ART 3.pdf

DAGNE DAUKANTAITE ∗ 

Vytautas Magnus University, 

School of Law 

IS A FAMILY RELATIONSHIP ALONE ENOUGH TO CREATE 

AN INSURABLE INTEREST IN THE LIFE OF THE OTHER? 

Contents 

Introduction....................................................................................................... 35 

1. Life Insurance in General.............................................................................. 36 

2. Insurable Interest in Life Insurance Context................................................. 37 

3. Public Policy Considerations, where the Purposes of the Insurable Interest 

Doctrine are Rooted........................................................................................... 39 

4. Different Types of Family Relations in Connection to the Insurable Interest 

Requirement....................................................................................................... 41 

4.1. Concepts and Definitions in General.................................................................41 

4.2. Husband-wife Relationship...............................................................................42 

4.3. Parent-child Relationship .................................................................................44 

4.4. Sibling Relationship..........................................................................................47 

4.5. Other Types of Family Relations.......................................................................48 

5. Insurance Law of the Republic of Lithuania ................................................. 48 

Conclusions ....................................................................................................... 52 

Abstract in Lithuanian....................................................................................... 54 

∗ DAGN DAUKANTAIT. Address: Vytautas Magnus University, School of Law, 

Daukanto 28, Kaunas 3000 Lithuania. E-mail:

Dagn Daukantait Is a family relationship alone enough to create an insurable interest in 

the life of the other? 35 

Introduction 

Every person lives one’s life being uncertain about what the next day will bring. 

We cannot predict our future. This uncertainty gives rise to the feeling of fear. Risk or the 

chance of loss is an inseparable part of human existence. Although we seek security, it 

always seems beyond our reach. Risk cannot be avoided completely because without risk 

the future development would be impossible, life would be less comfortable, less exciting 

for we would not have automobiles, planes, boats and many other things helping us dayto-day. 

Since risk is a part of our life we must develop means to deal with it. Experience 

indicates that we live in a world that can be both hard and cruel. Risk management is a 

rational attempt to reduce or avoid the consequences of loss or injury. We live in an 

unsafe world, and we must face the possibilities of sickness, injury, death, financial loss 

or other unfortunate events that can occur. Insurance is the best way to deal with that 

uncertainty, fear and to achieve the feeling of security. 

This article will cover only life insurance, the beneficiary being a family 

member, and will not touch upon other forms of insurance. The analysis of this problem 

mainly will be focused on the American (USA) law system, because here the distinction 

between the laws of different states and different court decisions is extremely sharp. 

Those contrary views seem to be well grounded, reasoned, and having plenty of 

supporting arguments. Such opposite views on the same subject show that some judges 

have different perceptions of the person. There is a natural belief that all human beings 

have strong morals, and that natural love and affection always prevail against other 

feelings, financial needs or selfishness. 

It is not a bad idea to trust people so much. However, the other view should also 

be taken into account, namely, the view expressed by John Rawls, that a rationally 

thinking person is always selfish. 1 There is an eternal intrinsic fight in every human 

being, a fight between morals and personal needs. A person may act one way or another 

depending upon the value he attaches to these two choices. Accordingly, the choice made 

leads to two different extremes. One is the optimistic view that a person will always 

choose to act in accordance with morals. The pessimistic view is that personal needs will 

always prevail over the moral considerations. 

Sometimes a court’s decision seems to be reached by reliance on one of these 

approaches. The best solution would be to take the middle approach. We cannot believe 

unconditionally that all people possess the same strong moral considerations, which make 

them choose the correct way to act. Also, we cannot treat people like potential enemies, 

which can do much harm in order to achieve the result they selfishly desire. Thus, the 

middle approach would be to trust people because otherwise it would be impossible to 

live in the community, but not to trust them unconditionally. Due regard must be paid to 

all surrounding circumstances and facts, which could influence the behavior of a person. 

This middle approach, as being the most objective, will be used in analyzing the insurable 

interest requirement in the family context. 

The first part of this article will define the concept, purposes and functions of life 

insurance and distinguish it from other forms of insurance. The second part will cover the 

insurable interest doctrine and the ways of fulfilling this requirement. The following part 

will explain the purpose of the insurable interest requirement, which is grounded in 

public policy. The fourth part of this article will analyze the scope of insurable interest in 

the family context, namely, whether different types of family relations standing alone are 

1 Jrat Imbrasait, Law Theory (lecture notes, Kaunas, VDU, School of Law, 2000 fall).

International Journal of Baltic Law 

Volume 1 No. 2 (February, 2004) 36 

enough to create an insurable interest in the life of the other. Finally, the last part will 

view insurance law of the Republic of Lithuania. 

Significance of this article: Lithuanian insurance law, being a relatively young 

branch, needs supplement with some explanatory provisions, and USA experience in this 

field can stand as an example for the Lithuanian legislature. 

The purpose of this article is to evaluate and analyze the insurable interest 

requirement as between family members, and to affirm or negate the following 

hypothesis: a family relationship standing alone is not enough to create an insurable 

interest in the life of the other, e.g. some form of pecuniary interest in the continuance of 

the insured’s life is needed. 

1. Life Insurance in General 

There are different types of insurance contracts. Likewise, there are different 

definitions of insurance. Insurance can be defined either broadly or narrowly, depending 

on the type of insurance. 

Broadly defined, insurance is a contract by which one party, for a 

compensation called the premium, assumes particular risks of the other 

party and promises to pay to him or his nominee a certain … sum of 

money on a specified contingency. 2 

The most popular definition of life insurance is narrow: "a contract to make 

specific payments upon the death of the person whose life is insured." 3 Life insurance 

policies contain a specific term, which is absent from other forms of insurance contracts, 

namely - cestui que vie. This term is used to define the insured as a "person whose life is 

the subject of the policy" 4 . The other characters involved - the insurer, the owner of the 

policy and the beneficiary are usual to the other forms of insurance also. 

All insurance contracts, including life insurance, have several common elements. 

However, life insurance is quite distinctive. First of all, "a policy of life insurance is not a 

mere contract of indemnity, but is a contract to pay the beneficiary a certain sum of 

money upon the event of death". 5 So it is a form of investment. 6 Secondly, the 

requirement of insurable interest seems to be more stringent than in other types of 

insurance contracts. 7 The nature and importance of the insurance object can explain this. 

Thirdly, unlike other forms of insurance, "life insurance faces the certainty of loss on 

every policy" 8 . The fourth important distinction is that life insurance policies can provide 

only dollars at the time of death, 9 but human life cannot be estimated like this. Human 

values such as love and affection simply cannot be replaced by dollars and cents. 10 

Finally, it is important that "life insurance cannot restore life" 11 . 

The functions and purposes of life insurance are mixed in some sense. The most 

important function of life insurance is "to provide the means of avoiding major financial 

2 

43 Am Jur 2d, Insurance, §1. 

3 

John F. Dobbyn, Insurance Law in a Nutshell (Minnesota: West Publishing Company, 

1996), p. 7. 

4 

Id. 

5 


6 

See note 3: John F. Dobbyn. p. 81. 

7 


8 

Numan A. Williams, Insurance: An Introduction to Personal Risk Management (Cincinnati, 

Ohio: South- Western Publishing Company, 1984), p. 146. 

9 

Id. 

10 Id. 

11 Id., p. 147.



loss when economic death occurs" 12 . Knowing that death is a certainty and taking into 

account the fact that life insurance cannot restore life, a logical inference can be drawn 

that life insurance insures against financial consequences of death, not the death itself. 

The purpose of life insurance is that it can help to "alleviate financial consequences of the 

premature death" 13 . In other words, while life insurance is worthless to preclude the 

emotional suffering of a deceased’s family, it minimizes the economic loss and helps to 

avoid some costs associated with death. 

As it has been mentioned earlier, the insurable interest requirement is a common 

feature to all forms of insurance contracts. However, it has a specific application in 

relation to life insurance. This point has to be analyzed in order to proceed with this 

discussion. 

