Table content.

page

Acknowledgement ......................................................................................................1

Introduction ........................................... .....................................................................1

Chapter 1................................................... ........... .....................................................2

1.1 background of the study..................................... ............................................... 2

1.2 statement of the problem................ ................................................................... 3
1.3 objective of the study............................................... ........................................... 4
1.3.1General........................................................................................................ 4
1.3.2Specific..................................................................................................... .5
1.4 research questio...................................................................................................5
1.4.1 Main question ...........................................................................................5
1.4.2 Specific question......................................................................................5
1.5 significance of the study................................................ ....................................6
1.6 literature review.................................................................................................. 6
1.7 Source of data.....................................................................................................7
1.7.1 Primary............................................................................................................ 7
1.7.2 Secondary........................................................................................................7
1.8 research methodology.......................................................................................7
1.8.1Research design.............................................................................................. 7
1.8.2Research method......................................... ...................................................7
1.9 organization of the study.................................... .............................................7
1.10 limitation of the study............................................................... ......................8
1.11 scope of the study.............................................................. .............................8
1.12time frame..........................................................................................................8
1.13 bibliography.................................................................................................8

CHAPTER ONE

Introduction
This paper will be contains the plans for the study of discrepancy of life insurance under
Ethiopian civil code and commercial code. Furthermore Who are the beneficiary of life
insurance under the code and investigating what is judgements of the federal Cassation
decision.

1.1 Background of the study

Insurance is a contact whereby, for stipulated consideration, one party undertake to compensate the
other for lost on specified perils.1Today in our world insurance is important device of covering risk
related with business and personal lives of a great number of people.In present time types of insurance
are numerous. Under Ethiopian commercial code has generally Insurance classified in to two. These are
insurance against damage and insurance of person. Insurance of person which is classified into life
Insurance and insurance against accident and illness.2 Life Insurance is that guarantees a specific sum of
money to designated beneficiary upon the death of the insurer or to the insured if he or she lives
beyond certain age.3 Under Ethiopian legal systems, life Insurance is defined as a contract whereby the
insurer undertake against the payment of one or more premiums to pay to the subscriber or to the
beneficiary a specific sum on certain conditions dependent upon the life or the death of subscriber or
third party insured.4 From this definition, it may be deduced that life Insurance is a contract between
the policy owner and the insurer. The policy owner sometimes is called policy holder, is the person who
has the right to exercise control over the policy.

Life Insurance generally exist in various form. In Ethiopia context the following type of life Insurance has
been identified. The first type is Term life Insurance, refers to straight life Insurance that is in effect for
specific period of time. And the second type is whole life Insurance policy pertain life Insurance where
by the sum of assured is payable on death only and not expiry of any fixed period.5 The last one is
endowment policy, is a kind of life Insurance where by the primary obligation insured himself where the
survives the beneficiary.

In Ethiopian comrcial code of 1960 says that

"Art 691---Definition

A life insurance is a contract where by the insurer undertakes against the payment of one or more
premiuns to pay to the subscriber or to the beneficiary a specified sum on certain conditions dependent
up on the life or death of the subscriber or third party insured"6from the above definition one can
conclud that
- life insurance is acontract
-the contract is made between the insurer and the subscriber

- the insurer under takes or commits it self to pay the agreed amount of money to the beneficiary up on
death of the subscriber

1 “Insurance”, online <http.www.the law dictionary.org/insurance> [ last accessed may 25,2019]

2 Commercial code of the empire of Ethiopia, 1960, Negarit Gazeta, Extra ordinary issue, Proc. No 166,19 the year, Art 654(3)

3
“Life Insurance “, online< http.www.the free dictionary.com> [last accessed may 25, 2019]

4
Supra note 2, Art 691

5
Ezra L Desalegn, “some issue relating to life insurance under Ethiopian commercial code”,
Journal of Africa law, vol 52 no 2,2008, pp 190

6
The commercial code of empire of Ethiopia, negarit gazeta,19 the year, proc no.166/1960
1.2 Statement of the problem
recently anumber of Insurance company in our country becomes increase and many peoples are
engaging in Insurance transaction,the Insurance companies protect and give guarantee for individuals
from challenges Many peoples contracting with insurer company to buy life Insurance policy but after a
subscriber died this contraca can be different view from the two laws to whom it should be pay. The
commercial code and the civil code has contradicted idea.The provision of commercial code has
conflicting idea from that of Art 827(1) of the civil code. Under article 827(1) of civil code.

