The Law Pertaining to the Beneficiary
If a policy of life insurance is taken out by one person on the life of
another in whom he has an insurable interest, such policy, as previously
explained, may be regarded by him as his own property, free from any control
whatsoever by the person whose life is insured. But this chapter is concerned
primarily with a policy which the insured has taken out on his own life
for the benefit of someone whom he has named as beneficiary therein. Yery
frequently, the insured sees fit to name gratuitously some beneficiary or
beneficiaries, such as his wife, children or near relatives, and sometimes
without their having knowledge of his act. This common practice of thus
gratuitously designating a beneficiary raises many important legal questions.
Under what conditions does the beneficiary's interest become a vested right
which cannot be impaired by either the insured or his creditors? Under what
conditions may the insured retain sufficient control over his policy to
change the beneficiary at will? To what extent is a beneficiary's interest
in a policy transmissible to his or her representatives ? What is the effect
of a cessation of the beneficiary's insurable interest in the life of the
insured prior to the maturity of the contract? To what extent are the rights
of a beneficiary in a bankrupt's policy subject to the claims of creditors?
These are some of the important questions which, as regards essentials,
it is the purpose of this chapter to answer.
Sections in Chapter 30.