Page 13 - Life Assurance

ter. In the latter case there would not usually
be a financial loss to the brother upon the death
of his sister, but in the former case the father
would suffer financial loss upon the death of his
child.

A creditor has an insurable interest in the
life of a debtor because the death of the debtor
would subject the creditor to possible loss.

3/3/3 When does the Insurable Interest Must
Exist?

In property and liability insurance it is
possible to affect coverage on property in which
the insured does not have an insurable interest
at the time the policy is written, but in which
such an interest is expected in the future.

In marine insurance a shipper often obtain
coverage on cargo it has not yet purchased in the
anticipation of buying cargo for a return trip. As a
result, the courts generally hold that in property
insurance, insurable interest need exist only at
the time of the loss and not at the inception of
the policy.

On the other hand, in life insurance it is the
general rule that insurable interest must exist at
the inception of the policy, but is not necessary
at the time of the loss.

54 Life31/life/life 08