Question

Que:

Why principles of indemnity are not applicable to the contact of life insurance?

Answer 1

Principle of Indemnity-

Principle of Indemnity ensures the insured (the person who buys insurance) that on the happening of any loss or damage, the insured should be put back into the same financial position that the insured was before the happening of the loss.

However, Principle of Indemnity is not applicable to life insurance because life insurance is adopted as a means of saving and life insurance is not based on the principle of compensation. According to the principle of Indemnity the purpose of insurance is to bring back the insured to the same financial position as he/she was before the happening of loss. But in case of life insurance, the life of a person cannot be brought back.

Answer 2

The principle of indemnity is not applicable in case of life insurancebecause under life insurance, the insurer is required to pay the fixed amount agreed upon in advance in the event of death or on the expiry of the period of the policy. ... It is not acontract of indemnity
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