2. Insurable Interest in Life Insurance Context 

Historically, the doctrine of insurable interest, while being the creation of 

common law country, evolved in England, not in America. The Parliament enacted two 

statutes - George II and George III - for regulation of property insurance and life 

insurance respectively. 14 Both statutes require showing an insurable interest in the subject 

matter insured before any contract of insurance can be entered into. 15 When analyzing the 

wording of these two statutes, it seems that the purpose of enactment was to secure the 

insurers against fraudulent claims. Anyway, for the purposes of this article it is worth to 

notice that the Parliament transformed the principle of insurable interest into a rule of 

law, 16 and consequently English courts enforced this rule. 17 American legislature and 

judiciary branches also adopted it. 18 

Nowadays, an insurable interest appears to be required in every state in the 

USA. 19 An insurable interest is necessary to the validity of an insurance contract. 20 "[I]f 

no insurable interest exists, the contract is void" 21 . 

It is not easy to define the concept and extent of insurable interest with precision 

because the definition varies with every kind of insurance contract. In general, "whatever 

furnishes a reasonable expectation of a pecuniary benefit from a continued existence of a 

subject of insurance is a valid insurable interest." 22 However, such a definition seems to 

be too narrow and imprecise to be applicable correctly to all the kinds of insurance 

contracts. As it was mentioned above, life insurance is inherently distinctive from other 

types of insurance. The early English statutes recognized that distinction by separating 

property and life insurance. Today the authorities in essence agree that "a distinction must 

be made between property insurance and life insurance in determining the question of 

what amounts to an insurable interest." 23 "For this reason, the nature and definition of 

12 

William H. Cummings, J. Mac Spears, Life and Health Pathfinder, Second Edition 

(Indianapolis: Pathfinder Publishers, 1988), p. 1-5. 

13 

J. J. Launie, George E. Rejda, Donald R. Oakes, Personal Insurance (Pennsylvania: 

Insurance Institute of America, Inc., 1987), p. 236. 

14 


15 

Id. 

16 

Id. 

17 

Id., p. 79. 

18 

Id., p. 80. 

19 

60 ALR 3d 98. 

20 

This aspect will be considered in the following part of this article. 

21 


22 Id. 

23 Id.



insurable interest and the time when it must exist are treated subsequently in relation to 

the specific kind of insurance involved." 24 Property insurance will not be analyzed further 

leaving an insurable interest in relation to life insurance the only object of analysis. 

Also there is another important division related to life insurance, which is 

necessary to consider because it affects the insurable interest requirement. "For the 

purposes of the insurable interest doctrine, life insurance is divided into two distinct 

groups - insurance taken out on one’s own life and insurance taken out on the life of 

another." 25 

The first group, the insurance taken out on one’s own life, is less problematic. It 

is also not very important for this analysis. Thus, only the most general aspects will be 

discussed in order to show that here the insurable interest requirement cannot be ignored 

either. 

"The general rule is that every person has an insurable interest in his own life". 26 

Accordingly, a person may purchase a life insurance policy on his own life, making the 

proceeds payable to anyone he wishes. 27 It follows that a beneficiary does not need to 

have an insurable interest to be named in a policy of life insurance. However, there is an 

important limitation to the above statement - a statute prohibiting life insurance in favor 

of beneficiaries who have no insurable interest in the life of the insured. 28 However, 

whether such statute "applies to policies taken out by the insured himself for such a 

beneficiary depends in general upon the wording of the statute" 29 . 

Relevant works on insurance outline one more limitation to the right in question. 

It is not created by law, but by insurance companies themselves. They restrict this right in 

order "to avoid difficulties that can arise; for instance, this occurs when a person names a 

fiancée as beneficiary, marries someone else and does not change the designation." 30 

Such restrictions are grounded on a company’s policy. 31 Yet, even in the absence of a 

statute limiting the right to take out insurance on own life and designate a beneficiary 

having no insurable interest, or in the absence of a restrictive insurance company’s 

policy, one cannot be sure that a life insurance policy in question will not be invalidated 

by a court. The courts will declare a policy invalid where the transaction is for the 

purpose of speculation and is a mere cover for a wagering contract. 32 

The second group of life insurance, insurance taken out on the life of another, 

creates much more problems. Here the requirement that a beneficiary should have an 

insurable interest in the life of the insured is strict. Still, the question of what constitutes 

the necessary insurable interest arises immediately. 

An insurable interest in relation to life insurance is defined in the Insurance 

Codes of every state. For example, Alabama Insurance Code §316 provides as follows: 

Insurable interest with reference to personal insurance is an 

interest based upon a reasonable expectation of pecuniary advantage 

through the continued life, health or bodily safety of another person and 

consequent loss by reason of his death or disability, or a substantial 

24 

Id. 

25 


26 


27 

See note 12: William H. Cummings. p. 3-13. 

28 


29 

Id. 

30 


31 

Id. 

32 

43 Am Jur 2d, Insurance, §974.



interest engendered by love and affection in the case of individuals 

closely related by blood or by law. 33 

Such definition encompasses different types of relations, which can give rise to the 

insurable interest in the life of another person. This definition seems to be divided into 

two parts. The first part covers relations, which are based upon expectancy of some sort 

of pecuniary benefit, for example creditor-debtor relationship or that of business partners. 

The second part covers relations among family members, based upon criteria of love and 

affection prevailing between them. In this article the attention will be focused on the 

second of these two categories, namely, family relations. 

The authorities are split on the question of what constitutes the requisite interest 

of one person in the life of another. 34 An inference can be drawn that the reason for this 

disagreement is rooted in the complexity and broadness of the above definition. It gives a 

broad discretion to the courts to interpret the law as they see fit for the situation at issue. 

Such interpretation can lead to a declaration that life insurance policy in question is 

devoid of insurable interest, rendering that insurance to be contrary to public policy. This 

result leads to important consequences. 35 

3. Public Policy Considerations, where the Purposes of the Insurable 

Interest Doctrine are Rooted 

The traditional definition calls insurance "a social device for the transference of 

individual risk to an insurance company, which, for a certain consideration, assumes 

losses suffered by the insured." 36 Since insurance has a great influence upon the society, 

it must protect the interest of the public it serves. 37 

There are two safeguards, namely, insurable interest and consent, which protect 

the insured against the possibility that another person could financially benefit from the 

insured’s death. 38 Public policy considerations are remembered every time when any of 

these safeguards are somehow impaired while procuring a life insurance policy. 

As it has been noted above, an insurable interest is necessary to the validity of an 

insurance contract. It means that an absence of an insurable interest renders the policy 

unenforceable, illegal and void. The purposes of the insurable interest doctrine are rooted 

in public policy. 39 Those purposes are prevention of wagering and removal of the 

temptation to deliberately hasten the death of insured in order to receive the insurance 

proceeds. 40 

A wager policy is a pretended insurance where no loss can be sustained in case 

the event insured against happens because of absence of an insurable interest. 41 It is 

generally agreed that such policies, in which the only interest is the destruction of the 

matter insured, are void as being contrary to public policy. 42 Some states have statutes 

prohibiting wager policies, and if no statute has been enacted, such policies are being 

invalidated on the grounds of public policy. 43 Another relevant consideration is that the 

33 

Mutual Savings Life Insurance Company v. Noah, 291 Ala. 444, 282 So. 2d 271 (1973). 

34 


35 

See the following part of this article. 

36 


37 

Id., p. 3-12. 

38 

Id. 

39 


40 

Id., p. 80-81. 

41 


42 

60 ALR3d 98. 

43 




lack of insurable interest can give rise to the intention of a beneficiary to hasten the death 

of the insured person. 

