, but did enter because deceived, the contract is null. If someone, say, makes a pact above the age, the money is not his or his heirs'. This money must be returned, with the sum deducted which is equivalent to the annual premiums paid, unless the sentence of a judge has declared otherwise. If someone has given a false but insurable age, let the heirs compose the matter so that they retain for themselves that quantity of the handed-over money which would have been given if the true age had been designated. Yet we judge that in these adjuncts of lesser moment one must act more mildly if the ministers of the company themselves were in the cause and the insured acted as if deceived. Besides, several other circumstances here and there are taken up by the company to be investigated, and this must be said to pertain to it: thus the disease of grandparents, and other things; we do not judge that these things, concealed in good faith or exercising no influence on the death of the insured, are to be held as destructive of the pact. Let this be said in general. There are certain companies which set down a healing clause, by force of which, if after a time determined from the pact entered the company has not discovered and decided the matter, the contract is unassailable, for example, The New York Life Insurance Co.: according to this company, incontestability means: if the insured person is the examined person (i.e., if no substitution was made), if that person has truly died and the contract or policy, as it is commonly called, is in force at the time of death according to its terms, this contract will not be contested. "This policy shall be incontestable after one year from its date of issue except for non-payment of premium." (Studies in Practical Life Insurance, p. 154.) We judge also, as we have already indicated, that the company ought to answer for errors of the contract which are owed to its agents and not to the private persons themselves, who are easily deceived by them in good faith; otherwise the whole difficulty will fall upon innocent heirs. As to restitution itself, when its obligation is truly present, it is of itself to be made to the injured company. Yet, as in other matters, so in this cause great difficulties can arise. But if it is established that the company insured itself against these events, perhaps it can more easily be permitted that restitution be made either to pious causes or to the poor. - Cf. Lehmkuhl, nn. 1036 et seq. - Bulot, n. 830. - Huppert, Der Lebensversicherungsvertrag. - Genicot, n. 658, VIII. - Hudnut, Studies in Practical Life Insurance.

I say. The contract of insurance is licit; for when due conditions concur, equality of justice certainly is preserved in it, as theologians commonly admit and daily practice confirms. - But the required conditions are the following: 1st. that the price be proportioned to the danger; 2nd. that the danger be true and equally known to both parties; 3rd. that the insurer have that from which he can pay; 4th. that the insured observe the particular conditions of the contract. - Cf. St. Alphonsus, n. 911. - Kenrick, nn. 137 and 139.

Titius insured his life with a certain company and assigned the policy to his wife so that, in the event of his death, she might have the means to support herself and the children. When questioned in the name of the company concerning his age, however, he said that he was 36 years old, while in fact he was 38. But it happened after five years that Titius, oppressed by misfortunes and indulging in drunkenness on account of melancholy, fell into a well and died. Since the insurance company knew nothing of the lie concerning his age or of the drunkenness that was the cause of death, it paid five hundred pounds to the wife without delay. The wife, however, doubted whether she could retain the money. Hence it is asked:

1. How many species of the contract of insurance are there?

2. What is the force of the conditions that are customarily attached to insurance?

3. What is to be said of the case?

1. How many species of the contract of insurance are there?

There are three: Marine, Fire, and Life insurance.¹

1 Manual of Moral Theology, vol. i, p. 554.

2. What is the force of the conditions which are usually annexed to insurance policies?

The effect of such conditions depends upon the intention of the parties to the contract, and in the case of insurance companies in general it is difficult to say what the intention is. The chief difficulty is to distinguish when the contract is absolutely null and void, so that no rights are conferred by it, and when it is only voidable at the option of the insurer. In general it may be said that if there were substantial mistake in the contract, it is null and void; if there were only accidental mistake, it is only voidable. Mistake will be substantial when the insurer did not intend to contract on the basis which in fact exists; it will be accidental when a full knowledge of the facts would not have prevented him from entering into the contract, but would only have varied its terms.¹

1 Manual of Moral Theology, vol. i, p. 555.

3. The case. Titius insured his life and assigned the policy to his wife. He gave his age as 36, whereas it was 38. The policy would not be void on this ground. The only effect of the truth being told would be to raise the amount of the premium. After five years Titius took to drink on account of misfortunes, and while in drink killed himself by falling into a well. The insurance company knew nothing about the lie nor about the cause of Titius’ falling into the well, and paid the insurance money. In insurance policies there is usually a suicide clause, but even suicide does not usually void the policy, especially when it has been assigned to another. A recent authority says: “Suicide of the assured was originally a reason for the avoidance of the policy. But even then, if the assured had bona fide assigned his policy and notice of the assignment had been given to the company before the suicide had taken place, the assignee would be entitled to the assurance money. And this is the law to-day, and can be relied upon in the event of the death of an assured by his own hand under such circumstances that his suicide is exempted from the risks assured against, provided of course that it is a bona fide assignee who makes the claim. But the modern practice of life assurance is either to make no distinction at all in the case of suicide, or to make only some limited or temporary distinctions.”¹

1 Knight, Business Encyclopaedia, under the entry “Life Assurance.”

The wife of Titius may therefore keep the money she has received from the insurance company. Titius should indeed have paid higher premiums than he did, in consideration of his being two years older than he said he was. The company will have the right to deduct the difference from the sum paid if it comes to know the real age of Titius.