Some types of contracts have to be in a particular form in order to be legal. From a practical standpoint, this aspect of the formation of a contract refers to whether or not the contract has to be in writing or can be oral.

The Statute of Frauds, which was originally enacted in England in the seventeenth century and has become a part of the statutory law of nearly all the states of the United States, requires certain types of contracts to be in writing to be enforceable. The only section of the statute that might be construed to apply to a life insurance contract is that which requires written and signed proof of an agreement that by its terms cannot be performed within one year from its effective date. Since the insurer�s promise may have to be fulfilled within one year or even one day from issuance of the policy, a life insurance contract falls outside the statute. Hence in the absence of specific legislation requiring a life insurance contract to be in writing, such a contract can be oral in form.

Some states specifically require life insurance contracts to be in writing, while others construe statutes prescribing standard provisions in the contract to mean that the contract itself must be in writing. All states have prescribed a set of standard provisions that must be included�in substance�in all contracts of life insurance. This requirement does not necessarily invalidate oral contracts; standard provisions are simply assumed to be a part of the oral agreement.

Statutes invalidating any terms in a policy that appear in a type face smaller than a designated size and statutes requiring a policy to be signed have been interpreted as not requiring a written contract. Charter provisions requiring all contracts to be in writing are usually disregarded by the courts if proof is furnished that an agent of the company led the "insured" to believe that he or she was covered under an oral agreement.

As a practical matter, oral contracts are rare; they usually occur only when an agent oversteps his or her authority and the company is estopped from denying responsibility for the agent�s conduct. Because oral contracts are a potential source of misunderstanding and litigation, they are completely unsuitable for a transaction involving life insurance.