Basically, the same public policy purposes are pursued by requiring to have a 

consent of cestui que vie before trying to take out or issue a life insurance policy. It is a 

general rule that a life insurance policy procured without the knowledge and consent of 

the insured person is against the public policy and unenforceable. 44 As a result such a 

policy is likewise void ab initio. An inference can be drawn that insurance procured 

without the insured’s knowledge and consent indicates that a beneficiary possesses no 

insurable interest in the life of the insured. No one can be permitted to obtain insurance 

on the life of another without his knowledge and consent, whatever the relationship 

between them is. 45 

However, there is an exception, which entails a controversy. Some authorities 

express a view that insurance on a spouse can be procured without his or her consent. 46 

Others say that such practice cannot be permitted, as it may "be a fruitful source of 

crime." 47 The second view seems to be more acceptable for the following reasons. Firstly, 

the insurance is taken out on the life of an adult, who has one’s own opinion and must be 

given a chance to participate in a decision making which concerns one’s own life. Every 

person is a separate and independent entity, so if someone attempts to interfere with one’s 

life, one’s consent should be obtained. Secondly, one cannot ignore the cases, which 

support the above statement, namely, that a lack of consent can lead to a crime of 

murder. 48 So it can be said that the costs of allowing such exception in relation to spouses 

outweigh possible benefits, whatever they may be. 

Authorities seem to be in accord on the point that an exception to a requirement 

of consent applies to a parent insuring the life of a child. 49 "It is not against public policy 

for a minor to contract for insurance", 50 but a parent may insure an infant’s life without 

one’s consent. 51 

It is worth to notice that a beneficiary who intentionally takes the life of cestui 

que vie is prevented by the courts from receiving insurance proceeds. 52 This principle is 

based on considerations of public policy. 53 The courts accept and widely apply the 

principle that no one should be able to benefit from his own wrong. 54 For example, the 

court in Beck v. West Coast Life Insurance Company 55 , where a husband killed his wife, 

explained that "it would be unconscionable to allow him to profit from his wrong." Such 

beneficiary is also precluded from inheriting the insurance proceeds. 56 A few states have 

statutes enacted for the purpose of dealing with such situations. 57 

The consequences of issuing life insurance in the absence of any of the 

safeguards described above involve the insurer too. Tort liability can arise if a beneficiary 

44 Id., §976. 

45 See note 3: John F. Dobbyn. p. 102. 

46 Id. 

47 43 Am Jur 2d, Insurance, §261. 

48 See Metropolitan Life Insurance Company v. Smith, 59 S.W. 24 (1959), or Ramey v. 

Carolina Life Insurance, 244 S.C. 16 (1964). 



51 Id., §261. 


53 27 ALR3d 794. 


55 Beck v. West Coast Life Insurance Company, 38 Cal. 2d 643, 241 P.2d 544 (1952). 

56 27 ALR3d 794. 

57 44 Am Jur 2d, Insurance, §1715.



attempts or actually murders the insured in order to receive the insurance proceeds. 58 That 

liability arises because the insurer has a duty to investigate with reasonable care whether 

a beneficiary has an insurable interest in the continued life of the insured. 59 Insurer can 

also be held liable in negligence for issuing a life insurance policy without first obtaining 

the signed consent from the insured. 60 Also the potential liability of an insurer is not 

eliminated by the fact that such policy is void ab initio. 61 

In sum, those two simple safeguards discussed above have substantially reduced 

the chances for abuse. "If one party could benefit from another’s death through insurance, 

the best interest of the public would not be served." 62 Insurance would become the 

motivation for murder and fraud. 63 

4. Different Types of Family Relations in Connection to the Insurable 

Interest Requirement 

4.1. Concepts and Definitions in General 

In this article the term "family" will mean not only the immediate family. It will 

mean "a group of persons connected by blood, by affinity, or by law". 64 "The term 

'family' is elastic, and it will be liberally construed. It is not confined to a husband and 

wife and their children." 65 

As it has been mentioned above, the authorities disagree on the question of 

what constitutes a required insurable interest of one person in the life of another. The 

same applies to the family members insuring the life of each other. Cases dealing with 

this issue are divided into two groups. The first one declares that a close family 

relationship alone is enough to create an insurable interest in the life of the other 66 . The 

second one, in addition, requires an insurable interest to be based on expectancy of 

some pecuniary benefit or advantage from the continued life of the insured person 67 . 

Both these views will be analyzed in a discussion below. 

The definition of the insurable interest formulated in Warnock v. Davis 68 , is 

generally accepted and often quoted by the courts of justice: 

[I]n all cases there must be a reasonable ground, founded upon 

the relations of the parties to each other, either pecuniary or of blood 

or affinity, to expect some benefit or advantage from the continuance of 

the life of the assured. 

As to the expectation of benefit or advantage from the continued life of the 

insured the Court further opined that "[i]t is not necessary [for it to be] … always capable 

of pecuniary estimation." 69 The above definition seems to be more in accord with the first 

view as it declares that an insurable interest may arise out of relations by blood or affinity 

alone. However, it is not quite clear how close that relationship should be. It can only be 

58 


59 

Liberty National Life Insurance Company v. Weldon, 267 Ala. 171, 100 So. 2d 696 (1957). 

60 

See note 48: Ramey v. Carolina Life Insurance Company. 

61 


62 


63 

Id. 

64 

Bryan A. Garner, et. al. eds., Blacks Law Dictionary, Seventh Edition (Minnesota: West 

Group, 1999), p. 620. 

65 

Hosmer v. Welch, 107 Mitch. 470, 65 N.W. 280 (1895). 

66 


67 

Id. 

68 

Warnock v. Davis, 104 U.S. 775, 26 L. Ed. 924 (1881). 

69 Id.



said that "the closer the relationship is, the more likely will an insurable interest be found 

to exist." 70 The cases reveal that the relationship of a husband and a wife has been held to 

be sufficiently close to create an insurable interest. 71 The relationship of a parent and a 

child has been given the same status 72 . Other types of family relationships have been held 

to be insufficient to create an insurable interest when standing alone. 73 The relationship 

between siblings stands somewhere on the dividing line 74 . 

However, there is authority to the contrary, namely, that an insurable interest in 

the life of another is a pecuniary interest 75 . This rule seems to be derived from the early 

English statute George III. 76 

Pecuniary interest, in other words, economic interest, means money. Money 

should not be understood only as the exact sum of dollars. It can have lots of different 

forms, for example, food, clothing, education, daily support, or different services 

provided without the payment thereof, and so on. It seems that a pecuniary benefit could 

mean not only money actually received, but also the expenses saved. The court in 

Rombach v. Piedmont & Arlington Life Insurance Company 77 said that "when the 

insurable interest arises, or is implied from relationship, it will be deemed to exist when 

the relationship is such that the…legal claim [arises]" upon the insured for services or 

support. Other say that a "pecuniary interest is tested by the factual expectancy rather 

than legal interest test." 78 Anyway, the authorities seem to agree that a pecuniary benefit 

is something of value, which is already being received or is reasonably expected to be 

received in the future. The court in Morrell v. Trenton, etc., Insurance Company 79 while 

commenting upon the language of Warnock v. Davis 80 expressly 

stated that the "expected benefit must consist in service, maintenance, or the like. 

…[I]t must be a pecuniary benefit, as distinguished from a mere sentimental or moral 

gratification." This court explained the words 'benefit or advantage from the continuance 

of the life' to mean material or physical benefit or advantage. 81 

Further analysis will try to answer what test should be applied to different types 

of family relations in order to fulfill the insurable interest requirement and remain in 

conformity with the public policy considerations, e.g. a close relationship test or an 

expected pecuniary benefit test. 

4.2. Husband-wife Relationship 

It is universally accepted that a wife has insurable interest in the life of her 

husband and vice versa, without more. 82 Some states enacted statutes "permitting married 

women to insure their husbands’ lives." 83 Although the spouses are related by law, as 

opposed to relation by blood, the above cited authorities seem to believe that the natural 

70 

60 ALR3d 98. 

71 

Jennings et al. v. Jennings, 250 Ala. 130, 33 So. 2d 251 (1947). 

