The Life Insurance Act, 1774 was also known as the Gambling Act, 1774. It received the Royal assent on 20th April 1774. Before the introduction of this Act, any person could legally take out Life Insurance on any other person without taking into consideration whether the beneficiary of the policy had any legitimate interest in the person whose life was insured. However the present Life Insurance System provided a legal ambiguity for a form of gambling an insurance policy could be made in the name of a third party, giving the insurer a chance of earning a profit in case the insured person expired. The four sections of the Act states as follows:
According to Section 1 of the Act, no pledge can be made on the life of any person or persons, where the person for whom the policy is made has no interest in the matter
According to section 2 of the Act, each policy should contain the names of the persons who will be benefited from the policy
According to Section 3, all cases, where the insured party had a legal interest is the life or event, they could only get the value of the interest from the policy.
According to Section 4 of the Act, legitimate insurance of ships, goods or merchandise do not get legitimate insurances.
