2.1.4 Competent Parties
Just as in the term "innocent until proven guilty," so are applicants considered "competent" unless obviously otherwise, or have been proven incompetent, to enter into a legal contract.
Minors, the mentally impaired, and those under the influence of alcohol or drugs are not considered competent parties.
Minors are generally deemed as not having the knowledge necessary to understand the ramifications of a legal contract yet. Not only minors are excluded on that basis, so are the mentally impaired and those under the influence of alcohol or drugs.
- Business entities, trusts, and estates are always considered competent parties.
- Purchasers of life insurance policies are "policyowners" (policyowners are not necessarily "policyholders" - this concept will be elaborated on throughout the course).
- An insurance contract is conditional in that the insurer's promise to pay benefits is dependent on the occurrence of the risk insured against.
