Letter: Insurance Laws Need To Be Changed

Friends and neighbors, I want to share my personal experience to hopefully prevent this from happening to you. My mother won’t break the insurance policy she holds on me, but I hope to shed some light on this issue and possibly affect some change.

There is an extremely troubling issue that exists in the world of insurance as it relates to close family members. That issue is obtaining life insurance on a child, without the insured person’s permission.

Normally, in order to obtain an insurance policy on the life of another, one would need to have an “insurable interest” in the life of that other person. The insurable interest that a family member has in the life of another is based upon the assumption that these relationships have a foundation based upon love and affection, particularly that of a parent insuring the life of a child.

Under current insurance standards, and the law, a parent may obtain an insurance policy on the life of a child even without that child’s knowledge or consent. What happens if that child (the insured) and the parent who has purchased the insurance policy (and is also the beneficiary of that same insurance policy) become estranged?

What would happen if this parent and child not only became estranged, but develop a tremendous animosity toward one another?

Is there anything that the child (the insured) can do to terminate or cancel such an insurance policy? The answer to that question, unfortunately, is that there is nothing that can be done to terminate or cancel such an insurance policy.

This practice is allowed because there is an assumption that the love and affection between family members ought to preclude the purchaser of such a policy from having the motivation to murder the insured simply to reap a financial benefit.

But if no such love and affection exists, why should it be permissible, according to current standards and the law, for a parent to have such a financial interest in the death of the insured? Why doesn’t the insured simply have some kind of right to choose who can hold and own an insurance policy insuring his or her own life?

Some states require the consent and knowledge of the insured to any life insurance policy procured by either a parent or a child. However, with very young children, there is no such requirement for knowledge and consent. What ought to happen if the nature of the relationship between a parent and a child were to change such that a strong argument could be made that no insurable interest would exist any longer? Why should a parent continue to have a financial interest in the death of a child if there is no more love and affection between the two? How do the insurance standards and the law treat that specific situation?

The unfortunate reality is that the insurable interest analysis need only take place at the time of the inception of the insurance policy, not at the time of the insured’s death.

So, in the instance of an insurance policy purchased on the life of a child of tender years, such that knowledge and consent would not be required from the child in any state, and the subsequent deterioration of the relationship between the parent and the insured child, there is absolutely nothing the insured child can do to terminate or cancel the insurance policy previously obtained that now provides a significant incentive for the parent to have in the premature death of the child!

Furthermore, in such a situation, the parent may have absolutely no financial interest in the ongoing life of the child and yet, unfortunately, there is no corresponding policy governing the end of a loving and affectionate relationship between a parent and a child.

If you find this practice appalling, please go online and sign my petition. Hopefully, we can get the insurance companies to take note of this unjust practice and create a way to break insurable interests with special circumstances: www.change.org/p/help-protect-individuals-from-having-unwanted-life-insurance-policies-placed-on-them.

Special thanks to attorney Dave Roy of Dave Roy & Associates P.A. for his research assistance.

Bedonna Flesher, Wellington