Lloyd's Maritime and Commercial Law Quarterly

Professor Francis D Rose

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INTERPRETING WITH-PROFITS LIFE INSURANCE CONTRACTS

Equitable Life Assurance Society v. Hyman

Considering how much of the average citizen’s wealth is tied up in various savings and investment products, there appears to be, to date, surprisingly little litigation or indeed hard law generated by such entitlements. A middle-income individual might have a large proportion of his or her wealth tied up in pensions, unit-linked investment vehicles and various insurance products, and yet little understanding of the true nature and value of those intangible rights. Advisers who are called upon to consider the legal position in respect of such contracts have little guidance to date. One of the most inscrutable of the common financial products is the life insurance contract “with profits”.1 An initial question when considering the extent of investors’ rights in respect of financial products is whether one is concerned with defective advice or a defective product (or both). When

1. Described by Lord Steyn as: “One of the most attractive methods of personal saving in the United Kingdom”: Equitable Life Assurance Society v. Hyman [2000] 3 W.L.R. 529, 531. Life insurance is often used interchangeably with life assurance nowadays. Traditionally there was a distinction drawn between “insurance” where the risk (e.g., fire) might never occur, and “assurance” where the risk (e.g., death) was inevitable, although the timing was uncertain. Insurance now seems apt to cover both species of contract.

LLOYD’S MARITIME AND COMMERCIAL LAW QUARTERLY

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