72 

Woods, &c., v. Woods' Admr., 130 Ky. 162, 113 S.W. 79 (1908). 

73 

See note 33: Mutual Savings Life Insurance Company v. Noah. 

74 

Equitable Life Insurance Company v. R. R. Hazlewood, 75 Tex. 338, 12 S.W. 621 (1889). 

75 

Rombach v. Piedmont & Arlington Life Insurance Company, 35 La. Ann 233 (1883). 

76 

60 ALR3d 98. 

77 

See note 75: Rombach v. Piedmont & Arlington Life Insurance Company. 

78 


79 

Morrell v. Trenton, etc., Insurance Company, 64 Mass. 282 (1852). 

80 

See note 68: Warnock v. Davis. 

81 

See note 79: Morrell v. Trenton, etc., Insurance Company. 

82 


83 




love and affection prevailing between them is just as strong as that between persons 

related by blood. This belief may be rooted in common law. 

"At common law, husband and wife become by marriage one person" with a 

legal existence of a wife absolutely merged in that of her husband. 84 The result of this 

common law unity is "complete disability [of a married woman] to act as a legal 

person." 85 So only a husband can legally be able to contract on behalf of his family. 86 

These disabilities of a wife were abolished by the enactment of the Married 

Women’s Acts, which is in force in almost all the states now. 87 This means that a wife 

has a right to contract in her name, on her behalf and independently of her husband as 

they are considered as separate legal persons. 

However, "[t]he law continues to recognize [the legal unity of the spouses] with 

respect to certain rights, duties, and obligations arising from the marriage". 88 Among 

other duties, a husband, who is the head of the family, 89 is under obligation to maintain 

and support his wife. 90 A wife, in her turn, is under obligation to care for her husband in 

sickness, to be his helpmate, to perform her household and domestic duties without 

compensation therefor. 91 These legal obligations and rights of spouses give rise to the 

expectancy of a pecuniary benefit now and in the future. They are of pecuniary nature, 

whether it is support or household services. 

An inference can be drawn that the relationship of spouses, while being a very 

close one, has a pecuniary element in it too. From this point of view there is no need to 

decide which one of the tests discussed above should be used, because the insurable 

interest in the life of the spouse can be predicated upon both, the close relationship and 

the expectancy of some pecuniary benefit from the continued life of the spouse. 

Some authorities propose that the amount of life insurance policy of a husband 

and a wife should be based on their earning capacity. If spouses earn equal amounts, they 

should have equal amounts of life insurance, when one of them earns more, that spouse 

should carry more life insurance 92 . This statement seems to be a reasonable one as it is in 

conformity with the purpose of life insurance, e.g. the protection against the financial 

consequences of death. 93 This proposal is likewise based on the economic interest test. 

Some sources 94 conclude that a wife has an insurable interest in the life of her 

husband. This conclusion is based on the argument that "she is financially better off if her 

husband is alive" and "she has no economic incentive to do away with her husband". 

Here the existing insurable interest is also based on some form of financial interest in the 

continued life of the insured spouse. 

The cited authorities seem to treat a wife as dependent on her husband for 

support. 

The court’s conclusion in the Gambs case 95 is that a wife has a direct interest in 

the life of her husband. "The law requires him to support her, and in most cases she is 

actually dependent upon him for support." This conclusion seems to have its basis in the 

84 

41 Am Jur 2d, Husband and Wife, §2. 

85 

Id., §16. 

86 

See id., §137 for the exceptions. 

87 

Id., §17. 

88 

Id., §2. 

89 

Id., §10. 

90 

Id., §8. 

91 

Id., §9. 

92 

See note 8: Numan A. Williams. p. 155. 

93 

See the first part of this article. 

94 

See note 12: William H. Cummings. p. 3-12 – 3-13. 

95 

Henry Gambs, Public Administrator in charge of Estate of Amanda Holliday v. Covenant 

Mutual Life Insurance Company, 50 Mo. 44 (1872).



common law. The court expressly accepts the rule that the insurable interest in the life of 

the other must be a "direct and definite pecuniary interest", and declares that "a person 

has not such an interest in the life of his wife or child, merely in the character of husband 

or parent." This decision clearly rejects the view that the husband can have an insurable 

interest in the life of his wife only because of the relationship of spouses. However, a 

wife has an insurable interest in the life of her husband because she has "a right to look to 

the husband for support", which constitutes an expectancy of a pecuniary benefit. 

The Gambs case is rather exceptional. The weight of authority recognizes both 

spouses to have a reasonable expectancy of pecuniary benefit from the continued life of 

the other as a result of their interdependence, which arises out of their mutual legal 

obligations. 

There is a different situation when the spouses are divorced. "[A]fter a divorce 

[or the annulment of the marriage], the insurable interest of a wife in the life of her 

husband ceases." 96 However, this affects only her right to procure insurance on his life 

after the divorce, but not necessarily terminates "the right to receive the proceeds … by 

the mere fact that the parties are divorced subsequently to the issuance of the policy." 97 

The cessation of the insurable interest can be explained by the fact that the relationship of 

a husband and a wife is terminated together with the marital rights and obligations of the 

spouses. In such situation the test of reasonable expectancy of pecuniary benefit should 

be applied in order to give a wife an insurable interest in the life of her former husband. 

The pecuniary benefit in question could be alimony, which the husband is ordered to pay 

his wife by the decree of divorce, or his duty to support their children. 98 

In sum, a relationship of a husband and a wife includes a pecuniary element. 

Thus, there is no need to decide how an insurable interest between them should be tested. 

Accordingly, this type of relationship is in itself sufficient to create an insurable interest 

in the life of the other. However, proof of a financial interest is required when a person 

wishes to procure a policy of insurance on his former spouse’s life. 

4.3. Parent-child Relationship 

Presumably, the parent-child relationship, arising from ties of blood, is the 

strongest one of all. "[N]o relationship … is more sacred or more binding than that of 

parent and child." 99 These ties uniting a parent and a child are the main reason why some 

courts conclude that this type of relationship is enough to give an insurable interest in the 

life of the other, and no additional element is required. It has been held that a child has an 

insurable interest in the life of his parent, 100 and a parent has an insurable interest in the 

life of his child. 101 

However, this is not a universal rule. There is some authority holding that this type 

of relationship is not sufficient, and requiring some pecuniary interest in addition to it. 102 

Some courts accord insurable interest unconditionally to a relationship of a 

parent and a minor child. 103 It is obvious that a minor is totally dependent upon his 

parents for support. The loving parents care for him, give a place to live, food, clothing, 

various gifts and all other things the child needs. "The death of a young parent is tragic, 


97 70 ALR3d 348. 


99 See note 72: Woods, &c., v. Woods' Admr. 

100 Reserve Mutual Life Insurance Company v. Kane , 81 Pa. 154 (1876). 

101 Williams v. Washington Life Insurance Company, 31 Iowa 541 (1931). 


103 See note 3: John F. Dobbyn. p. 96.



partly because children can be left without proper financial support." 104 It is considered 

that a minor always has a direct pecuniary interest in the continued lives of his parents in 

addition to a very close relationship. Moreover, a reference to the legal parental duty to 

provide support and maintenance to their children supports this finding. 

The same cannot be said about a parent. He may have no economic interest in 

the life of his minor child. Such a parent does not have an insurable interest in the life of 

his child in jurisdictions, which follow the rule that some pecuniary interest is essential 

and that a relationship in question is not enough. "Even in such jurisdictions, however, a 

father has an insurable interest in the life of a minor to whose earnings he is entitled." 105 

A requirement that a parent should have a pecuniary interest in the life of his minor child 

seems to be reasonable in the light of Crawford case 106 . In that case the father procured 

the policies on the lives of his three minor children with the intention of killing them in 

order to collect the proceeds. Of course, such disaster will not occur every time when a 

parent purchases a policy on his child’s life, while having no pecuniary interest therein. It 

should not be understood that love and affection are worthless as compared to money. 

