(a)An insurable interest, with reference to life and disability insurance, is an interest based upon a reasonable expectation of pecuniary advantage through the continued life, health, or bodily safety of another person and consequent loss by reason of that person’s death or disability or a substantial interest engendered by love and affection in the case of individuals closely related by blood or law.
(b)An individual has an unlimited insurable interest in his or her own life, health, and bodily safety and may lawfully take out a policy of insurance on his or her own life, health, or bodily safety and have the policy made payable to whomsoever he or she pleases, regardless of whether the beneficiary designated has an
insurable interest.
(c)Except as provided in Section 10110.4, an employer has an insurable interest, as referred to in subdivision (a), in the life or physical or mental ability of any of its directors, officers, or employees or the directors, officers, or employees of any of its subsidiaries or any other person whose death or physical or mental disability might cause financial loss to the employer; or, pursuant to any contractual arrangement with any shareholder concerning the reacquisition of shares owned by the shareholder at the time of his or her death or disability, on the life or physical or mental ability of that shareholder for the purpose of carrying out the contractual arrangement; or, pursuant to any contract obligating the employer as part of compensation arrangements or pursuant to a contract obligating the employer as guarantor or surety, on the life of the principal obligor. The trustee of an employer or trustee of a pension,
welfare benefit plan, or trust established by an employer providing life, health, disability, retirement, or similar benefits to employees and retired employees of the employer or its affiliates and acting in a fiduciary capacity with respect to those employees, retired employees, or their dependents or beneficiaries has an insurable interest in the lives of employees and retired employees for whom those benefits are to be provided. The employer shall obtain the written consent of the individual being insured.
(d)Trusts and special purpose entities that are used to apply for and initiate the issuance of policies of insurance for investors, where one or more beneficiaries of those trusts or special purpose entities do not have an insurable interest in the life of the insured, violate the insurable interest laws and the prohibition against wagering on life.
(e)Any device, scheme,
or artifice designed to give the appearance of an insurable interest where there is no legitimate insurable interest violates the insurable interest laws.
(f)An insurable interest shall be required to exist at the time the contract of life or disability insurance becomes effective, but need not exist at the time the loss occurs.
(g)Any contract of life or disability insurance procured or caused to be procured upon another individual is void unless the person applying for the insurance has an insurable interest in the individual insured at the time of the application.
(h)Notwithstanding subdivisions (a), (f), and (g), a charitable organization that meets the requirements of Section 214 or 23701d of the Revenue and Taxation Code may effectuate life or disability insurance on an insured who consents to the issuance
of that insurance.
(i)This section shall not be interpreted to define all instances in which an insurable interest exists.
Notes of Decisions
Mahan v. Charles W. Chan Ins. Agency, Inc., 222 Cal. Rptr. 3d 360 (Cal. Ct. App. 5th 2017).
“On rehearing, in response to our request for briefing specifically directed to the insurable interest issue, the Chan Defendants point out that the insurable interest requirement is nothing more than a "prerequisite to taking out a life insurance policy" and serves to outlaw…”
Lincoln Nat'l Life Ins. v. Gordon R.A. Fishman Irrevocable Life Trust, 638 F. Supp. 2d 1170 (C.D. Cal. 2009).
· cites it 2× “” Cal. Ins.Code § 10110.1®. Further, and more importantly for purposes of this case, section 286 of California’s Insurance Code provides that “an interest in the life or health of a person insured must exist when the insurance takes effect, but need not exist thereafter or when…”
Carton v. B & B Equities Grp., LLC, 827 F. Supp. 2d 1235 (D. Nev. 2011).
· cites it 2× “Cal. Ins. Code § 10110.1 (a). It is a violation of California law to create “[a]ny device, scheme, or artifice designed to give the appearance of an insurable interest where there is no legitimate insurable interest.”
Lincoln Nat'l Life Ins. v. Calhoun, 596 F. Supp. 2d 882 (D.N.J. 2009).
“l(b); Cal. Ins. Code § 10110.1 (e). Statutory definitions of “insurable interest” recognize that an individual has an insurable interest in his own life or the life of a close blood relation, and also where there exists “an expectation of pecuniary advantage through the…”
In Re Marriage of Bratton, 28 Cal. App. 4th 791 (Cal. Ct. App. 1994).
“) Insurance Code section 10110.1, subdivision (d) similarly states: “(d) An insurable interest shall be required to exist at the time the contract of life or disability insurance becomes effective, but need not exist at the time the loss occurs.”
Wells Fargo Bank, N.A. v. Am. Nat'l Ins. Co, 493 F. App'x 838 (9th Cir. 2012).
“The pre-2010 version of California Insurance Code section 10110.1 is applicable because the beneficial interest was transferred by Thelma Cabal to Accumulation Trust in January 2008 and the statute does not apply retroactively.”
Paul Revere Life Ins. v. Fima, 105 F.3d 490 (9th Cir. 1997).
· cites it 2× “Revere argues that the district court erred in applying California Insurance Code section 10110.1 to determine whether Fima had an insurable interest in the 1988 policy.”
Liberte Capital Grp. v. Capwill, 854 F. Supp. 2d 478 (N.D. Ohio 2012).
· cites it 4× “” Cal. Ins. Code § 10110.1 (e) (1998) (2009 amendment moved provision to Cal.”
Mahan v. Charles W. Chan Ins. Agency, Inc. (Cal. Ct. App. 2017).
“” (Ins. Code, § 10110.1, subd. (b).) None of the parties brings to our attention any case that sheds light on whether an insurable interest under this statute may be considered “property” for purposes of the Elder Abuse Act.”
Cal. Insurance Code § 10110.1(a): 2 cases
Lincoln Nat'l Life Ins. v. Gordon R.A. Fishman Irrevocable Life Trust, 638 F. Supp. 2d 1170 (C.D. Cal. 2009).
“” Cal. Ins.Code § 10110.1®. Further, and more importantly for purposes of this case, section 286 of California’s Insurance Code provides that “an interest in the life or health of a person insured must exist when the insurance takes effect, but need not exist thereafter or when…”
Cal. Insurance Code § 10110.1(b): 3 cases
Paul Revere Life Ins. v. Fima, 105 F.3d 490 (9th Cir. 1997).
“Revere argues that the district court erred in applying California Insurance Code section 10110.1 to determine whether Fima had an insurable interest in the 1988 policy.”
Cal. Insurance Code § 10110.1(e): 1 case
Cal. Insurance Code § 10110.1(g): 1 case
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