Life Assurance

Life of Another

In most cases the applicant for the policy is also the life insured. However, a person with an insurable interest can apply for a life insurance policy on the life of another. The applicant in this case becomes the legal owner of the policy and not the life insured.
The applicant must be able to prove that they have an insurable interest in the life being insured by the insurance company. For example, a wife has an insurable interest in the life of her husband. Partners in business together have an insurable interest in each others lives for the purpose of the business.

If there is a claim, the applicant is entitled to the proceeds of the policy.

A common example of this would be a wife making an application to insure her husband. There is an insurable interest and in the event of a claim the proceeds are paid outside the deceased's estate directly to the policyholder. In this case the deceased's wife. The wife is the policyholder and owns the policy.

See also Trusts.



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