Section 3.41 Insurable Interest

• Library: Insurance Practice 2015

Questions involving insurable interest in personal insurance cases can arise in a number of ways. It is quite clear under Missouri law that an individual may insure his or her own life for the benefit of any other person or entity without regard to whether the person or entity has an insurable interest in the insured’s life. Forester v. Bellville, 513 S.W.2d 726 (Mo. App. E.D. 1974); Mut. Bank & Trust Co. v. Shaffner, 248 S.W.2d 585 (Mo. 1952).

Although the above statement is generally true in the case of legal reserve life insurance companies, it should be pointed out that it is not true in connection with stipulated premium or assessment plan life insurance companies. Section 377.310, RSMo 2000, of the stipulated premium plan law provides that no corporation shall issue a policy when the beneficiary does not have an insurable interest in the insured. The same thing is true in the case of assessment companies. Section 377.080, RSMo 2000. In 1992, both the assessment and stipulated premium plan laws were amended to provide that I.R.C. § 501(c)(3) qualified plans were deemed to have an insurable interest in the life of any insured individual policyholder who has designated such a qualified institution as a beneficiary or has made a gift or an assignment of interest in the life of the individual. Sections 377.080.3, 377.310.3. It is important to know that the rules may be different between the different types of companies, even if there are just a few of these assessment-type companies still in existence in Missouri.

Because the owner of a policy and the person paying the premium may be someone other than the...