# Life nsurance without permission?

**URL:** <https://boards.straightdope.com/t/life-nsurance-without-permission/268735>\
**Category:** Factual Questions\
**Created:** [October 11, 2004, 11:35pm UTC](https://boards.straightdope.com/t/life-nsurance-without-permission/268735 "2004-10-11T23:35:49Z")\
**Posts on this page:** 1\
**Page:** 2

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**Author:** ![Cunctator](https://avatars.discourse-cdn.com/v4/letter/c/43a26b/32.png) [@Cunctator](https://boards.straightdope.com/u/Cunctator)\
**Post date:** [October 12, 2004, 11:08pm UTC](https://boards.straightdope.com/t/life-nsurance-without-permission/268735/21 "2004-10-12T23:08:51Z")

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> [@HeyHomie](#):
>
> Then what’s to stop Australians from taking out insurance policies on the Town Drunk?
> 
> If Insurable Interest is only required at policy inception (in the US at least), then I think I’m seeing a pretty big loophole in the system here. Try to follow me:
> 
> I approach the neighborhood drunk and offer to buy him a bottle of hooch if he’ll sign on the dotted line. By doing so, he takes out a life insurance policy on himself, naming me as the beneficiary. I give the guy his bottle and never see him again.
> 
> Meanwhile, I pay the premiums on the policy. When the neighborhood drunk dies of exposure later on this winter, I have the county clerk produce a copy of the death certificate. I mail it in to the insurance company and WHAMMO… a hefty check 4-6 weeks later.
> 
> Is what I’m describing legal and/or possible under current insurance codes? If so, I can’t believe no one else has thought of it. (NOTE TO MODERATORS: I do not plan to do this, or teach or encourage anyone else to do this.)

An insurer would certainly require the town drunk to undergo a medical examination before issuing a policy. From my experience in underwriting, no insurer would touch him - or, at the very least, the sum insured that the insurer would be prepared to offer would be \*\*very \*\* low, and hedged with lots of policy exclusions.

The decision in Australia to remove the requirement for insurable interest was based on consideration of the following issues:

- it was no longer seen as an effective protection against the risk of moral hazard. Analysis of murders in Australia showed that, in most cases, the murderer has, or did have, an insurable interest in his victim. It was felt also that the criminal law provided sufficient protection against the possibility of the murder of a life insured by a policyholder.

- the requirement for insurable interest could be circumvented easily anyway via the assignment of a policy, immediately after inception, to a third party.

- enforcement of the insurable interest requirement is reliant on the willingness of insurers to deny claims under policies taken out by people who lacked interest. The experience of Australian insurers suggested that they generally did not deny claims on these grounds.

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