Insurable Interest (Life)

why do businesses have life insurance?

to make up for the financial losses that might occur should an insured key employee or owner die prematurely

selling a policy

life insurance policy owners are free to assign or sell their policy to anyone or anything, regardless of the relationship between the new owner and the insured

relationships that are automatically deemed to represent an insurable interest

1. individuals in themselves 2. spouses in each other 3. parents in their children 4. children in their parents or grandparents

business owners as beneficiaries

business owners and partners insure each other's lives (naming themselves as beneficiaries) to provide the funds needed to buy out the business interest of the one who dies first

insurable interest in business relationships

it exists in a variety of business relationships, between the business owner's and between the business and its employees

insurable interest

represents the financial impact that would be incurred by the loss of the insured person or property insurable interest ends after the policy has been issued