Life Insurance Amendment Act 1984
No. 74 of 1984
An Act to amend the Life Insurance Act 1945 consequent upon the enactment of the Insurance Contracts Act 1984
[Assented to 25 June 1984]
BE IT ENACTED by the Queen, and the Senate and the House of Representatives of the Commonwealth of Australia, as follows:
Short title, &c.
1. (1) This Act may be cited as the Life Insurance Amendment Act 1984.
(2) The Life Insurance Act 19451 is in this Act referred to as the Principal Act.
Commencement
2. This Act shall come into operation on the day on which the Insurance Contracts Act 1984 comes into operation.
Insurable interest
3. Section 86 of the Principal Act is amended by omitting from sub-section (2) “This section” and substituting “Subject to section 86a, this section”.
4. After section 86 of the Principal Act the following section is inserted in Division 1 of Part IV:
Application of sections 83, 84 and 86
“86a. Sections 83, 84 and 86 do not apply to or in relation to a policy to or in relation to which the Insurance Contracts Act 1984 applies.”.
5. Section 96 of the Principal Act is repealed and the following section is substituted:
Paid-up policies
“96. Where a policy owner who desires to discontinue further premium payments on a policy on which not less than 3 years’ premiums have been paid in cash makes application to the company for a paid-up policy—
(a) the company shall vary the policy so as to provide for the payment, in lieu of the amount originally payable, of an amount not less than the amount determined in accordance with the rules set out in Part I of the Sixth Schedule; and
(b) the policy as so varied shall be taken, for the purposes of that Part of that Schedule, to be a paid-up policy.”.
Savings as to insurable interest
6. Section 113 of the Principal Act is amended by omitting “(apart from the provisions of paragraph 86 (1) (a))” and substituting “(otherwise than by reason of his being a parent or person in loco parentis of the child)”.
NOTE
1. No. 28, 1945, as amended. For previous amendments, see Nos. 65 and 80, 1950; No. 94, 1953; No. 3, 1958; No. 93, 1959; No. 29, 1961; No. 145, 1965; No. 78, 1973; No. 216, 1973 (as amended by No. 20, 1974); No. 32, 1977; No. 177, 1978; Nos. 92 and 176, 1981; and No. 143, 1983.
Overview
The Life Insurance Amendment Act 1984, enacted by the Queen, the Senate, and the House of Representatives of the Commonwealth of Australia, was introduced to amend the Life Insurance Act 1945 in response to the enactment of the Insurance Contracts Act 1984. The primary objective of this Act was to ensure that certain sections of the Life Insurance Act 1945 would not apply to policies covered by the Insurance Contracts Act 1984, thereby creating a more streamlined regulatory environment for life insurance policies in Australia. By omitting and substituting specific sections, the Act aimed to harmonise the regulatory frameworks of both Acts, ensuring that the newer legislation would govern the newer policies while the older Act would still apply to existing policies not covered by the newer Act.
The Life Insurance Amendment Act 1984 also sought to address issues concerning insurable interest and the conversion of policies into paid-up policies. By amending and repealing certain sections, the Act provided clarity and updated the rules governing insurable interest and the conditions under which policies could be converted to paid-up status. This ensured that policyholders had clear guidelines and protections under the updated legislative framework, facilitating better understanding and compliance with the insurance regulations.
Scope and Application
The Life Insurance Amendment Act 1984 applies to the Life Insurance Act 1945, making amendments consequential to the enactment of the Insurance Contracts Act 1984. The Act operates throughout the Commonwealth of Australia, affecting insurance companies and policyholders within its jurisdiction. It specifically modifies provisions related to insurable interest and paid-up policies, excluding certain policies governed by the Insurance Contracts Act 1984. The amendments clarify and update the conditions under which insurable interest is assessed and how paid-up policies are handled. The Act repeals certain sections and introduces new provisions to align the Life Insurance Act 1945 with the broader regulatory framework established by the Insurance Contracts Act 1984. Subordinate instruments may further extend or restrict the application of this Act, ensuring its provisions are effectively implemented and adapted to changing circumstances.
Key Provisions
The Life Insurance Amendment Act 1984 (Act) makes several amendments to the Life Insurance Act 1945 (Principal Act). One of the key changes is the introduction of section 86a, which specifies that sections 83, 84, and 86 of the Principal Act do not apply to policies that are governed by the Insurance Contracts Act 1984 (section 4). This amendment aims to ensure consistency and alignment between the two Acts. Another significant change is the redefinition of the concept of insurable interest, with section 86 of the Principal Act now subject to the provisions of section 86a (section 3). Additionally, section 96 of the Principal Act has been repealed and replaced with a new provision that governs the conversion of policies into paid-up policies, provided that the policy owner has paid at least three years’ worth of premiums (section 5).
The Life Insurance Amendment Act 1984 imposes certain obligations on life insurance companies. Firstly, when a policy owner requests to convert their policy into a paid-up policy after making three years of premium payments, the company must vary the policy to provide for the payment of an amount not less than what is determined according to the rules outlined in Part I of the Sixth Schedule of the Principal Act (section 5(a)). Secondly, the Act also modifies the concept of insurable interest, which affects the eligibility of individuals to take out life insurance policies (section 3).
Failure to comply with the provisions of the Life Insurance Amendment Act 1984 may result in legal consequences. While the Act does not explicitly state any specific penalties or consequences for non-compliance, breaches of the Principal Act, which has been amended by this Act, may be subject to penalties as outlined in the Principal Act itself. The Principal Act includes provisions for civil and criminal penalties, which may include fines and imprisonment, depending on the severity of the breach. It is essential for life insurance companies and policyholders to adhere to the requirements set forth in the Act to avoid potential legal repercussions.