Insurable Interest in Life Insurance is necessary. If there is no financial exposure from the policy insured to the policy beneficiaries, the life insurance company will decline the applications. Family members, charities, business partners or key business employees can be legitimate beneficiaries of a life insurance policy.
Branch Owner, TWFG Insurance Services, Fremont California and the Greater Bay Area Representing Dozens of Insurance Carriers
Insurable interest is necessary in order to obtain a life insurance policy. The dependent must show they would suffer financial loss due to the death of the insured person. This may be a spouse or business partner for example. A person just can not take a policy out on any person just because the want to if they can not show any insurable interest or financial loss due to the passing of the individual.
Insurable interest is what ensures that someone cannot take a life insurance policy on you with the purpose of making money on your death. It is insurance fraud to take out a policy on an older or terminally ill person just to collect money on their death; or even worse, to kill someone for the purpose of collecting their life insurance. In order to prevent fraud and to protect their policyholders, all life insurance policies use some measure of insurable interest.
There is not a time when an insurable interest is not necessary. The insurable interest is the reason that a life insurance contract is written. Without insurable interest all other underwriting factors are irrelevant. The sole purpose of life insurance is to protect another person or entity from a financial loss at a person's death.
Whether it is a loved one who would suffer financially due to loss of income or debt. A loan institution that would suffer loss of a debt repayment at a person's death. A business owner with the death of a partner, buy sell life insurance, or a death of a key employee, key man life insurance. There always has to be an insurable interest to purchase life insurance.
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Whether it is a loved one who would suffer financially due to loss of income or debt. A loan institution that would suffer loss of a debt repayment at a person's death. A business owner with the death of a partner, buy sell life insurance, or a death of a key employee, key man life insurance. There always has to be an insurable interest to purchase life insurance.