Competent Parties
MR. WATSON: What is the minimum age to buy insurance?
STUDENTS: 15.
MR. WATSON: Why?
STUDENTS: Who cares.
MR. WATSON: What if you enter into an insurance contract with a 14-year-old? It is what kind of contract at that point?
STUDENTS: Void.
MR. WATSON: Why? Because he is under age. What about a drunk guy? Could he enter into a contract?
MAN: Yes, i mean no.
MR. WATSON: Would it be legal, valid and binding?
STUDENTS: No.
MR. WATSON: Right, because you have to be competent to enter into an agreement.
MR. WATSON: Would a disabled guy be incompetent?
MAN: Not necessarily. Depends on his disability.
These people would be considered incompetent:
- minors (under 15),
- the mentally infirm (coma, dementia, etc.), and
- those under the influence.
MR. WATSON: These folks cannot legally enter into a contract. Just because someone is disabled, it does not mean that they are incompetent.
Required signatures on the application
MR. WATSON: Here's my wife (indicating to female student). Here's my son, Rooster (indicating to male student). I buy a policy on my wife. I name Rooster, my son, as beneficiary. Do I have to sign on the application? Yes or no? Yes, because I am buying the policy. Also, my wife (the insured) must sign and the agent of the company.
MR. WATSON:. Now, who must sign on this application?
- Me (policy-owner),
- my wife (insured), and
- a representative of the company (the agent)
MR. WATSON: Now, who are the parties to the contract? Who has contractual capabilities?
MAN: The policy-owner and the company.
Know this: The beneficiary does NOT sign the insurance application.