However, it is worth to remember that the insurable interest doctrine is a safeguard for 

the benefit of the insured. 

While the prime reason behind [the insurable interest] 

rules seem to be that the insured is safer if the beneficiary will suffer 

some loss from his death, it may be observed that some beneficiaries 

with a valid interest in the insured’s life still consider the insurance 

proceeds more valuable than the insured’s continued life. 107 

That is why insurable interest should be tested relying on more objective criteria 

than love and affection, which is totally subjective in its nature. Another thing to 

remember is the purpose of life insurance, e.g. protection against the financial 

consequences of death. Though the death of a child is tragic, it does not bring major 

economic losses along with it. 

A different situation arises in the parent-adult child relationship. The courts seem 

to be more reluctant to recognize any of them as having an insurable interest in the life of 

the other based on the relationship alone. This can be explained by the fact that an adult 

child is usually no longer dependent upon his parents. He leaves his parents’ home and 

creates his own family. 

However, some courts conclude that this relationship is in itself sufficient to 

give an insurable interest in the life of the other, and no other element is required. For 

example, the court in Woods case 108 , while reaching the above conclusion, speaks mostly 

of "the duties due from children to their parents", which "arise from the principle of 

natural justice and retribution". Nevertheless, this language contains a reference to a 

pecuniary element because an obligation or duty owed by one person to another creates 

an expectancy of some pecuniary benefit from the continued life of the other. Anyway, 

such inference indicates that only parents have insurable interest in the lives of their adult 

children, but not vice versa. 

The approach that a pecuniary interest is required to sustain the validity of a life 

insurance contract and that a mere relationship of a parent and an adult child is not 

sufficient seems to have greater support in case law. The court in Volger case 109 , while 

104 

See note 8: Numan A. Williams. p. 191. 

105 


106 

West Coast Life Insurance Company v. Crawford, 58 Cal. App 2d 771, 138 P2d 384 

(1943). 

107 

9 ALR3d 1172. 

108 

See note 72: Woods, &c., v. Woods' Admr. 

109 

The Continental Life Insurance Company v. Volger, 89 Ind. 572 (1883).



reaching the decision that a daughter has no interest in her mother’s life, expressly stated: 

"[t]he law is well settled that a policy … upon the life of another, in the continuance of 

whose life the assured has no pecuniary interest, is void, as being against public policy." 

This means that an insurable interest must be a pecuniary interest. The court criticizes the 

approach "that near relationship, as between parent and child, is sufficient foundation 

upon which to rest an insurable interest" by saying that it "is not sustained by the weight 

of authority." 

Justice Black employed a very similar reasoning in The Prudential Insurance 

Company v. Hunn 110 , concluding that a mother has no insurable interest in the life of her 

son. The opinion of the court contains the following language: "[t]he beneficiary must 

have had an insurable interest of a pecuniary character, or of that nature, either present or 

prospective, at the time the policy had its inception." The judge, as distinguished from the 

Woods case, declared that there is no legal obligation on the part of the children to 

support their parents, so the court cannot infer from the fact of relationship alone such 

insurable interest, which would uphold a policy. 

There are cases where a policy was procured without the consent of the insured 

parent. 111 This immediately indicates lack of insurable interest and leads to a conclusion 

that there is a pecuniary interest, but it is against the continuance of the insured’s life. 

The Hogan case 112 is important and often cited by courts. Here the court stated 

that 

the mere relation of father and son, where both parties are of 

mature years, and live apart, in independent pecuniary circumstances, 

and mutually entirely independent of each other, and having no 

business relations with each other, does not create an insurable interest 

in the son on the life of the father. 

The above statement clearly indicates that this court accepts the view, which 

requires a finding of an insurable interest based on the expectation of advantage which 

can be derived from the continued life of the insured. The opinion cites Mr. May’s 

Treatise on the Law of Insurance, that the relationship is "of little importance except as 

tending to give rise to the circumstances which justify a well-founded expectation of 

pecuniary advantage from the continuance of the life insured, or risk of loss from its 

termination. " 113 

Thus, with respect to insurance in parent-child context, it would be more 

objective to require the existence of an insurable interest based on the expectancy of 

some pecuniary benefit from the continued life of the insured, than insurable interest 

based on such subjective criteria as love and affection inherent in a parent-child 

relationship. This approach is sustained by the weight of authority. The only exception 

can be allowed with respect to a parent-minor child relationship because it contains a 

pecuniary element therein. That pecuniary element is derived from the legal obligation on 

the part of the parents to support their minor children and from the fact that a minor is 

totally dependent upon his parents. 

110 The Prudential Insurance Company v. Hunn, 21 Ind. App 525, 52 N.E. 772 (1899). 

111 See Chicago Guaranty Fund Life Society v. George A. Dyon, 79 Ill. App 100 (1898). 

112 Guardian Mutual Life Insurance Company Of New York v. Patrick Hogan, 80 Ill. 35 

(1875). 

113 Id.



4.4. Sibling Relationship 

The degree of relationship within which an insurable interest exists is not clearly 

defined. The closer the relationship, the more likely an insurable interest will be found. 

The relationship between siblings seems to be on the dividing line, since "[t]he decisions 

are not in accord on the question whether one has, by reason of relationship alone, an 

insurable interest in the life of a brother or sister." 114 

The case Lord v. Dall 115 is especially important. It was the case of first 

impression in the USA. The question raised in this case was whether a life insurance 

policy "is a contract, which can be enforced by the laws of this State; the law of England, 

as it is suggested, applicable to such contracts, never having been adopted and practiced 

upon in this country." The court further noted that there was no precedent of an action 

upon a policy of this nature and turned its attention to the practice of European countries. 

"It seems that these insurances are not favored in any of the commercial nations of 

Europe, except England; several of them having expressly forbidden them." The court 

cited the reason for that given in France, "that it is indecorous to set a price upon the life 

of man, and especially a freeman, which … is above all the price", and criticized it as 

being 'singular'. This case is important because the American court accepted and applied 

the English insurable interest doctrine in relation to life insurance for the first time. This 

court accepted the rule that "the interest must be a pecuniary, legal interest, to make the 

contract valid; one that can be noticed and protected by the law". 116 The conclusion that a 

sister has an insurable interest in the life of her brother was reached in light of evidence 

showing that "the brother was her sole means of support and absent the policy, the 

brother’s death would leave her in complete want." 117 

Subsequently, a number of jurisdictions started to apply the rule that in order to 

constitute insurable interest there must be some expectation of pecuniary benefit from the 

continued life of the insured in addition to relationship of the parties. It is universally 

agreed that "the presence of an [additional] economic interest in having the life of the 

insured continue is a factor heavily favoring, if not determining, the validity of the 

policy." 118 The following examples clearly illustrate this rule. A sister has an insurable 

interest in the life of her brother who supports and educates her 119 . A sibling, being a 

partial dependant of her brother, has an insurable interest in his life 120 . A person has an 

insurable interest in the life of his brother when he is his creditor 121 . Also, a man has an 

insurable interest in the life of his brother who is a business partner 122 . This is true even 

in those jurisdictions which hold that "an insurable interest does not arise from the mere 

fact of the kinship shown, but must be a pecuniary one, and be disclosed by the facts 

alleged." 123 

Distinction must be made between the policies taken out on one’s own life and 

those procured on the life of the other because this affects the requirement of an insurable 

interest. While holding that the mere relationship between siblings is sufficient to create 

an insurable interest in the life of either of them, the authorities often cite cases where a 

114 


115 

Lord v. Dall, 12 Mass. 115 (1815). 

116 

Id. 

117 

Id. 

118 

60 ALR3d 98. 

119 

See note 115: Lord v. Dall. 

