this uh session we are going to cover the topic of insurable Interest the concept of insurable interest uh this is in chapter 9.22 two as you can see from our uh heading here and so let's uh talk about the concept of insurable interest uh you know basically uh what this is addressing is the issue can you ensure anyone that you want to and so um basically uh can I ensure my neighbor if I feel like it and so the answer really is dependent on the concept of insurable Interest so you must have an insurable interest in the life of uh the person that you are attempting to ensure and so how do we determine uh whether you have that insurable interest well the underwriters at the life insurance company you have to convince them that uh if that individual uh dies you in fact may suffer a financial loss so there is that requirement that you need to demonstrate that if that person you're trying to ensure dies you could potentially have a financial loss and so this is all uh put in place to make sure that uh we really don't uh speculate on people's lives we don't see someone and say aha uh there's someone that doesn't look uh really healthy or here's someone that maybe if they die I will benefit from the death benefit if I owned an insurance policy on their life so uh it's primarily designed as I said to to prevent speculating uh on a person's life now we automatically have an insurable interest in our own life uh we have an insurable interest in the lives of our children or grandchildren our spouse uh or anyone really who is dependent on us for support and education so for example let's say I am paying for the education of my niece uh her parents live in another country but she is now here in Canada uh and I have decided to assist them and I'm going to be paying for her education her post-secondary education as an example now she my niece would actually have an insurable interest on my life because if something happened to me if I were to die uh she may not she may suffer some Financial uh loss because uh I will no longer be there to cover her uh educational costs so she could have an insurable interest in my life however I really wouldn't have an insurable interest on her life because if something happens to her that doesn't change my financial situation sure I will be sad and have emotional uh issues as a result of that but from a financial perspective if she dies um I am not going to suffer a financial loss so she would have an insurable interest in my life but I would not have one an insurable interest on hers now I can also have an insurable interest on my one of my employees if I'm uh you know if I have a small company and that company hires a bunch of individuals as employees uh I could have an insurable interest or the company would have an insurable interest on that employees life because if something happened to the employee if it may be a key employee then uh the company may suffer financially and so basically uh this whole concept of insurable Interest says that know you must be able to demonstrate that you have uh you'll see this term pecuniary uh you know you can substitute the word monetary there so if you have a situation where if that person dies you could suffer uh a financial loss then potentially you would have an insurable interest in that individual's life now this insurable Interest really only needs to exist at the time a policy is issued so at the time you apply for the policy you can demonstrate you have an insurable interest in that individual's life and you know then you're eligible to to the company will likely issue that policy now later on let's say for example uh I have a partner a business partner and we have a buy sell arrangement in other words we have a partnership agreement whereby if one of the partners dies the other one is going to buy out the shares of the deceased partner and to support the you know provide the funds for that buyout I will own an insurance policy on my partner's life and my partner will own one on my life and so everything is fine we've got that in place however sometime down the road we decide oh we're no longer want to be partners we're going to separate we're going to go our own ways uh and so uh we no longer have that buyout arrangement in place because we're no longer business partners now I own a policy on my ex partner's life and he or she does the same on my life life so at that point in time um if we're no longer business partners there really is no longer an insurable interest however that doesn't mean the policies now have to be cancelled for example I would then say to my ex partner I have this insurance policy in your life do you want to uh keep it if you want to keep it I will transfer the ownership over to you and so you know that's something I could do but the fact that I still want a policy and we're no longer uh business partners does not impact the fact that I uh no longer have an insurable interest I can keep that policy if I want to or I can transfer to that individual and they can continue with that policy so that whole insurable interest uh concept uh really must only exist at the time the policy is issued now there are certain situations where uh some companies if you uh if you get the life insur the person whose life the insurance is going to be placed to agree to that uh insurance so the person is not related to you or is not in one of these categories I've identified up here uh if that person says yes it's okay for uh the policy owner to own an insurance policy in my life in other words they give written consent that it's okay now some insurance companies will accept that and say okay if they agree to it we'll assume that there is insurable interest but then other companies may still decide uh no we don't think there's insurable interest there so it's a you know this point here is that it's really company dependent some will if uh the life insured agrees to it others will still say no we're not we don't think there's an insurable interest there so uh that's our description of insurable interest um and uh you know as I say you have to make sure that you must demonstrate you can suffer a financial loss if that life insured dies