Insurable Interest

"Insurable Interest" in the context of Life Insurance and Living Benefits is a fundamental legal and financial principle requiring the policyholder to have a legitimate stake in the welfare of the person insured. This stake could be based on familial, emotional, or financial relationships, where the policyholder would suffer a direct loss or hardship if the insured individual were to experience harm, illness, or death.

For Life Insurance, insurable interest must be established at the time the policy is initiated, demonstrating that the policyholder would endure financial or emotional loss without the insured individual. Common examples include policies taken out by an individual on their own life, a spouse, a child, or a business partner, where there is a clear and lawful interest in the continued life of the insured.

In the realm of Health Insurance and Living Benefits, insurable interest is similarly grounded in the relationship between the policyholder and the insured, ensuring that coverage is purchased out of a genuine concern for the insured's health and well-being. This principle supports the ethical foundation of health-related insurance, ensuring that policies are taken out to provide for medical care and support in times of need, rather than for potential financial gain from another's illness or injury.

The concept of insurable interest is integral to the insurance process, as it legitimizes the insurance contract, aligns it with moral and ethical standards, and safeguards against speculative and fraudulent practices. It ensures that Life and Health Insurance policies are used as intended: to offer financial protection and peace of mind in the face of life's uncertainties.