Robert S. Bloink

Abstract

The long-dormant insurable interest doctrine is being revisited as banks and investment funds increasingly purchase life insurance policies. Some industry commentators object, accusing Wall Street of engaging in schemes that resemble impermissible gambling on the lives—and deaths—of others. In response, Wall Street financiers maintain that they comply with state insurable interest statutes and that their efforts to build a secondary market for life insurance expand consumer options and dismantle the longstanding monopsony of insurance companies. A workable compromise between the insurance industry and Wall Street must modernize the insurable interest doctrine in a way that preserves the free assignability of life insurance policies while preventing a revival of the long-condemned practice of wagering on lives. Developing such a proposal requires a comprehensive examination of the doctrine’s history, the modern context in which it operates, and the leading modernization proposals advanced to date.

---