Insurable interest

Another legal element of a valid insurance contract is insurable interest. This means that the person acquiring the contract, the applicant, must be subject to loss upon the death, illness or disability of the person being insured. A policy obtained by a person not having an insurable interest in the insured is not valid and cannot be enforced.

This insurable interest must exist between the applicant and the individual being insured. When the applicant is the same as the person to be insured, there is no question that insurable interest exists — individuals are presumed to have insurable interest in themselves. Questions tend to arise when the applicant is not the person to be insured. As a general rule, the consent of the person to be insured is required before a policy is issued, even if the applicant has an insurable interest. Insurers have a legal responsibility to verify insurable interest and obtain the insured’s consent.

In the covenant of redemption, the applicant and policyowner, Christ, has an insurable interest that is intrinsic. Christ purchased salvation for and qualified his people at great personal cost: his life (John 10:17-18, I Corinthians 6:20, II Corinthians 8:9). His insurable interest is valid because he loves us (Ephesians 5:2, I John 3:16, 4:9-10). His resurrection insures the eternal preservation and protection of his people (Acts 5:30-32, Romans 4:25, I Peter 1:3-5). He continues to legally intercede before the Judge on behalf of his people, a kind of “cosmic counsel” in God’s high court, to maintain the just legal status of his covenant people (Job 16:19, Isaiah 53:12, John 17:9, Romans 8:33-39, I John 2:1). This insurable interest by Christ corresponds with the will of the Father (Isaiah 54:10, John 3:16, 6:37-40, Acts 2:23).

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Covenant theology