- 3,863
Because carrier training is horrible and non existent.
Standards adapted by state commissioners, why 2 is anyones guess probably some legal reason where you couldn't get away with it after 10 years or 20 years.
Because carrier training is horrible and non existent.
- 1,641
In some states you can kill yourself after one year and have the carrier pay.... too bad you can't leave it for yourself and do that whole reincarnation thing. Just saying....
- 2,908
You guys are getting things convoluted here methinks, although I will adjust my thinking as needed based on any comments.
Insurable interest refers to the relationship between the policy owner and the insured. Not between the insured/owner and the beneficiary.
The law does not want you to buy a policy to insure someone you dont even know or have an insurable interest in just as an investment or as prelude to killing them. It is true that after the policy is issued it may be transferred though.
There is no problem in naming about anyone or anything as beneficiary as long as it is a legit person or organization. If I want to get a life insurance policy on myself and name a church I heard about on the radio, or the world wildlife fund, or somechick that I had a crush on in high school it is no one's business and completely legal. The operative words are "policy on myself." If try to become the owner of a policy on someone I dont know or the like then that is another matter.
Beneficiary has nothing to do with insurable interest.
Where am I going wrong here?
Insurable interest refers to the relationship between the policy owner and the insured. Not between the insured/owner and the beneficiary.
The law does not want you to buy a policy to insure someone you dont even know or have an insurable interest in just as an investment or as prelude to killing them. It is true that after the policy is issued it may be transferred though.
There is no problem in naming about anyone or anything as beneficiary as long as it is a legit person or organization. If I want to get a life insurance policy on myself and name a church I heard about on the radio, or the world wildlife fund, or somechick that I had a crush on in high school it is no one's business and completely legal. The operative words are "policy on myself." If try to become the owner of a policy on someone I dont know or the like then that is another matter.
Beneficiary has nothing to do with insurable interest.
Where am I going wrong here?
- 3,384
I have had several insurers including NML request information concerning the relationship between the insured and beneficiary when it is not a clear issue (spouse, family member, etc.) You cannot just name anyone as the initial beneficiary, they will ask about it if it is not clearly a "normal" beneficiary.
With Charities, they usually want to see a track record of giving to that specific charity.
After the policy is issued, then the owner can change it to whomever he/she wants.
With Charities, they usually want to see a track record of giving to that specific charity.
After the policy is issued, then the owner can change it to whomever he/she wants.
- 2,908
That point being noted, nevertheless that does not mean that it is governed by the principle of "insurable interest." It arises from carrier business practices and rules.
Insurable interest means that you cannot insure some thing or someone where you would experience no loss if the person or property were lost. The beneficiary is not the insured. Again, I am not saying that there are not other rules or principles that they rely upon in regard to the naming of beneficiaries.
- 14,808
This issue seems to be up to the policy owner. Let's say I take out a 2M policy and name my wife as the beneficiary - we have no kids, I don't work and she makes all the money.
If I die she suffers no financial loss - just an emotional loss.
If I die she suffers no financial loss - just an emotional loss.
- 2,908
Ahhh, that gets into another issue, although related. A person always has an insurable interest in themselves and although a carrier can agree (and legally must) with that principle they can set limits on what that level of interest is based on facts. Same thing with disability, for example. A carrier can agree that you have an insurable interest in your ability/inability to work but can set limits on what that interest is based on certain facts, rules, and limits set by state law. If you want to make more by being disabled than by working the carrier can legitimatly clip your wings while agreeing that you have an insurable interest at a more reasonable level.
Not necessarily so... on the financial loss...
You see, you are such a lovable little fuzzball that the loss of you so severely impacts your wife that she is no longer able to force herself to make a living. Well, it could happen... I saw it on TV once...
The reality is there isn't a company out there that is going to issue 2 mil on someone that doesn't represent a significant loss.... like 15-20 times earnings for a start... so 2 mil will require somewhere in the ballpark of 100K+ annual income, produced by the insured. So 2 mil isn't happening in the example that you gave...
- 3,384
Agreed. The person insuring the life another person MUST have an insurable interest in that person. Beneficiary does not although insurance carrier practices indicate that they want to see some interest on the part of the initial beneficiary.
If insurable interest were not required, I would insure the heck out of derelicts living in the park across the street and make mad payday LOL
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