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The insurable interest of family members is assumed to be emotional as well as financial. The law allows insurable interest on the presumption that a personal connection makes the family member more valuable alive than dead. Thus, close relatives are assumed to have an insurable interest in the lives of those relatives, but more distant ...
Insurable interest is no longer strictly an element of life insurance contracts under modern law, for example with viatication agreements and charitable donations. [11] Often there is no requirement today that the beneficiary have a proven insurable interest in the life of the insured when the insured has purchased the insurance. [8]
The concept requires that the insured have a "stake" in the loss or damage to the life or property insured. What that "stake" is will be determined by the kind of insurance involved and the nature of the property ownership or relationship between the persons. The requirement of an insurable interest is what distinguishes insurance from gambling.
An insurable interest is that legal or equitable relationship between the insured and the subject matter of the insurance, separate from the existence of the insurance relationship, by which the insured would be prejudiced by the occurrence of the event insured against, or conversely would take a benefit from its non-occurrence.
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However, note that as long as an insurable interest existed at the time the policy was created, it remains valid even if the interest later ceases. [ 7 ] A person is considered to have an unlimited interest in their own life [ 8 ] or in that of their spouse, a case the law considers broadly equivalent; even if not financially dependent on the ...
The master policy holder of a group life insurance plan in the case of an "Employer Employee Group" is basically the Employer and for other groups would be the entity that has an insurable interest in the lives of its members. A bank it could be said has an insurable interest in the lives of its members who hold a deposit or have taken a loan.
Collateral Protection Insurance, or CPI, insures property held as collateral for loans made by lending institutions. CPI, also known as force-placed insurance and lender placed insurance, [1] may be classified as single-interest insurance if it protects the interest of the lender, a single party, or as dual-interest insurance coverage if it protects the interest of both the lender and the ...