When must insurable interest exist for a life insurance contract to be valid Quizlet

- limited financial loss insurable interest
- A clerk insured his employer's life with two insurance companies for £5,000 and £2,500 respectively.
- On the employer's death the first insurer paid out £5,000
- the second refused the claim for £2,500, for lack of insurable interest.
- The clerk had a 7 year fixed term contract of employment at an annual salary of £600. His employer had also lent him £4,700, promising him that he need not repay it while his employer was alive.
- The court, however, found that only the
employment was an interest recognised at law.
- The promise not to demand the loan was a mere forbearance and not a legally binding promise.
-As the employee had already recovered to the full extent of his interest in the employment under the first policy (valued at £600 x 7 years), the second policy was void for lack of insurable interest.

Inhaltsverzeichnis Show

When must insurable interest exist for a life insurance to be valid?
At what time the interest must be present in case of life insurance contract?
Why is an insurable interest required in every insurance contract?

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When must insurable interest exist for a life insurance to be valid?

When buying life insurance, insurable interest must exist at the time the life insurance policy is purchased. If the policyholder and insured person are different, both the policyholder and named beneficiary must have an insurable interest and prove financial loss and hardship if the insured were to pass away.

At what time the interest must be present in case of life insurance contract?

For life insurance, the insurable interest must exist at the time of purchasing life insurance. An individual is said to have an insurable interest in his own life and that of his spouse.

Why is an insurable interest required in every insurance contract?

Key Takeaways. Insurable interest is the basis of all insurance policies linking the insured and owner of the policy. Insurable interest can be an object which, if damaged or destroyed, would result in financial hardship for the policyholder.