INSURABLE INTEREST – To buy an insurance policy on some- one’s life, you must have an insurable interest in that person, which means that you would suffer a financial loss if he or she died. The law assumes you have an insurable interest in your own life and the lives of your spouse and dependents. Others must prove they have an insurable interest if they want to buy a policy on your life. The buyer only needs to prove
an insurable interest at purchase. If circumstances change—such as through divorce or the dissolution of a business partnership—the person named as beneficiary, even if he or she is also the policyholder, can usually still collect a claim at the death of the insured. When you buy life insurance, you must make two important decisions—who will own the policy and who the beneficiary or beneficiaries will be. The customary approach is for
the owner and the insured to be the same person, but it’s not the only alternative. It’s a good idea to check with your tax or legal adviser to see if it makes more financial sense for someone else to be the owner.
You can choose any beneficiary you wish—and if you
own the   Read more…