July 25, 2011
Authored by: Mary Ann Mancini and Caitlin Murphy
Life insurance is an important estate planning tool that many people buy to provide financial support for loved ones and to ensure that their estate will be able to pay estate taxes when they pass away.
The “Insurable Interest Requirement”. In the U.S., a life insurance policy can only be acquired by a person (or entity) who has an “insurable interest” in the life of the insured. This means the person who acquires the policy must have some reason to wish for the insured’s continued life. This requirement for an insurable interest originated in England in the 18th century when Parliament enacted a law requiring an insurable interest to stop the popular practice of wealth investors purchasing life insurance policies on elderly persons and persons accused of capital crimes so they could reap the profits when the person died (by natural or unnatural causes). This law remains in effect in