When must Insurable Interest exist in a Life Insurance Policy?


For Casualty & Property Insurance, the Insurable Interest must exist in a Life Insurance Policy. Insurable interest has an important role in life insurance and wills.

When an individual prepares a will after his or her death, it’s important to develop a strategy for how to divide property or assets between family members when some of them are not considered eligible for an inheritance by their parents or spouses.

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What is Insurable Interest in Life Insurance?

when must insurable interest exist in a life insurance policy
Insurable Interest exists in a Life Insurance Policy

One of the most important insurance policies for older adults is life insurance. It’s useful to understand what this type of policy insures so that you can manage your finances with good security when you’re old and retired.

Most life insurance policies cover three basic types of death: accidental, homicide, and suicide. This is called a total or aggregate benefit. A number of policies cover just one type of death, such as accidental death, while others cover several types. The most common policy is what is called a “whole life” plan. It covers the three types of death and builds up cash over time that can be used to pay for funeral expenses. If you’re considering this type of plan, it’s important to understand a term called insurable interest.

Insurable interest is a legal term that refers to an individual’s financial interest in another person’s life. It’s a concept that has been around a long time, but it’s only relatively recently that it has become a legal issue that needs addressing.

Before the 19th century, life insurance policies simply didn’t cover death, and the notion of insurable interest was frowned upon in most states. It wasn’t until rulings in state courts beginning in 1845 that insurable interest became necessary. Insurable interest went by various complicated names such as “family right,” “personal right,” or “right of survivorship.

Life Insurance Without an Insurable Interest

Life insurance policies were designed to protect those who depend on the deceased — but what if you don’t have someone like that? It’s not uncommon for a person living alone and without dependents to desire life insurance, but it’s hard to find an insurer willing to provide coverage.

This post is all about how life insurance can be arranged without an insurable interest, as well as what those who live solo need to know before they start shopping for this type of coverage.

The question of whether you can get life insurance coverage without an insurable interest was raised recently in a discussion about my blog. A reader asked what other options were available for people who don’t have family-sponsored insurance coverage and wondered if anyone had seen any recent court decisions raising questions like this.

How Do You Prove Insurable Interest?

The typical insurance policy is written on an “occurrence basis,” meaning that it only covers the risks for which the insured has made a payment.

Insurance premiums are calculated based on your risk of financial loss, so if you’re not prepared to suffer any such losses, you may be required to purchase additional coverage before being allowed to enter into an insurance policy. If you’re experiencing difficulty in establishing insurable interest, it’s worth exploring whether or not you have made payments prior to applying for your plan that might count as “insurance.


This is a great place to start if you are interested in the insurance world. There are different types of insurable interests and they can have an important role in your life or estate plan. If you are unsure of which one you need, it’s okay to start with this article as a place to start.

We hope that it was helpful! If you have any questions or concerns, you can contact us at answermeall.com@gmail.com. Thank you for reading, we would love to hear from you!


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