Insurable Interest Flashcards
What is insurable interest?
Insurable interest refers to a person’s interest, financial, or otherwise, in obtaining insurance for a person or property.
A person or an organization having an insurable interest is likely to suffer a loss due to damage or destruction of the insured object or person.
Who is considered to have an insurable interest?
- His spouse, child, or ward
- His employee
- A person on whom he is at the time the insurance is effected
What is the Subject Matter of Insurance?
It can be life, limb, property, or even potential legal liability and may vary with the type of insurance available.
What is the Subject Matter of the Insurance Contract?
It is the financial interest of the insured in the subject matter of insurance.
Example: A loan of RM 30K for a fire policy, the subject matter would be the building which limits the loan at 30K.
What is an Assignment?
The transfer of rights and liabilities from one person to another is known as “an assignment of policy”.
What are an Assignee and Assignor?
An assignee is a person who takes over the assigned rights.
An assignor is a party or entity who transfers the rights of the contracts they hold to another party.
What is the term Novation?
The act of - replacing an obligation to perform with another obligation; or adding an obligation to perform; or replacing a party to an agreement with a new party.
What does Schedule 10 of the Financial Services Act 2013 state?
It deals with the payment of policy monies under life and personal accident policies.
What does PARA 2 of Schedule 10 of the FSA 2013 provide?
A policy owner who has attained the age of sixteen years may nominate a person to receive the policy monies upon his death by notifying the following details:
- Name
- DOB
- ID number
- Address
Such nomination shall be witnessed by a person of sound mind who has attained the age of 18 years and who is not chosen under the policy.
What does PARA 3 of Schedule 8 of the FSA 2013 provide?
A person has an insurable interest in his own life to an unlimited extent. However, any person affecting a life insurance policy on the life of another must have an insurable interest at the time of effecting the policy; otherwise, the policy is void.