120 

Williams v. Northeast Mutual Insurance Association, 72 S.W. 2d 166 (1934, Mo. App). 

121 

William B. Lewis v. The Phoenix Mutual Life Insurance Company, 39 Con. 100 (1872). 

122 

Bonistalli v. Bonistalli, 269 Pa. 8, 112 A. 7 (1920). 

123 

Miller v. Traveler’s Insurance Company, et al., 81 Ind. App 618, 144 N.E. 554 (1924).



policy procured by the insured designates a sibling as a beneficiary. 124 This decision is 

based on the common law rule that "every person has an insurable interest in his own life 

… although the beneficiary named … [may be] without any insurable interest therein" 125 , 

and it should not stand as a rule in cases where a policy is procured on the life of the 

other. This article will ignore the decisions reached by mixing the cases with those two 

distinctive types of life insurance policies. 

Most courts dealing with cases where a policy is taken by a beneficiary on the 

life of the sibling seem to accept the view that a pecuniary interest in the life of the 

insured is required in order to sustain the validity of the said policy. 126 

Some courts express the view that a more liberal rule should be applied. 127 It is 

obvious that liberalization of rules is sometimes very helpful because it softens the 

requirements and simplifies procedures. However, this is not true when life insurance is 

at issue. It is a widely accepted truth that human life is the most valuable and precious 

thing on Earth. Thus, no liberalization should be allowed if it could lead to a slightest risk 

of losing this valuable. 

4.5. Other Types of Family Relations 

The authorities universally agree that other types of family relations are not 

sufficient to create an insurable interest in the life of another. In addition "a factual 

expectancy of economic benefit is required" 128 . A relationship between cousins is too 

remote to constitute an insurable interest in human life and health. 129 Also, it is generally 

agreed that in-law relations are not sufficient to confer an insurable interest on a 

beneficiary. 130 The same applies to relations between an uncle and a niece 131 ; an aunt and 

a nephew 132 ; a grandfather and a granddaughter 133 . 

All decisions concerning these types of relations unanimously agree that an 

insurable interest in the life of the other must be tested by an expectancy of some 

pecuniary benefit to be derived from the continued life of the insured. 

5. Insurance Law of the Republic of Lithuania 

Lithuania is on the way to European Union. Accordingly, Lithuanian laws have 

to comply with the European Community’s (EC) laws and regulations. The same applies 

to insurance law as well. 

124 For example, such cases are: Phillips’ Estate, 238 Pa. 423, 86 A. 289 (1912); Aetna Life 

Insurance Company v. France, 94 U.S. 561, 24 L. Ed 287 (1876). 

125 See note 123: Miller v. Traveler’s Insurance Company. 

126 See, for example, Gulf Life Insurance Company v. Davis, 52 Ga. App 464, 183 S.E. 640 

(1936); or see note 121: William B. Lewis v. The Phoenix Mutual Life Insurance Company. 

127 Clarence Hodge v. Globe Mutual Life Insurance Company, 274 Ill. App 31 (1934). 


129 National Life & Accident Insurance Company of Nashville v. Alexander, 226 Ala. 325, 

147 So. 173 (1933). 

130 National Life & Accident Insurance Company v. Ball, 157 Miss. 163, 127 So. 268 (1930). 

131 Bell v. National Life & Accident Insurance Company, 41 Ala. App 94, 123 So. 2d 598 

(1960). 

132 Commonwealth Life Insurance Company v. George, 248 Ala. 649, 28 So. 2d 910 (1947). 

133 Burton v The Connecticut Mutual Life Insurance Company, 119 Ind. 207, 21 N.E. 746 

(1889).



The objective of the EC, e.g. "a single market for insurance" 134 , was achieved by 

means of three generations of insurance directives 135 . The first generation was concerned 

with the right of establishment, the second - with freedom to provide insurance by way of 

services, and the third converted these two basic principles into the single market. 136 The 

three Life Directives 137 left the regulation of insurance activity for competence of each 

member state. 138 Thus, this part will review insurance law of the Republic of Lithuania in 

order to answer what constitutes an insurable interest in the life insurance context. 

In Lithuania life insurance as a separate branch of insurance activity evolved 

only in 1996, when the statute on insurance 139 separating life and non-life insurance was 

enacted. 140 This was done in reliance upon the EC requirement that life and non-life 

insurance must be separated. 141 Western life insurance traditions make only first steps in 

Lithuania 142 , and the necessary legal norms are only starting to emerge 143 . 

The review of existing legal norms should start by noting that the Constitution of 

the Republic of Lithuania is silent about the insurance activity. 144 

There is no insurance code in most West European countries, that is why critics 

say that insurance law is not a separate, self-dependent branch of law, but a mere civil 

law institute. 145 Lithuania is not an exception because the Civil Code 146 is the main legal 

source regulating insurance activities. 147 However, the Civil Code provides only the most 

general norms of insurance law and it can be applied only if other laws on insurance do 

not provide otherwise. 148 There is no provision in the Civil Code, which could give an 

answer to the question raised above. 

The Law on Insurance of the Republic of Lithuania, while complying with the 

EC requirement to separate life and non-life insurance 149 will be revised again in order to 

achieve membership in EC 150 . This statute is not explicit enough and sometimes is silent 

about some aspects of insurance activity. Thus, it would be useful to supplement the 

statute with certain explanatory norms. 

This statute does not provide whether the insurable interest doctrine is accepted 

by the Lithuanian legislature. The only possible reference to it can be found in Article 

134 

Robert Merkin, Angus Rodger, EC Insurance Law (New York: Addison Wesley 

Longman, Inc., 1997), p. 1. 

135 

Id., p. 3. 

136 

Id. 

137 

First Council Directive 79/267/EEC – Taking-up and pursuit of the business, 5 March 

1979. Second Council Directive 90/619/EEC – Provisions to facilitate effective exercise of 

freedom to provide services, 8 November 1990. Third Council Directive 92/96/EEC – amending 

79/267/EEC and 90/619/EEC, 10 December 1992. 

138 

Rimantas Stankeviius, "Lietuvos Draudimo Teiss altiniai", Teis (2002, t. 42), p. 125. 

139 

Law on Insurance of the Republic of Lithuania (1996 07 10, Nr.I-1456). 

140 

Dr. Vytautas Kindurys, "Gyvybs Draudimas Lietuvoje", Lietuvos kis (2002, Nr.9-12), p. 

38. 

141 

J. epinskas, ir kt., Draudimas (Kaunas: Pasaulio Lietuvi Kultros, Mokslo ir vietimo 

Centras, 1999), p. 30. 

142 

Aura Maldeikien, "Kodl Verta Drausti Gyvyb?” Mokesinios (2002, Nr. 26(280), 

2002 07 01-07). 

143 

See note 141: J. epinskas, p. 146. 

144 

See note 138: Rimantas Stankeviius, p. 119. 

145 

Id., p. 120. 

146 

Civil Code of the Republic of Lithuania (2000 07 18, Nr.VIII-1864). 

147 

See note 138: Rimantas Stankeviius, p. 120. 

148 

See note 146: Civil Code of the Republic of Lithuania, Art. 6.1018. 

149 

Law on Insurance of the Republic of Lithuania, in. (2002, Nr. 60-2411), Art. 5. 

150 

See note 141: J. epinskas, p. 149.



3 151 , which reads as follows: "subject matters of insurance may be economic interests … 

related to the length of a person’s life" 152 . However, the above statement is wrong. The 

article in question defines interests, which can be a subject matter of an insurance 

contract, and it has nothing to do with an insurable interest requirement. 

The characters, other than an insurer, involved in a life insurance contract are as 

follows. First, there is an insured who contracts with insurer. He must pay the premiums 

and is entitled to an insurance payment after an insured event occurs 153 . Second, there is a 

covered person, e.g. cestui gue vie. The third one is a beneficiary. One person is specified 

in the insurance type regulations, not in the contract 154 . The same person can be any or all 

of these characters. 

