Insurable Interest Arising Out of Ties of Affection, Blood or Marriage
The courts have generally held that certain ties of near relationship create
an insurable interest, even though the element of dependence is not present.
Thus, according to the weight of authority, a parent has an insurable interest
in the life of a child even though the same be permanently disabled. The
relationship of husband and wife is also conclusively presumed in nearly
all cases to establish an insurable interest on behalf of either party in
the other's life.
As regards other relationships, however, the courts have generally taken
the position that the interest must be based upon a reasonable expectation
of deriving pecuniary benefit from the continuance of the insured's life.
On this theory American courts have repeatedly held, for example, that a
woman has an insurable interest in the life of her fiance, since that relationship
gives to her a reasonable right to expect pecuniary benefit. An excellent
review of the numerous decisions referring to insurable interest arising
out of ties of blood or affection is furnished by the Circuit Court of Appeals.
Following a review of the decisions bearing' on the subject the court held:
The sum of the decisions and of text-book discussions upon the
subject of insurable interest may, we think, be fairly stated thus: No person
has an insurable interest in the life of another unless he would in reasonable
probability suffer a pecuniary loss, or fail to make a pecuniary gain, by
the other's death; or (in some jurisdictions) unless, in the discharge of
.some undertaking, he has spent money, or is about to spend money, for the
other's support or advantage. The extent of the insurable interest the amount
for which a policy may be taken out, or for which recovery may be had is
not now under consideration. What is often called "relationship insurance"
must be governed by this rule. It must rest upon the foundation of a pecuniary
interest, although the interest may be contingent, and need not be capable
of exact estimation in dollars and cents. Sentiment or affection is not
sufficient of itself, although it may often be influential in persuading
a court or jury to reach the conclusion that a beneficiary had a reasonable
expectation of pecuniary advantage from the continued life of the insured.
In one relation only the relation of husband and wife is the actual existence
of such a pecuniary interest unimportant; the reason being that a real pecuniary
interest is found in so great a majority of cases that the courts conclusively
presume it to exist in every case, whatever the fact may be, and therefore
will not inquire into the true state of a few exceptional instances. This,
we think, is essentially what is meant by the declaration of courts and
textbook writers that the mere relationship of husband and wife is sufficient
to give an insurable interest. . . .
In all other relationships there is no presumption of interest, and no
insurable interest exists unless the reasonable likelihood of pecuniary
loss or gain is present in actual fact. No doubt, judicial language is to
be found supporting the view that the mere relationship of parent and child
is sufficient to give an insurable interest.