Insurable Interest In Life Insurance at Life

Insurable Interest In Life Insurance. In life insurance, insurable interest refers to what level of loss you'd experience should a specific person become incapacitated or die. For life insurance purposes, an insurable interest would be determined by the beneficiary benefiting financially from the insured’s continued existence and would suffer from financial loss or hardship if the insured died.

If no insurable interest exists when a policyowner buys a life insurance policy, the contract may still be enforced. Proving an insurable interest will take place during the application process. Insurable interest is the basis of all insurance policies.

Life Insurance

Or, you are a ceo and your employer might want life insurance coverage on you. It's important because it helps prevent insurance fraud. One of the main reasons that insurance companies use insurable interest in life insurance is to prevent insurance fraud. In life insurance, a person has an insurable interest in another person when the death of that person would cause a financial, emotional or another type of loss.