CR94 Validity of funeral insurance policy


Validity of funeral insurance policy


The complainant in his capacity as beneficiary submitted a complaint that the insurer had not provided him with a response to death claim he submitted in respect of the death of the life assured.

The insurer rejected the claim, as documentation in its possession revealed that the life assured did not sign the application form, hence a valid contract did not come into existence.


The policy commenced on 1 June 2004 and covered the life assured and her spouse. The spouse died on 18 June 2004 and the spouse assured benefit was duly paid. The life assured died on 2 December 2004 and the complainant submitted a claim. It came to light that the complainant, in addition to being the beneficiary and premium payer, was the cousin of the life assured and the representative who sold her the policy.

The insurer submitted affidavits completed by the life assured and the complainant after the death of the spouse confirming that the spouse, and not the life assured, signed the application form. They both confirmed that the life assured was in fact present when her spouse signed the application form. The insurer was of the view that as the life assured did not sign the application form the contract was not valid. It therefore rejected the claim and reclaimed the spouse’s benefit that was paid by it.

The office challenged the insurer’s view as to the validity of the contract by posing the following questions:

1. Whether it was the insurer’s contention that an insurance contract would be invalid if the application form was signed by a third party on the instruction and authority of the proposed policyholder:

(a) in his own name as the policyholder’s agent;
(b) in the name of the policyholder, purporting to be the policyholder?

2. If the contention was that the policy would be invalid, on what principle and on what legal authority was reliance placed for each or either such contention?

3. Did it agree that the facts of this case seemed to fall in category 1(b)? If the insurer did not agree, what was its contention in this regard?

4. Are there any other grounds, apart from the alleged invalidity of the contract, on which the insurer wished to rely for declining liability under this policy? If so, full particulars were required.

The insurer confirmed its view that the contract was not valid. Although the arguments raised were not convincing and did not satisfactorily answer our questions, the contents of its response raised substantial disputes of facts which this office was not able to resolve on the papers submitted to it.


In terms of Rule 5.2, the complaint could not be upheld.

We did however write to the insurer expressing our concern over the questionable and unsatisfactory underwriting that occurred in this matter.

October 2005