Page 14 - Life Assurance
P. 14
This follows because the life insurance is
not a contract of indemnity, while property liability
insurance, with certain exception, is generally so
considered.
Also, the courts view life insurance as an
investment contract. To illustrate, assume that a
wife who owns a life insurance policy on her
husband later obtains a divorce. If she continues to
maintain the insurance by paying the premiums, she
may collect upon the subsequent death of her
former husband, even though she is remarried and
suffers no particular financial loss upon his death. It
is sufficient that she had an insurable interest when
the policy was first issued.
In a similar way, a corporation may retain in full
force a life insurance policy on an employee who is
no longer with the firm.
A creditor may retain the policy on a life of a
debtor who has repaid an obligation. In other
words, in life insurance the general rule is that a
continuing insurable interest is not necessary.
55 Life31/life/life 08
not a contract of indemnity, while property liability
insurance, with certain exception, is generally so
considered.
Also, the courts view life insurance as an
investment contract. To illustrate, assume that a
wife who owns a life insurance policy on her
husband later obtains a divorce. If she continues to
maintain the insurance by paying the premiums, she
may collect upon the subsequent death of her
former husband, even though she is remarried and
suffers no particular financial loss upon his death. It
is sufficient that she had an insurable interest when
the policy was first issued.
In a similar way, a corporation may retain in full
force a life insurance policy on an employee who is
no longer with the firm.
A creditor may retain the policy on a life of a
debtor who has repaid an obligation. In other
words, in life insurance the general rule is that a
continuing insurable interest is not necessary.
55 Life31/life/life 08
