Parents may obtain death insurance for their children below seven years old without affecting the validity of the insurance contract (Taiwan)

Sean Tsou

The Taichung Branch of the Taiwan High Court rendered the 108-Shang-Yi-396 Decision of October 29, 2019 (hereinafter, the “Decision”), which is summarized generally as follows.  With respect to common practical circumstances where the parents obtain death insurance for their children, the court affirmed that even if the parents are both the applicants or beneficiaries of their minor child, if the insured is a minor child below seven years old, the parents may still directly agree to obtain insurance on behalf of their minor child.

According to the facts underlying this Decision, when Insurance Agent C solicited insurance business for Insurance Company D, Insurance Agent C obtained death insurance for her children A and B below seven years old on their behalf from Insurance Company D without their written consent.  Many years later, A and B asserted that the death insurance contracts with Insurance Company D were invalid and requested to have the premiums returned pursuant to the requirement that “a death insurance contract executed by a third party without being recognized in writing by the insured and without an agreed-upon insurance amount shall be invalid” under Article 105, Paragraph 1 of the Insurance Law.  After returning the premiums to A and B, Insurance Company D requested that Insurance Agent C, who had solicited such business for it, should return the commission and compensate the damage to the investment and the cost of the premiums.

The court pointed out in the arguments in this Decision that the so-called “written consent of the insured” in Article 105, Paragraph 1 of the Insurance Law” means that, in reference to Articles 13, 76 and 78 of the Civil Code, the intent of people with no disposing capacity (e.g., people below seven years old) shall be expressed by their legal representatives, who shall also accept the expression of intent on their behalf, and that no unilateral act of an individual with limited disposing capacity shall be valid without the permission of his/her legal representative.  Therefore, in insurance practice, an insurance contract for a minor below seven years old is actually executed by the parents, and insurance contracts with minors above seven years old also require the permission of their parents in order to come into force.  The current provisions do not exclude the above scenario where the legal representative is also the applicant or beneficiary.  Therefore, even though A and B never not gave their written consent to the insurance contracts at issue, still since A and B were both below seven years old when the insurance contracts were executed and Insurance Agent C, the mother of the two, had expressed the intent to execute the death insurance contracts with Insurance Company D on behalf of A and B, it is not appropriate to readily deny the validity of the insurance contracts at issue in the absence of any specific legal provision that restricts a legal representative from being an applicant or beneficiary at the same time.