Section 81: Free choice of policy

81. Free choice of policy (1) Where a party to a contract in terms of which money is loaned, goods are leased or credit is granted, requires, whether as a condition thereof or otherwise, that an insurance policy or its policy benefits be made available and used for the purpose of protecting the interests of a creditor, the person who is so required to make that policy or those policy benefits available shall have a free choice— (a) as to whether he wishes to enter into a new policy and make it available for that purpose, or wishes to make available an existing policy of the appropriate value for that purpose, or wishes to utilise a combination of those options; and continued on page I15 – 55 I15 – 54 (1) [Issue 7] cy benefits be made available and used for the purpose of protecting the interests of a creditor, the person who is so required to make that policy or those policy benefits available shall have a free choice— (a) as to whether he wishes to enter into a new policy and make it available for that purpose, or wishes to make available an existing policy of the appropriate value for that purpose, or wishes to utilise a combination of those options; and continued on page I15 – 55 I15 – 54 (1) [Issue 7] Revised Laws of Mauritius (b) where a new policy is to be entered into— (i) as to the insurer with which the policy is entered into and as to the insurance agent, if any; (ii) as to whether or not the policy benefits concerned are to be provided in an event other than the death or disability of the life insured; and (iii) as to whether or not the value of the policy benefits to be provided thereunder, when taken in the aggregate with the value of the policy benefits provided under any other policy which is also to be made available and used for that purpose, shall exceed the value of that debt or other obligation; and (c) where an existing policy is to be made available, as to whether or not a variation of the policy required for that purpose shall be such as to cause— (i) policy benefits to be provided in an event other than the death or disability of the life insured; or (ii) the value of the policy benefits to be provided thereunder, when taken in the aggregate with the value of the policy benefits provided under any other policy which is also to be made available and used for that purpose, to exceed the value of that debt or other obligation. (2) The provisions of subsection (1) shall be deemed not to have been complied with unless the policy holder whose policy is to be made available has confirmed in writing, before the policy is used for the purpose of securing the debt concerned or other obligation, that he— (a) was given prior written notification of his entitlement to the freedom of choice referred to in that subsection; and (b) freely and willingly exercised that freedom of choice. (3) Any policy benefits that may be provided under a policy referred to in subsection (1) shall accrue and be paid to a creditor only to the value of the interests of the creditor in the subject matter of the policy, and any surplus shall accrue and be paid to the policy holder whose policy is used for the protection of the interests of the creditor concerned. (4) Where the provisions of subsections (1) and (3) are not complied with, the security provided by the policy made available and used for the purpose shall be void and the policy benefits shall be provided to the person who made it available. (5) A judgment creditor, the trustee in bankruptcy or liquidator of a bankrupt or insolvent policy holder, who is entitled to a part of the realisable value of an insurance policy may, where he is in possession of the policy, deliver it to the insurer who is liable under the policy for the purpose of the payment to that creditor or trustee of the sum to which he is entitled. I15 – 55 [Issue 1] Insurance Act (6) Where a judgment creditor, the trustee in bankruptcy or liquidator referred to in subsection (5) is not in possession of the policy concerned, he may by notice inform the person in possession of the policy of his rights and require him to deliver the policy to the insurer which is liable under the policy for the purpose of the payment to that creditor, the trustee in bankruptcy or liquidator of the sum to which he is entitled. (7) This section shall not apply to a loan granted to a policy holder by a long term insurer against a security of a long term insurance policy.