"Art 827.--things making inheritance.--life insurance

As indicated in art 827 of the civil code, wheather life insurance could or could not constitute a
hereditary estate.

(1) monies due in performance of acontract of life insurance to which the deseased has not determined
the beneficiary or the insurance is made to the benefit of the heirs of the deceased with out any other
interdiction.
(2) in other cases, they shall not form part of the inheritance"7

Art 701 of the comercial code provides for the beneficiary of the life insurance as follows
"Art 701.-- Beneficiary of insurance policy
(1) An insurance policy for the event of death may be made to the benefit of specified beneficiries.

(2) the following persons shall be deemed to be specified beneficiaries not with standing that they are
not mentioned by name
(a) the subscriber's spouse, even where the marriage took place after the policy was enterd in to.
(b) the subscribers children, wheather or not born at the time when the policy is entered"

There is no unanimity in decisions of courts of various level regarding the rule under art 701(2) is
concerned. Some courts make this provision applicable to all cases but other courts do not accept this
argument.The Federal supreme court usually reject decisions on such argument , the husband or the
wife, and children who are born when the Insurance was made are considered as specific beneficiary
according to Art 701(2) of commercial code.8 according to the civil code it is only the person who is
indicated as the beneficiary who is going to collect all money the spouse shall be beneficiary only when
the subscriber makes him beneficiary. The contradiction exists between Art 827(1) of civil code and Art
701(2) of commercial code is not such an apparent contradiction rather than the difference in the two
provision critical that end up with difference outcome. what is more difficult is both the civil code and
commercial code were proclaim at the same time, These two contradict rules create a great problem in
their application. The decision of courts varies from one court to another court. The judges get in
dilemma; which one rule apply for the case related with this issue. The different decisions of various
7
The civil code of empire of Ethiopia, negarit gazeta, 19th year, proc no.165/1960., article 827

8
Ali Mohamed, “Law of Succession Distance Program”, Bahirdar, Bahirdar university, pp57
level of courts affect the peoples, who is children, wife or husband, Beneficiary of Insurance and legal
heirs due to the court decide based on the civil code other while on commercial code this create unfair
treatment of law towards peoples, who have similar case but different decisions. This also ultimately
lose the objective of the law create great social crisis.

1.3 Objective of study

1.3.1 General objective

The followings are general objectives:

 To Determine the the legal discrepancy and beneficiary of the life Insurance of the subscriber after he
was died.

1.3.2 Specific objective

✔ To evaluate the consequence of determine the beneficiary of life Insurance
✔ Exploring other legal system experience to this issue
✔ To evaluate the decision of the courts and the effect of the decision.
✔ To put forward the possible recommendation

1.4 Research question

1.4.1 Main question

 Who is the beneficiary of life insurance policy according to commercial and civil code of Ethiopia?

1.4.2 Specific question

 What will be the effect of enforce the rule enshrined under

Art 827 of civil code?
 Are the spouses and childrens of the subscriber are exclude
from the benefit of life insurance policy?
 What would be the effect to enforce the rule enshrined under Article 702 of commercial code?
 How we can interpret the rules effectively?

1.5 Significance of the study

Since the issue of life insurance beneficiary is very critical because of the growth of insurance company
and peoples also contract life insurance. After the death of the subscriber there is a conflict between the
heir and the spouses and childrens to take the money and that govern this issue are each other
contradict such event needs acadamical research to resolve this crucial problem. This research also
important for judges and lawyers to handle such like cases. Finally, and most importantly, the study will
serve to individuals, who is a beneficiary of life insurance policy or legal heirs and for insurance
company.

