Hello, this is attorney Oh Seung-hyun of Cheongchul Law Firm.

Even a life insurance policy taken out for the sake of your family may pay no benefit if the insured person never consented. In a contract that treats another person's death as the insured event, the insured's written consent is the core requirement that determines whether the contract is formed at all. This article summarizes how Korean courts assess the insured's consent.

Why is the insured's consent required?

Commercial Act Article 731(1) (상법 제731조 제1항) requires the insured's written consent when concluding an insurance contract that treats another person's death as the insured event. The rule is designed to prevent another person's life from being used as a means of collecting insurance money or being exploited for crime, and to protect the insured's own will.

Arguments such as "we are family, so it is fine" or "the insured knew about the policy" are not enough. Courts have consistently held that blanket consent, implied consent, and presumed consent all fail to satisfy the written consent required by Commercial Act Article 731 (상법 제731조) (Supreme Court Decision 2014Da204178, Oct. 15, 2015).

Void from the start without consent – subsequent ratification does not work either

A contract concluded without the insured's written consent is void from the start (Supreme Court Decision 96Da37084, Nov. 22, 1996). This differs from cancelling a contract that was once validly formed. Under a void contract no insurance benefit is paid, and the policyholder may recover the premiums paid.

The important point is that the contract does not become valid even if the insured later ratifies it. The same holds true even where premiums were paid for years or hospitalization benefits were once received. In Supreme Court Decision 2004Da56677, Sept. 22, 2006, the Court held that an insurer asserting invalidity after collecting premiums for a long period does not violate the principle of good faith. Supreme Court Decision 2014Da204178, Oct. 15, 2015, confirmed the same position.

In addition, the written consent must be given by the time the contract is concluded (Supreme Court Decision 96Da37084). The approach of "sign up first and collect the signature later" does not work.

The person who concluded the contract may also assert that it is void

A question may arise whether it violates the principle of good faith or estoppel for the policyholder who personally concluded the contract without consent to later claim that it is "void." Courts have consistently held that it does not.

Supreme Court Decision 96Da37084 held that even the party who caused the contract to be void may assert its invalidity without violating good faith or estoppel. In 2024, Supreme Court Decision 2024Da238392, Nov. 14, 2024, reaffirmed the same principle. This principle applies equally to contracts that treat bodily injury as the insured event.

Failure to explain may make the insurer liable for damages

When a life insurance contract on another person is concluded, the insurance agent has a duty to explain to the policyholder that the insured's written consent is required. In Supreme Court Decision 2007Da76696, Aug. 21, 2008, the Court held that where the agent failed to perform this duty and the contract became void as a result, the insurer may be liable for damages under Insurance Business Act Article 102(1) (보험업법 제102조 제1항).

In the same decision, however, the Court also held that if the invalidity was entirely attributable to the policyholder's own fault, there is no causation between the breach of the duty to explain and the loss, so liability may not be recognized. Even where the duty to explain was breached, whether damages are awarded depends on the circumstances of each case.

The insured's consent is also required when changing the beneficiary

Commercial Act Article 734(2) (상법 제734조 제2항) applies Article 731(1) mutatis mutandis to the designation and change of the beneficiary. The consent obtained at the time of initial enrollment does not carry over as consent to every later change of beneficiary. When the beneficiary is changed, the insured's written consent to the specific change must be obtained anew.

There is an exception for group insurance

Under Commercial Act Article 735-3 (상법 제735조의3), when an organization takes out life insurance on its members as the insured pursuant to its rules, a special provision applies to the individual written consent requirement. However, to designate as beneficiary a third party who is neither the insured nor the insured's heir, the insured's written consent must be obtained unless the organization's rules expressly so provide. The mere fact that the company pays the premiums does not exempt the consent requirement.

Persons under 15 and minors

Commercial Act Article 732 (상법 제732조) renders void any life insurance contract that treats the death of a person under 15 as the insured event. The prohibition cannot be overcome even with the consent of a parent or legal guardian. For minors aged 15 or older, the minor's own written consent is still required for life insurance on another person, so one should not assume that a legal guardian's signature alone is sufficient.

Points to check before and after enrollment

• Confirm that a written consent form personally signed by the insured before the contract was concluded has been secured

• Confirm that the insured's re-consent procedure was followed when the beneficiary was changed

• No death coverage contract may be concluded if the insured is under 15

• If the contract is held void for lack of consent, a refund of premiums paid may be claimed

• If the agent breached the duty to explain, consider a damages claim against the insurer

Closing

In life insurance on another person, the insured's written consent requirement is strictly construed. Neither implied consent nor subsequent ratification can cure the invalidity, and years of premium payments do not make the contract valid. If you are facing a dispute over missing consent of the insured or a change of beneficiary, please prepare the relevant contract and consent documents and apply for a free consultation with Cheongchul Law Firm.

Thank you.