What conditions are needed to establish insurable interest?

What is insurable interest and how does it work?

Insurable interest is the expectation of a monetary loss that can be covered by insurance.

In a life insurance policy the person must expect a financial loss as a result of the insured person passing away.

For example, an insurable interest exists between spouses, siblings, parents and their children, and business partners.

An insurable interest must exist at the time the life insurance policy is issued, but is not necessary at the time of loss.

For instance, you could be married to someone and buy a life insurance policy on that person, then get divorced, keep the life insurance, the person you divorced dies, and you would get the proceeds from the life insurance policy, subject to the terms and exclusions in the life insurance contract.

Here's how to learn more about insurable interest.

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