1.6 Literature review

There exist various books, articles about life insurance and the beneficiary of life Insurance Ali Mohamed
"law of succession distance material " stated that to determine the beneficiary, if life insurance his
opinion have been forward to interprate and enforce the two provisions inway the rules can ensure
both right of heirs and spouse and children's to take the benefit of life insurance in case where the
beneficiary was not specifie.this approach is possible to consider the wife or the husband of the
deceased as one of heir the deceased ,just for the purpose of taking a share from the benefit of life
insurance policy made by the deceased and this protect the exclusion of either the hier or childrens born
after the conclusion of life insurance policy and at the same time make the husband or wife of deceased
on the beneficiary of life insurance policy.9 The article by Yohannes Heroui "the determination of
beneficiary of life insurance policy" stated that: Under Article 701 of commercial code ,the right to
determine the beneficiary of his life insurance policy belongs to the subscriber ,and him alone. He may
designate his beneficiary or beneficiaries by name or by term like "my spouses" ,"my children" ," my
heirs" and others .The term of "specified" beneficiary in Article 701(1) of commercial code was carefully
chosen for the purpose indicating the subscriber may express his choice in above terms If so he chooses.
Sub article (2) doesn’t neither is it intend to, establish a new beneficiary in addition to the subscriber in
his own choice. It doesn't make the spouses and children of the subscriber beneficiary the policy in their
own right and article702 (2) doesn't thus derogate from the principle laid down under sub article (1) and
make the spouse and childrens beneficiary in their own right. It merely drawn by the subscriber
himself.10 In general, above literatures have been discussed about beneficiary of life insurance. However,
they failed to provide in what mechanism in our legal system the spouses assimilate as hier of the
subscriber because in law of succession if Ethiopia husband and wife are not succeed each other and the
second literature absolutely discriminate the spouses of the subscriber to benefit from life insurance
policy.

1.7 Source of data

the research contain both primary and secondary input for conducting the research and both data
gathered from library.
1.7.1 Primary data
The primary data include the FDRE civil and commercial code and proclamation are used.

9
Supra note 7, pp 63

10
Yohhanes Heroui,” the determination of beneficiary of life insurance policy “Ethiopian bar review, vol 1, no 1,2006, pp61
1.7.2 Secondary data

The research data used in the research paper include, Articles, codes, and books.

1.7 Reaserch Methodology

1.7.1 Research Design
This Reaserch will be employed by the qualitative Reaserch approach this is since Reaserch will be
analyzed by statutory provision. Additionally the Reaserch question will not be described in number.
Rather, it wants to show the extent of legal protection for employee and to the heirs , children and
spouses of deceased, so as to not arbitrarily terminate their rights and their employment.
1.7.2 Research method
This study is purely doctrinal, descriptive, analytical and It describes about insurance particularly about
life Insurance the researcher uses legislation I.e. commercial code, civil code of Ethiopia and other
foreign statutes and judgments. It also analysis the existing law about life insurance and federal
supreme court Cassation decisions.

1.8 Organization of the study

The study comprises only one chapters. This chapter is about background and essential structure of the
study including the objective, the main and supplementary questions, significance of the study,
Methodology, literature review and others ,specifies the introductory remark on life insurance and the
beneficiary of life Insurance moreover, the chapter also provide the definition and type of life Insurance.
and also analysis of discrepancy of exiting commercial and civil code and other statutes in governing the
beneficiary of life insurance will be discussed.

1.9 Limitation of the study

During conducting this proposal the researcher faces different problem. As you know the
researcher is student, he hardly influenced by shortage of time, and finance. When we say the
researcher influenced by shortage of time because the researcher have other burdens when
he going in learn activities. For instance : the researcher shall to do the given assignments, to
read about test as well as for exam. Conducting research is time taking activities. In addition the
researchers have not any source of income, except the money given by family for maintenance
specially the cost of handout, coffee or tea and the like. The limitation is not only this but also
there are other limitations which negatively influence our activities during the time conducting
research. As researcher unfamiliar with this course and we did not know deeply about law course it
becomes another challenge.
1.10 Scope of the study
The study focus on life Insurance in general beneficiary of life insurance in particular in line with the
commercial code and civil code of Ethiopia and legislation that govern this issue.
1.11 Time frame
The proposal spent one months in doing this research. Two weeks for data collection, one week for data
analysis, one week for writing research proposal.
 Data collection………………...50%
 Data analysis…………………..25%
 Writing research proposal…….25%

1.12 Bibliography

BOOKS
1.A. Mohamed,” law of succession distance program”, Bahirdar university, Bahi rdar.

2.D. Mellese and K. Solomon,” law of succession teaching material”, justice and legal system research
institute,2009
LAWS
1 The civil code of empire of Ethiopia, negarit gazeta, 19th year, proc no.165/1960.
2 The commercial code of empire of Ethiopia, negarit gazeta,19th year, proc no.166/1960.

JOURNAL

1 E. Desalegn, “some issue relating to life insurance under Ethiopia commercial code,
Journal of Africa law, Vol 52, No2,2008
2 Y. Heroui, “the determination of beneficiary of life insurance policy “, Ethiopian Bar
review, Vol 1, No 1,2006, pp61