Insurable Interest
A financial or emotional relationship between the applicant and the insured that would result in a financial loss to the applicant if the insured were to die. This is a requirement for purchasing life insurance on someone else.
Detailed Explanation
You generally have an insurable interest in your spouse, children, and sometimes business partners or key employees.
Practical Example
Mark purchased a life insurance policy on his wife because he has an insurable interest in her life – her passing would cause him financial and emotional hardship.
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