A person desiring to effect an insurance on his life usually procures from the office in which he proposes to insure a blank form, containing a series of interrogatories, all of which must be answered in writing by the applicant. To these answers must be appended the certificate of his usual medical attendant as to his present and general state of health, with a like certificate from an intimate personal friend. The party is then subjected to an examination by the medical examiner of the company, and, if the application is in all respects satisfactory, a policy is issued.
On the death of the party assured, and due proof being made thereof, the company must pay the full sum insured. The time fixed for this payment varies with different companies. Some agree to pay at thirty, some at sixty, and some at ninety days after the proofs of death have been received and duly approved.
The peculiarity of life assurance companies is, that they are required to pay the entire sum assured on the happening of a single event, making the loss a total one; but in fire and marine policies there is a distinction made between total and partial loss.
A clause is usually inserted declaring the policy void in case the assured should fall in a duel, die by the hands of justice, or by his own hand, or while engaged in the violation of any public law. An interesting case in point is reported in the English books. On the 25th of November, 1824, Henry Fauntleroy, a celebrated banker in London, was executed for forgery. The Amicable Society of London, the first company established in England, had written a policy on his life, upon which all the premiums had been paid. The rules of the company declared that in such cases the policy was vitiated, but the clause was not inserted in the instrument. The company resisted payment, but a decision was given sustaining the validity of the contract, which was, however, reversed, on an appeal being made to the House of Lords.
This clause, declaring a policy void in case the assured commits suicide, has given rise to much litigation. Some companies use the word "suicide," while others insert the words "shall die by his own hand"; but the courts of law in various adjudications have considered the expressions as amounting to the same thing. The word "suicide" is not to be found in any English author anterior to the reign of Charles II. Lexicographers trace it to the Latin word suicidum, though that word does not appear in the older Latin dictionaries. It is really derived from two Latin words, se and cædere,—to slay one's self. The great commentator on English law, Sir William Blackstone, defines suicide to be "the act of designedly destroying one's own life. To constitute suicide, the person must be of years of discretion and of sound mind."
In a case submitted to the Supreme Court of the State of New York, Chief-Justice Nelson settled the whole question. A life company resisted payment of the amount specified in their policy, on the ground that the assured had committed suicide by drowning himself in the Hudson River. To this it was replied, that, when he so drowned himself, he was of unsound mind, and wholly unconscious of the act.
Judge Nelson, after stating the question to be whether the act of self-destruction by a man in a fit of insanity can be deemed a death by his own hand within the meaning of the policy, decided that it could not be so considered. That the terms "commit suicide," and "die by his own hand," as used indiscriminately by different companies, express the same idea, and are so understood by writers in this branch of law. That self-destruction by a man bereft of reason can with no more propriety be ascribed to the act of his own hand, than to the deadly instrument that may have been used for the purpose. That the drowning was no more the act of the assured, in the sense of the law, than if he had been impelled by irresistible physical power; and that the company could be no more exempt from payment, than if his death had been occasioned by any uncontrollable means. That suicide involved the deliberate termination of one's existence while in the full possession of the mental faculties. That self-slaughter by an insane man or a lunatic was not suicide within the meaning of the law.
This opinion of Judge Nelson was subsequently affirmed by the Court of Appeals.
The whole current of legal decisions, the suggestions thrown out by learned judges, and the growing opinion that no sane man would be guilty of self-slaughter, have induced several new companies to exclude this proviso from their policies, while many older ones have revised their policies and eliminated the obnoxious clause. It is not that any man contemplates the commission of suicide; but every one feels that, if there should be laid upon him that most fearful of all afflictions, insanity, or if, when suffering from disease, he should, in the frenzy of delirium, put an end to his existence, every principle of equity demands that the faithful payments of years should not be lost to his family.
Another important principle, which has involved much discussion, is, that "the party insuring upon a life must have an interest in the life insured." Great latitude has been given in the construction of the law as to this point; the declaration of a real, subsisting interest being all that is required by the underwriters. In fact, the offices are constantly taking insurances where the interest is upon a contingency which may very shortly be determined, and if the parties choose to continue the policy, bona fide, after the interest ceases, they never meet with any difficulty in recovering. So also offices frequently grant policies upon interests so slender that, although it may be difficult to deny some kind of interest, it is such as a court of law would scarcely recognize. This practice of paying upon policies without raising the question of interest is so general, that it has even been allowed in courts of law.