An insurance contract conclusion as explained by the insurance planner, and judgment of death benefit

In the judgment, a court declared that if an insurance salesperson(insurance planner) who used a job title that is deemed to have the right to conclude an insurance contract explained to prospective insurance policyholder that the insurance beneficiary is entitled to receive the insurance benefit of the amount equivalent to the death insurance on occasion of the first degree disability, the insurer is obliged to pay the death benefit to the insured person's side who has reached the first degree disability.

Yong Soo Lim(insurance attorney, Judicial Research & Training Institute 28th) introduces the contents of the judgment and provides commentary and legal advice with the opinions of attorney to help you understand.

The Ulsan District Court Civil Part 5(Chairman Yoon Tae Sik, Chief Judge) delivered a victory to the plaintiff in a lawsuit filed by Boseong Hi-tech against Samsung Life Insurance that "Samsung Life Insurance should pay KRW 200 million".

insurance planner

The court said, "Considering that Samsung Life Insurance's insured confirmation proposed by Baek claims 'Death insurance will be paid on the first degree disability' and that Baek testified that she sold the insurance product without proper confirmation of the terms and conditions, Baek would have explained that if the insured reaches the first degree disability, 200 million won will be paid for the death insurance at the time of signing the insurance contract".

The court also pointed out that  "It admits that Baek used the title of 'Samsung Life Insurance Company Consultant' while explaining the insurance to Boseong Hi-tech at the time of the insurance contract, and realistically most of the insurance contracts are signed through the recommendation of insurance planners, and insurance planners are assigned the duty of acting as intermediaries between policyholders and insurance companies, and policyholders obtain specific information about the insurance contents from the insurance planners. Therefore, as the policyholders, it is easy to misunderstand that the insurance planners have the right to enter into a contract with insurance policyholders and that insurance contract is concluded as described".

The court added that  "Samsung Life Insurance appears to be monitoring and managing the activities of insurance planners by providing education and morning assembly hours".

Insurance contract conclusion as explained by the insurance planner

This was then followed by the judgment that "in this way, Samsung Life Insurance gave the right to represent the insurance contract by giving Baek job title, or by acquiescing the use of the title. Therefore, the apparent authority(ostensible authority) of Article 125 of the Civil Code was established without special circumstances".

In 2012, Boseong Hi-tech signed up for group insurance of Samsung Insurance Life with 50 employees as insured, and designated the company as a beneficiary. Mr. Park joined Boseong Hi-tech in March 2013 and agreed to the group insurance contract that designates him as an insured person.

In April 2013, Boseong Hi-tech requested Samsung Life Insurance for the change of insured person in view of the retirement and employment of the employees belonging to the company. Mr. Park was found in a stairway on the second floor of a building in Ulsan in May 2013, and was immediately taken to a nearby hospital by a 119 rescue team and was diagnosed with subdural hemorrhage without open intracranial wound, spastic tetraplegia, and so on. Seven months later, Mr. Park was registered as a disability degree 1(brain lesion level 1) by Changwon City.

🔘 Lawyer's Legal Advice

An Insurance planner or brokerage agency is an independent trader in Commercial
Act who carries out business to mediate insurance contracts for insurance companies. It is the mainstream position of the conventional view of the academic world and judicial precedent that insurance planners and insurance brokers do not have the right of agency to conclude insurance contracts. Therefore, it is a principle that the insurance contract cannot be considered as a false or inadequate description, even if an insurance planner or a insurance broker described the contents of the insurance product to be false or inadequate while collecting insurance.

For example, it has been ruled that an agreement cannot be said to have been made to pay insurance equivalent to twice the premium, even if the insurance planner had written and issued an IOU(promissory note) to give the policyholder twice the insurance as a premium after 5 years, due to the fact that the insurance planner is only a intermediary with no authority to conclude insurance contracts.

Prohibition of copyright infringement

In contrast, if an insurance company or an individual who has an insurance contract agent(such as a contracting agent) explains the contents of the insurance contract differently and explicitly concludes the insurance contract accordingly, the terms and conditions posted are excluded.

In the case of misrepresentation by the insurance planner, there are few cases where the insurance company is responsible for representation(apparent authority). Insurance benefits are not paid by the agreement with insurance planner, but are paid only when a certain insurance accident occurs in accordance with the terms and conditions, and the determination of whether the insurance payment is made or not is beyond the scope of the insurance planner delegated by the insurance company. Therefore, it cannot be said that the insurance planner promised the insurance benefits to substitute or represent the insurance company, and without such substitute act, the representation(apparent authority) cannot be established.

This judgment is an application of the representation(apparent authority)'s legal principle and is therefore one of the rare cases in which the insurance contract was concluded as described by the insurance planner.

THE high-quality & good contents

Insurance Attorney: Yong Soo Lim, Attorney at Law


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