ABSTRACT
In order to appreciate the comparative merits of different methods of Life Insurance, and the value of the facts established by our vital statistics, it is important to have a distinct idea of what it is that is insured. In other words, the thing to be settled is, the nature of the insurable interest in a life policy. The insurable interest is the money value of a life to a third party, and it can be nothing else. The policy may be for less, but not for more. Says Judge Phillips: 1 “An exceedingly indulgent construction in favor of the sufficiency of an insurable interest in a life, and in favor of the assignableness of life / policies not based upon a substantial, distinct, valuable, appreciable, insurable interest, tends to convert such contracts into gaming policies. Such a use of these insurances is subject to as great, at least, if not greater, objections, than other species of gambling. For this reason, and for others relative to the influence on morals and a temptation to crimes, life-policies ought to contain provisions requiring notice of assignments to be given to the insurers, and allowing to them the election either to assent to the assignment, or to redeem the policy on reasonable terms.” (Phillips on Ins., vol 1., page 60.) Nothing can be more just than the doctrine here laid down. A creditor can justifiably insure the life of his debtor only for the purpose of securing his debt, and to the amount necessary for that purpose. But a bad debt can not be turned into a good one in this way. If there is no probability that the debtor will pay in case he should live long enough, then there is to the creditor no insurable interest in the life, and the policy would be only a temptation to the crime of destroying it. Insuring an unproductive life is like insuring unsalable goods against fire. In either case the Company, in effect, offers a reward for the event insured against, only stipulating that the agency producing it shall be so strictly concealed as to be incapable of legal proof. On the principle that any creditor may insure the life of any debtor, without regard to the value of the life as a means of discharging the debt, the keeper of a grog-shop, in despair of getting pay for the liquor which 324had already destroyed the productive power of his customer, might get his customer’s life insured for a sufficient sum, and hasten to establish a claim against the Company by continuing to furnish liquor. We have read of a case resembling this in Denmark, and something, too, much like it, has occurred nearer home. To make an insurable interest, the life of the insured must have a money value to the party in whose favor the policy is made. If a debt is already worthless, the life of a debtor is of no value to the creditor, and there is no interest in it to be insured, any more than if the debt did not exist. So if the life of a husband or father contributes nothing, in a pecuniary way, to the maintenance of the wife or the children, it is not justly insurable for their benefit, no matter how great the loss of his life might be to them in point of love. There is no money value for the affections. (See Dickens, in the case of John Edward Nandy and Plornish, 2 and other novel authorities, passim.) A policy of Insurance on the life of a beloved relative, when there is really no insurable interest, that is, where the life is a pecuniary burden rather than otherwise, if not felt to be so, is a very awkward and uncomely piece of gambling. Probably very / few policies are taken which have this character at first. But the subject of a policy may lose the insurable interest which it had at first. If the premium for the entire life was paid at first, the case presents no difficulty. The loss has already occurred, and the indemnity, already paid for, awaits the stipulated condition of its becoming due. But if the premium is paid annually, we may ask, in the light of the passage above quoted from Judge Phillips, why, after the insurable interest has ceased beyond any chance of recovery, the insured or anybody else should be required or even permitted to pay further premiums ? At any rate, if the Company, in the case of the assignment of a policy where the insurable interest may have ceased, should have the opportunity to redeem at a reasonable rate, should not the insured also have the liberty to stop paying for further insurance on a life which, though likely to last long enough, has ceased to have any money value or insurable interest? Nine-tenths of the life policies are made by their terms to cover a period of life which, if reached, is in all but exceedingly rare cases, wholly destitute of the insurable element. You might almost as rationally insure for a given sum a wooden house for one hundred years, knowing that after three-quarters of that time it would be entirely uninhabitable. We are not objecting to the right of the party, having taken a policy covering the whole life, and paid a higher premium on that account during all the really insurable years, to carry the contract through, but only to the reasonableness of making such a contract at first.
