Life Insurance Basics
What is insurable interest in life insurance?
Insurable interest is a requirement for purchasing a life insurance policy. You must have an insurable interest in the life of the person you are insuring — meaning you would suffer a financial loss if that person died. Common insurable interest relationships include: spouses, parents and children, business partners, and employers and key employees.
Key Points
- Insurable interest: you must have a financial interest in the life of the insured
- Common relationships: spouses, parents and children, business partners, employers and key employees
- Insurable interest must exist at the time the policy is issued
- Purpose: prevents life insurance from being used as a wagering contract
- An independent agent can help you understand insurable interest requirements