Insurable Interests?

Life insurance lawyers know that a beneficiary of a life insurance policy must have an “insurable interest” in the life of the insured.

Those who have an insurable interest in the life of another fall into three general classes:

(1)  one so closely related by blood or affinity that he or she wants the other to continue to live, irrespective of monetary considerations;

(2)  a creditor; and

(3)  one having a reasonable expecctation of pecuniary benefit or advantage from the continued life of another.

The three insurable interest set forth above are discussed in various Texas Court cases.  In 1942, the Texas Supreme Court discussed insurable interest in an opinion styled, Drane v. Jefferson Standard Life Insurance Company.  These interests were also discussed in the 2001, United States 5th Circuit opinion styled, DeLeon v. Lloyd’s London Certain Underwriters.

The above third category has been explained this way:

Bluntly expressed, insurable interest under (the third) classification, is determined by monetary considerations, viewed from the standpoint of the beneficiary.  Would he regard himself better off from the standpoint of money, would he enjoy more substantial economic returns should the insured continue to live; or would he have more, in the form of the proceeds of the policy, should she die?

The above is quoted from the above mentioned Drane opinion.  It is also discussed in the 197 Texas Supreme Court opinion styled, Empire Life Insurance Company v. Moody.


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