Page 32 - Life Insurance underwriting Ebook IC 22

iii) Parents-children:

Parents can take insurance for their children when the children are young and
dependent. However, children buying insurance cover (except pension plans) for 1their
parents are not allowed and this is taken as a moral hazard.

iv) Assets:

Individuals have insurable interest in the assets they own because they benefit 1from
their use and are affected adversely when the assets get damaged.

b) Contract

I) Employer-employee

An employer has insurable interest in the life his employee to the extent of the value of
his services. If a lot of employees fall sick at the same time or become casualty in a
catastrophe then this will be detrimental to the organization...

ii) Company-key man

A company has insurable interest in the life of certain "key" people, whose absence can
affect the company adversely. These are key people and the company can take key-
man insurance on the lives of these people. The insurance amount for such policies can
be to the extent of any liability or reduction in profit result in g from the loss of special
skills of the key-person.

Partners Co-partners / Co-director

Partners have insurable interest in the lives of each other. The death of any of the
partner/s can affect the firm adversely. The amount can be in respect of any contractual
liability to purchase the share of the business of a deceased partner or director.

iv) Creditor-debtor

A creditor has insurable interest in the life of the debtor to the extent of the debt.

v) Bank-Borrower

A bank has insurable interest in the property mortgaged, against the loan granted by the
bank to a borrower.

1.5 Lack of insurable interest

Sashi Publications Pvt Ltd Call 8443808873/ 8232083010