Know About Insurable Interest

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Nobody in the world is getting any younger, and one can say that the world is getting more dangerous as the days go by. Some people might be superstitious and not want to invite trouble by getting insured, but there’s no doubt that life insurance is beneficial for those who’ll be left behind. Getting life insurance is an excellent way to protect one’s loved ones from any financial difficulties they might face in the event of the insured’s death.

Properties can also be insured, and there’s a chance that its loss can be financially damaging for the owner, the lender, and those who leased the property in question when they’re lost. Investing in non-life insurance to cover a property protects the affected individuals from any difficulties that the beneficiaries will experience.

Before getting insured, the beneficiary must have an insurable interest in either the person or the property.

What Is Insurable Interest?

Insurable interest is the reasonable concern the beneficiary has for the insured in case death or losses occur unexpectedly. The reasonable concern is typically the fact that the recipient will suffer financially or others if the insured entity will either die or be lost.

Insurable interest is a requirement for an insurance policy on an entity to be considered legal and to protect against any intentional acts of harm on the subject. Entities that will not be directly affected by the subject’s loss will not have any interest in the insured and will not be allowed to purchase an insurance plan to cover the subject and benefit from it.

Understanding Insurable Interest

Under section 10 of the Insurance Code of the Philippines, “Every person has an insurable interest in the life and health.” Naturally, one has an insurable interest in one’s self, the spouse, and the child/children. One also has insurable interest on any person one is dependent on for education or support, on those who are legally obliged to one regarding the payment of a debt, and on anyone whose life any estate or interest vested in one depends.

Insurable interest is an investment that protects those subject to financial loss when the insured is lost. The interest is more applicable to those people or entities that have a reasonable assumption of longevity or sustainability as long as no unforeseen events affecting the beneficiaries occur. Through insurable interest, the beneficiary, whether a person or an entity, will not suffer from the loss and will be given financial incentives as a result.

Insurable interest is the basis of all insurance plans. One will only benefit from this when an individual purchases insurance to cover the person or item. The policy must also not create a moral hazard wherein the policyholder will receive a financial incentive to allow for an intentional loss on what is covered.

Anyone insuring a property must have ownership of it and not just a possibility that it will be owned by the individual to keep any chances of a moral hazard that will profit the individual when the structure is destroyed from appearing.

Insuring another individual also requires the consent of the person in question before the plan can be issued. They must also first be able to demonstrate an insurable interest before being sold the insurance plan. A parent insuring a minor child is an exception, however.

If you need to avail either life on non-life insurance to benefit from insurable interest, then start comparing the different insurance policies available through our website at or contact us at 875 6677.


Author: erwin reyes

Erwin has a combined experience of more than 15 years in the car insurance industry in the Philippines and Australia. Loves cars and enjoys to sourcing out great deals for its clients