20-1104. Insurable interest with respect to
personal insurance; definition
A. Any individual of competent legal capacity may procure or effect an insurance
contract upon his own life or body for the benefit of any person. But no person shall
procure or cause to be procured any insurance contract upon the life or body of another
individual unless the benefits under such contract are payable to the individual insured
or his personal representatives, or to a person having, at the time when the contract was
made, an insurable interest in the individual insured.
B. If the beneficiary, assignee or other payee under any contract made in violation
of this section receives from the insurer any benefits thereunder accruing upon the
death, disablement or injury of the individual insured, the individual insured or his
executor or administrator, as the case may be, may maintain an action to recover such
benefits from the person so receiving them.
C. "Insurable interest" with reference to personal insurance includes only
interests as follows:
1. In the case of individuals related closely by blood or by law, a substantial
interest engendered by love and affection.
2. In the case of other persons, a lawful and substantial economic interest in
having the life, health or bodily safety of the individual insured continue, as
distinguished from an interest which would arise only by, or would be enhanced in value
by, the death, disablement or injury of the individual insured.
3. An individual party to a contract or option for the purchase or sale of an
interest in a business partnership or firm, or of shares of stock of a closed corporation
or of an interest in the shares, has an insurable interest in the life of each individual
party to the contract and for the purposes of the contract only, in addition to any
insurable interest which may otherwise exist as to the life of the individual.
4. A charitable organization as provided in section 43-1201, paragraph 4, which has
a policy ownership interest has an insurable interest in the life of each proposed
insured who joins with the charitable organization in applying for a life insurance
policy naming the charitable organization as owner and irrevocable beneficiary.
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