The Lithuanian insurance law recognizes that it is necessary to obtain a written 

consent of cestui gue vie on the appointment of the beneficiary. In practice, the covered 

person fills in and signs a questionnaire, and signs an application for insurance, in 

presence of an insurance agent. It is an achievement that this safeguard for the benefit of 

cestui gue vie was adopted by the Lithuanian legislature. However, the statute under 

discussion is silent about the purpose of this safeguard, e.g. the prevention of wagering 

on the length of human life. There is no statutory provision which would explain what 

happens to the insurance proceeds in case a beneficiary hastens the death of a cestui gue 

vie. Thus, it is not clear whether the proceeds should be included in the estate of the 

deceased or retained by an insurance company, and whether the said beneficiary being 

heir of the deceased can be allowed to inherit those insurance proceeds. These gaps 

should attract the attention of the Lithuanian legislature. 

The statute is not specific as to who can be a beneficiary of a life insurance 

contract. A beneficiary is defined as "a person specified in a contract of insurance at the 

wish of the insured or the person named by the covered person." 155 This provision is 

unclear as it does not specify what type of relationship must exist between a beneficiary 

and cestui gue vie, and this can lead to an inference that they can even be strangers to 

each other. Some insurers express a view that only family members can insure the lives 

of each other because an income tax benefit is available only in such circumstances. 156 

Others say that there is no such limitation, and people in no way related to each other can 

obtain an insurance policy on other’s life. 157 However, they agree that the existing law 

does not give an answer to this question, and this situation leads to uncertainty and 

different practices by the insurers. The need for an explanatory statutory provision 

becomes obvious. 

An exceptional situation arises when a minor child is involved. A minor is not 

capable of contracting for life insurance, so his parents can do that instead of him. 158 The 

statute expressly forbids insuring the life of a minor for the benefit of any person other 

than a minor himself. 159 However, it is not clear who has a right to insurance proceeds in 

case of minor’s death. Some insurers solve this problem by designating a contingent 

beneficiary who receives an insurance benefit in the event of the insured child’s death. 160 

More reasonable solution, which would conform to the statutory provision cited above, is 

151 

John Chernosky, Insurance Law (lecture notes, 2002 fall). 

152 

See note 149: Law on Insurance of the Republic of Lithuania, Art. 3. 

153 

Id. Art. 2. 

154 

Id. 

155 

Id. 

156 

Romualda Brasien, conversation with the authoress, Kaunas, 12 05 2003. 

157 

Karolis Vincinas, communication with the authoress on the phone, 11 05 2003. 

158 

See note 141: J. epinskas, p. 170. 

159 

See note 149: Law on Insurance of the Republic of Lithuania, Art. 10. 

160 

See note 157: Karolis Vincinas.



to include an insurance benefit in the estate of the deceased child. 161 Thus, we are faced 

with a lack of express statutory provision here as well. 

It is also important that the Lithuanian insurance law, as a relatively young 

branch of law, has no case law relevant to this article. Thus, it is not possible to have 

recourse to court decisions that would explain unclear statutory provisions. 

However, there is a complimentary progress in Lithuanian insurance law, 

namely, preparation of a project of Law on Insurance Contract of the Republic of 

Lithuania, 162 which introduces an insurable interest requirement into Lithuanian 

insurance law. The concept of an insurable interest is defined there as "a loss sustainable 

by an insured or a covered person in case the event insured against occurs". 163 The project 

further provides that "it is an indispensable condition for a damage insurance contract 

that an insured or a covered person has a valid insurable interest, capable of pecuniary 

estimation" 164 . Otherwise, the contract is void. 165 Thus, Lithuania recognizes the need of 

an insurable interest requirement. Moreover, it accepts the rule that an insurable interest 

in the subject matter insured should be a pecuniary interest in the preservation of an 

insurance object. 

However, the definition of the damage insurance contracts encompasses 

property insurance, civil liability insurance and health insurance, leaving life insurance 

outside the definition’s scope. 166 This is based on the nature of the insurance proceeds, e. 

g. whether the proceeds paid are equal to an amount of insurance, or they cover only the 

damages sustained. 167 The articles concerning an insurable interest requirement are not 

intended to apply to life insurance contracts. This is not a good idea. First, the subject 

matter of life insurance has a greater value than that of other forms of insurance. It should 

be afforded the same or even greater protection. Second, an inclusion of life insurance 

into a definition cited above would solve a relevant issue of who can be a beneficiary of a 

life insurance policy. Thus, a person having a pecuniary interest in the continued life of 

the covered person could be appointed as a beneficiary. 

In sum, the analysis of the Lithuanian insurance law yields a need to supplement 

existing legal norms with new explanatory provisions and fill the gaps regarding the 

issues mentioned above. A great achievement is a project of Law on Insurance Contract, 

which illustrates the first attempt to define an insurable interest requirement and insert it 

into the Lithuanian legal system. The analysis of a settled and comprehensive American 

insurance law can stand as a recommendation to the Lithuanian legislature of a way to 

improve Lithuanian insurance law. In order to have a properly applied law, it should be 

clear to insurance companies, which face it in their day-to-day business, and also to the 

potential life insurance consumers. 

161 See note 156: Romualda Brasien. 

162 Law on Insurance Contract, National Insurance Supervisory Board, project (2003). 

163 Id. Art. 2. 

164 Id. Art. 7. 

165 Id. Art. 12. 

166 Id. Art. 4. 

167 Id.

Conclusions 



It is widely recognized that insurance is necessary for the economic development 

of a country. With respect to consumers it is the best way to achieve security. 

In this article mostly American insurance law was analyzed. It is settled and 

comprehensive, thus it could stand as an example to Lithuania that is making only first 

steps in this branch of law. 

In the USA the need for life insurance is widely recognized as it helps to 

alleviate financial consequences of death. An insurable interest, which is necessary to the 

validity of an insurance contract, is required in every state in the USA. 

An insurable interest and consent are two important safeguards for the benefit of 

the insured, the purposes of which are rooted in public policy. Those purposes are 

prevention of wagering and removal of the temptation to deliberately hasten the death of 

the insured in order to receive the insurance proceeds. A life insurance policy procured in 

a way that impairs any of those two safeguards is invalidated on the public policy 

grounds. Issue of such policy has important consequences for the insurer, too, because 

tort liability can arise if a beneficiary attempts or actually murders the insured in order to 

receive the insurance proceeds. 

Authorities disagree on issue what constitutes a required insurable interest in a 

family context. There are two different views. First one states that a close relationship 

alone is enough to create an insurable interest in the life of the other. The second view 

suggests that some sort of additional pecuniary interest in the continued life of the insured 

is necessary to the validity of an insurance contract. This article supports the second 

approach. An insurable interest as a safeguard should be tested by more objective criteria 

than natural love and affection inherent in a family relationship, which is totally 

subjective in its nature. 

The article reveals that spouses have a pecuniary interest in the life of the other. 

This finding is based on their mutual legal obligations arising from the marriage, which 

lead to an expectancy of a pecuniary benefit from the continued life of the spouse. Thus, 

this type of relationship, while being a very close one, has a pecuniary element in it, too. 

After a divorce the insurable interest in the life of a spouse ceases. However, a reasonable 

expectancy of a pecuniary benefit, such as alimony or husband’s duty to support the 

children, gives a wife an insurable interest in the life of her former husband. 

With respect to a parent-child relationship, a minor child always has a direct 

pecuniary interest in the continued lives of his parents. A reference to the legal parental 

duty to support their children leads to this finding. The same cannot be said about a 

parent. The purpose of life insurance and the fact that an insurable interest should be 

tested by objective criteria support a requirement that a parent has a pecuniary interest in 

the life of his minor child. A parent and an adult child have no insurable interest in the 

life of each other, unless one is somehow dependent upon the other. 

