Legal Tips
Capacity to Contract
Document Date: April-2012
Here are some Frequently Asked Questions on the topic “Capacity to Contract”:
- Can a child buy an insurance policy and become the policyholder?
- If a person is made a bankrupt, can he buy a life insurance policy so that his family’s interests will be looked after if anything happens to him?
- Can a 16 year old child who suffers from Down’s syndrome buy an insurance policy?
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Q1. |
Can a child buy an insurance policy and become the policyholder? |
| A1. |
A child who has reached 16 years old can buy an insurance policy in his own name and become the policyholder. A child over 10 years old but below 16 years old can buy an insurance policy and become the policyholder only with written consent from his parent or guardian. |
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Q2. |
If a person is made a bankrupt, can he buy a life insurance policy so that his family’s interests will be looked after if anything happens to him? |
| A2. |
Once a person is made a bankrupt, his estate (including properties and monies) is vested in and managed by the Official Assignee. So, a bankrupt person can only buy an insurance policy with the Official Assignee's consent. |
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Q3. |
Can a 16 year old child who suffers from Down’s syndrome buy an insurance policy? |
| A3. |
We may allow a 16 year old child to buy an insurance policy if we are satisfied that he has sufficient mental capacity to make a decision for himself in relation to the matter.
A person who lacks mental capacity is not allowed to sign up for an insurance policy. However, if:
- the court has appointed a deputy1; or
- the person has, before his lack of mental capacity, appointed an attorney2,
to make decisions for him in this respect, then we may consider an application by the deputy or attorney for an insurance policy on his behalf.
1 Deputy is appointed by the court to make decisions for a person who lacks mental capacity on matters relating to his personal welfare, property or affairs.
2 Attorney is appointed by a power of attorney signed by a donor where the donor confers on the attorney the authority to make decisions about the donor’s personal welfare, property or affairs.
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