If you are planning on buying a 1Lifedirect life insurance policy for yourself or for anybody else you are going to need to understand the concept of insurable interest.
Insurable interest stipulates that you cannot buy a life insurance policy in somebody’s name unless you can prove that that person’s death, disability or illness would cause you financial or emotional distress.
Without requirements like insurable interest it would be a lot easier for unscrupulous individuals to take out a life insurance policy in somebody’s name to receive the life insurance payout on their death. Or, even worse, to cause that person’s death to receive the payout.
Consider one of the better known cases of a murder committed for insurance. In 1830 Thomas Griffiths Wainewright insured the life of his sister-in-law for the sum of £18,000. He then poisoned her, with strychnine, and tried to claim her life cover. His claims were refused and he was eventually imprisoned. I cannot resist including one final word from Mr Griffiths: When asked why he killed his sister-in-law he replied "Yes; it was a dreadful thing to do, but she had very thick ankles.”
So how does insurable interest apply to you? If you are taking out life insurance in your own name you are considered to have an insurable interest in your own life. Insurable interest can also be established for relationships based on blood or marriage, for example:
- A husband and wife
- Parents and children
- Grandparent/grandchild relationships
- Sibling relationships
Note that it is possible to insure the life of another person where relationships of blood or marriage do not exist. Please discuss your options with your 1Lifedirect agent.
Remember that if you take out a life insurance policy in somebody else’s name you are required to inform them of the fact. It is also important to note that while insurable interest has to be established when the policy is taken out it does not have to exist when a claim is made. So, for example, if you take out a life insurance policy in your wife’s name and then divorce her, you will still receive the life insurance payout should she pass away.
Contact 1Lifedirect now if you are interested in buying life insurance and want to learn more about the requirements of insurable interest.