I believe an insurable interest basically means you either rely on someone for financial support or you stand to lose financially if that person were to die.
For example, if you are an adult child and your elderly parent has no money saved and no life insurance, you may end paying to have a funeral and burial for your parent. You, as an adult child, have an insurable interest in your parent.
In addition, a stay-at-home spouse may have an insurable interest in his or her working spouse who provides financial support to pay the family's monthly living expenses.
And, business partners have an insurable interest in each other because if one were to die, the other may have to buyout the partner's share for the deceased partner's family.
Insurable Interest is a somewhat obscure foundation of insurance. IRMI defines it as: "An interest by the insured person in the value of the subject of insurance, including any legal or financial relationship. Insurable Interest usually results from property rights, contract rights, and potential legal liability."
Let me convert this to English. I have an insurable interest in my wife, my children and all of my family members and then I have an insurable interest in any partners I have in business and people I may have loaned money. The concept of insurable interest is intended to keep you from ensuring a neighbor and hoping he dies. An insurance company would not allow you to buy an insurance policy on someone of which you have no personal or business interest and this is probably the best definition I can offer that isn't technical in terms. Hope this helps and good luck
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