Insurable interest and Proposer

By | May 29, 2013
A proposer of a Life Insurance policy is the person who pays for the policy but life assured is a different person. For example, a father can propose a policy for his minor son. Here proposer is father and life assured person is son.

While applying for policy if the proposer does not have INSURABLE INTEREST on life to be assured person, policy will not be issued. This rule’s existence is to safeguard the life of Life assured person.

Some examples where insurable interest does not exist are

A person cannot take insurance on his friend.
A person cannot take insurance on his brother or sister.
A person cannot take insurance on his major earning son and parent.

Some examples where insurable interest does exist are

Father to son
Husband to wife with some conditions
Employer to employee
Banks to loan customers.

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