Cases concerned with a sibling relationship accord an insurable interest to one 

who has a pecuniary interest in the life of the insured. There are few cases holding that a 

sibling relationship alone is enough to create an insurable interest in the life of the other. 

However, these decisions failed to make a distinction between the policies taken out on 

one’s own life and those procured on the life of the other, and were reached relying on a 

general rule that everyone has an insurable interest in his own life. Thus, they are out of 

the scope of this article. 

With respect to other family relations, an insurable interest must be tested by a 

reasonable expectancy of some pecuniary benefit to be derived from the continued life of 

the insured person.



This article reveals that a family relationship alone does not create an insurable 

interest in the life of the other, and that an expectancy of a pecuniary benefit to be derived 

from the continued life of the insured person is necessary in addition to it. 

Lithuanian insurance law is a relatively young branch of law. There is no wonder 

that the analysis of Lithuanian insurance law yields a need to supplement the existing 

legal norms with new explanatory provisions and fill the gaps. A great achievement is a 

project of Law on Insurance Contract, which illustrates the first attempt to define an 

insurable interest requirement and introduce it to the Lithuanian legal system. Lithuania 

accepts the rule that an insurable interest in the subject matter insured should be a 

pecuniary interest. However, the articles concerning an insurable interest requirement are 

not intended to apply to life insurance contracts. The analysis of a settled and 

comprehensive American insurance law may stand as a recommendation to the 

Lithuanian legislature like a way to improve Lithuanian insurance law. In order to have a 

properly applied law, it should be clear to insurance companies, which face it in their 

day-to-day business, and also to the potential life insurance consumers.

Abstract in Lithuanian 



Dagn Daukantait 

AR EIMOS NARI TARPUSAVIO RYIAI YRA PAKANKAMA 

DRAUDIMO INTERESO, SUSIJUSIO SU KITO ASMENS GYVYBS 

STINUMU, ATSIRADIMO SLYGA? 

Santrauka 

Draudimas turi didel reik kiekvienos alies ekonominiam vystymuisi. 

Draudimo paslaug vartotojui tai yra geriausia priemon apsaugoti save, savo eim bei 

turt. Gyvybs draudimas neabejotinai yra vienas pigiausi ir skaidriausi taupymo b. 

iame straipsnyje daugiausia nagrinjama Jungtini Amerikos Valstij (JAV) 

draudimo teis, kadangi, bdama plaiai ir isamiai reglamentuota, ji gali bti puikus 

pavyzdys pirmus ingsnius ioje teiss akoje engianiai Lietuvai. 

Kiekviena JAV valstija pripasta, jog gyvybs draudimo sutartis, sudaryta 

neturint draudimo intereso, negalioja. is apribojimas yra skirtas apdrausto gyvybs 

draudimu asmens apsaugai. Kita apsaugos priemon slypi reikalavime gauti 

apdraudiamo asmens sutikim prie sudarant gyvybs draudimo sutart. ios dvi 

apdraustojo asmens apsaugos priemons tvirtintos siekiant vieosios tvarkos ir morals 

(public policy) tiksl: ukirsti keli savanaudikam piktnaudiavimui, susijusiam su 

apdraustojo gyvybs trukme, bei postmiui smoningai sukelti draudiminvyk su tikslu 

gauti draudimo imok. Gyvybs draudimo sutartis, sudaryta neturint draudimo intereso 

ar negavus apdraustojo sutikimo, pripastama negaliojania remiantis vieosios tvarkos 

ir morals principais. Be to, draudikui, sudariusiam toki sutart, gali kilti deliktin 

atsakomyb, jei naudos gavjas nuudo apdraust ar bando tai padaryti, siekdamas gauti 

draudimo imok. 

Klausimas, kokia yra draudimo intereso apimtis, neturi vienareikmio atsakymo. 

Egzistuoja du skirtingi poriai. Pirmasis teigia, jog artimas tarpusavio ryys savaime 

sukuria draudimo interes, susijus su kito asmens gyvybs tstinumu. Antrasis reikalauja 

papildomo finansinio (pecuniary) intereso. Straipsnyje pritariama antrajam poriui. 

Draudimo interesas apsaugo apdraust. Norint, kad i apsauga tinkamai veikt, 

draudimo intereso egzistavimo pripainimui nepakanka subjektyvi kriterij kaip eimos 

nari tarpusavio meil ir prisiriimas. Protingas tikjimasis tam tikros finansins naudos, 

susijusios su apdraustojo gyvybs tstinumu, yra kur kas objektyvesnis draudimo intereso 

pripainimo testas. 

io klausimo isamesn analiz parod, jog vienas sutuoktini gali tiktis 

finansins naudos, susijusios su kito sutuoktinio gyvenimo tstinumu. Susituok vyras ir 

moteris gyja tam tikras teises vienas kito atvilgiu, tuo paiu kyla ir pareigos. Vyras 

laikomas sipareigojusiu ilaikyti ir aprpinti savo mon. Tuo tarpu, mona turi vykdyti 

vairias, su nam ruoa susijusias pareigas. ie sipareigojimai yra finansinio pobio. 

Taigi, sutuoktini tarpusavio ryys yra ne tik labai glaudus, bet ir apimantis finansin 

interes. Skyrybos panaikina vyro ir moters vedybines pareigas, todl natralu, jog kartu 

nyksta ir draudimo interesas. Taiau sutuoktinis gyja draudimo interes, susijus su jo 

buvusio sutuoktinio gyvybe, jei is turi pareig mokti alimentus ar ilaikyti vaikus. 

Galima teigti, jog t ir vaik tarpusavio ryys yra pats tviriausias. Tvai turi 

pareig rpintis bei ilaikyti savo nepilnameius vaikus, todl maametis visada turi 

tiesiogin finansin interes, susijus su t gyvybi tstinumu. Tvai ne visada turi 

finansin interes, susijus su vaiko gyvybe. Taiau, atsivelgiant gyvybs draudimo 

tiksl (mirties sukelt finansini problem palengvinim), bei tai, jog draudimo 

interesas, kaip apsauga, turi bti pripaintas egzistuojaniu remiantis objektyviais 

kriterijais, tvai turi teis savo naudai apdrausti nepilnameio vaiko gyvyb tik tuo atveju,



jei egzistuoja finansinis interesas, susijs su minto vaiko gyvybs tstinumu. Tvai ir j 

suaug vaikai nepripastami turintys tok draudimo interes, kuris vienam j suteikt 

teis apdrausti kito gyvyb savo naudai, nebent j tarpusavio santykiai b pagrsti 

finansine priklausomybe. 

Broli, seser bei kitiems giminysts ryiams taikoma ta pati taisykl: tik 

tiesioginis finansinis interesas, susijs su apdraustojo gyvybs tstinumu, gali bti 

pripaintas tokiu draudimo interesu, kuris suteikt teis apdrausti to asmens gyvyb savo 

naudai. 

Lietuvos teiss akt, reglamentuojan gyvybs draudim, analiz atskleidia 

nemaai sprag. Teiss akt netikslum patvirtina nesuderinta draudimo kompanij 

veikla. Kyla aib klausim, neturin vienareikmio, tikslaus atsakymo. 

Gana didelis pasiekimas yra Lietuvos Draudimo Sutarties statymo projektas, 

parengtas Valstybins Draudimo Prieros Tarnybos. iame projekte pirm kart 

Lietuvos draudimo istorijoje apibrta draudimo intereso svoka. Be to, pripainta, jog 

draudimo interesas turi bti toks, kur galima vertinti pinigais. Taiau yra numatyta, kad 

is reikalavimas nebus taikomas gyvybs draudimo sutartims. 

Btent dl prieas patartina patobulinti Lietuvos teiss aktus draudimo 

srityje bei atsivelgti ilgamet JAV praktik, nes tik ais ir isams teiss aktai gali 

ti tinkamai taikomi.

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