What is an Insurable Interest as it relates to a Life Insurance Policy?
When you buy a life insurance policy there must be an insurable interest on the person being insured on the life insurance policy. Types of Insurable Interest for a Life Insurance Policy: • Your Own Life – Every person has an unlimited insurable interest in his or her own life. The insured person can choose whoever they want to be the beneficiary (who the proceeds are paid to upon the insureds death) of their life insurance policy. • Parent and Child, Husband and Wife, Brother and Sister – All have insurable interest in each other, because of blood relation or marriage. • Your creditors – All creditors may have an insurable interest in you if you owe them money. The creditor can be the beneficiary of your life insurance policy for the amount of any outstanding loan. • Business relationships – May create an insurable interest. An employer may insure the life of an employee, and an employee may insure the life of an employer. Insurable interest must exist at the time the life insurance p
