Legal Tips

Capacity to Contract

Document Date: 02-Jul-1996

Here are some Frequently Asked Questions on the topic "Capacity to Contract":

1. I understand that a child can buy an insurance policy and become the policyholder. Is this true?
2. Recently, my business failed and I was made a bankrupt. I am thinking of taking up a life insurance policy now so that my family's interests will be looked after, if anything happens to me. Can I take up a policy?
3. My 16 year old son suffers from Down's syndrome. Can he sign up for an insurance policy ?

1. I understand that a child can buy an insurance policy and become the policyholder. Is this true?

   Only a child who has attained the age of 16 years can buy an insurance policy in his/her own name and become the policyholder. Children over the age of 10 years but below 16 can buy an insurance policy and become the policyholder, provided they have the written consent of their parent or guardian.

2. Recently, my business failed and I was made a bankrupt. I am thinking of taking up a life insurance policy now so that my family's interests will be looked after, if anything happens to me. Can I take up a policy?

   Bankruptcy limits the legal capacity of a person to enter into a contract. As such, you can only take up an insurance policy with the Official Assignee's consent.

3. My 16 year old son suffers from Down's syndrome. Can he sign up for an insurance policy?

   Income may allow your son to sign up for an insurance policy if we are satisfied from medical evidence that your son has sufficient mental capacity to enter into a contract of insurance. However, persons who are of unsound mind or mentally disordered are not allowed to sign up for any insurance policies.