Other Policy Provisions

Life-insurance contracts sometimes contain other provisions which limit the liability of the company. Reference is had to prohibitions or restrictions, not already referred to in previous chapters, which relate to the insured's occupation after the issuance of the policy, residence and travel, military and naval service in time of war, intemperance, death while, violating law, or death at the hands of justice. Relative to these restrictions the tendency has been towards a liberalization of the contract. Public opinion has favored a policy which is not loaded down with unnecessary restrictions, and the aforementioned instances are the exception and not the rule. It may also be accepted as a principle that whatever is not prohibited or restricted in the policy becomes an implied privilege to the insured, especially where the policy contains an incontestable clause. 1

Footnote 1.

In discussing the incontestable clause, Richards makes the following significant comments: "If the general incontestable clause bars the insurance company from setting up in defense the act of suicide, even when committed by a sane man, it is difficult to discover any sufficient reason for allowing the company to except from its application, the death of the insured by legal sentence and execution for crime. The act of suicide, it may often be shown, is committed with the express purpose of hastening payment of the insurance money; whereas it rarely appears that the insured is actuated by any thought of insurance on his own life when persuaded to commit crime. So far as innocent beneficiaries are concerned the reasons for allowing them to take their insurance money are no stronger in case of suicide than in the case of legal execution; and so far as the insurance company is concerned it shows no equity in its own favor in either case inasmuch as it has expressly contracted by the clause in question to raise no such defense.......

"Where beneficiaries, as well as insurer, are in no wise responsible for hastening the date of maturity, it is not altogether clear, that in disregard of the express terms of the contract the insurer should be so unexpectedly favored, and the beneficiaries so heavily penalized. Premiums are often paid for many years, and at great sacrifice, a sacrifice felt, perhaps, by all the members of the household. Before leaving the insurance moneys with the company and depriving innocent widows and children of their natural means of support, in violation of the terms of the contract, the courts must be convinced that the general welfare of the community will thereby be promoted. Accordingly it is not surprising that the drift of opinion in the state courts is in the direction of extending the operation of the incontestable clause to the fullest protection of innocent beneficiaries". RICHARDS, GEORGE, Treatise on the Law of Insurance, 536.