To be able to recover from a life insurance policy a person has to be named as a beneficiary, the majority of the time. However, even if a person is named as a beneficiary they still have to have an insurable interest in the deceased to be able to recover.
As stated in the 1942, Texas Supreme Court opinion, Drane v. Jefferson Standard Life Ins. Co., “A person that has a reasonable expectation of pecuniary benefit or advantage from the insured’s continued life has an insurable interest.”
In the Drane case, although not related by blood or marriage to Harry Ezell, Jr., not indebted to him in any way, his godmother Dorothy Drane named him as beneficiary in two policies. Upon her death, the executor of her estate, her brother, asserted that Ezell had no insurable interest. The facts showed that Miss Drane had bought clothes for the boy for fifteen years, had paid for his medical care, had cared for him while his mother was ill, had taken him on vacations, and sadly was killed in a wreck as she drove to visit him his freshman year in college, “taking him a radio, a cap and an apple pie.” The court concluded that Ezell did have an insurable interest based on a reasonable expectation of pecuniary benefit and advantage from Miss Drane’s continued life. “We think that when Dorothy Drane was killed ‘his temporal affairs, his just hopes and well grounded expectations of support, of patronage, and advantage in life’ were impaired …. It is inconceivable, under the facts of this record, that he would ever have been tempted to destroy her life in order to collect the proceeds of the two policies in suit.”
The Drane case presents a unique set of facts but also points out or illustrates what the Courts look at when seeing whether or not a person has an insurable interest in the life of another.