"So, what exactly is it?"
An individual has insurable interest in something or someone when loss or damage would cause that individual to suffer a financial loss. Let's have a look at the example below.
You are retired and on a fixed income, however, your child is paying your rent. If anything were to happen to your child, i.e. loss, then you would not be able to afford your rent, i.e. financial loss. (Let say you are the individual in this example. Therefore that would mean, you have insurable interest in your child)
Why You Need to Know this?
Typically, the insurer will ask you questions regarding this topic when you are taking out Life Cover on another individual, e.g. your spouse, grandparent etc. Have a look at the section below. These are some of the questions you will be asked when filling out a questionnaire regarding this particular topic.
Click the example form to zoom in and have a closer look. This questionnaire is an example and may differ from Insurer to Insurer. However the basis for these questions are all the same. The Proposer will be able to prove with clear reason as to why the Insured needs this Life Cover in place.
Elle's Quick Tip
If for any reason your Life Cover has been declined because of insufficient evidence of insurable interest, don’t be despondent. Speak to your Online Broker, they will be able to assist you through the process. Remember, it does not matter how many questions you have. We will get through them all. We are here to help after all.