SECTION 30. WHO MAY INSURE.

A person can always insure his own life to any extent that he sees fit, and such insurance may either be for the benefit of his estate, or for the benefit of any person or persons whom he may designate. It is not necessary that the beneficiary should have any interest in the life of the insurer."

Where the policy is taken out by a third person, such person must have an insurable interest in the life of the person whose life is insured. Such interest must exist at the time the insurance was taken out, but not necessarily at the time of the death. This is the exact reverse of the rule in the case of marine or fire insurance.

This question was thus discussed by the Supreme Court of the United States in the case of Warnock vs. Davis:

"It is not easy to define, with precision, what will in all cases constitute an insurable interest, so as to take the contract out of the class of wager policies. It may be stated generally, however, to be of such an interest, arising from the relations of the party obtaining the insurance, either as creditor of or surety for the assured, or from the ties of blood or marriage, to him, as will justify a reasonable expectation of advantage or benefit from the continuance of his life. It is not necessary that the expectation of advantage or benefit should be always capable of pecuniary estimation, for a parent has an insurable interest in the life of his child, and a child in the life of his parent; a husband in the life of his wife and a wife in the life of her husband. The natural affection in cases of this kind is

• Union Fraternal League vs. Wal

ton, 109 Ga., 1; 34 S. E., 317 Elkhart Mut. Aid B. & R. Assn.

VB. Houghton, 103 Ind., 286; 2 N. E., 763.

• 104 U. S., 775.

considered as more powerful, as operating more efficaciously, to protect the life of the insured than any other consideration. But in all cases there must be a reasonable ground, founded upon the relations of 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. Otherwise, the contract is a mere wager, by which the party taking the policy is directly interested in the early death of the assured. Such policies have a tendency to create a desire for the event. They are, therefore, independently of any statute on the subject, condemned, as being against public policy.

"The assignment of a policy to a party not having an insurable interest is as objectionable as the taking out of a policy in his name. Nor is its character

changed because it is for a portion merely of the insurance money. To the extent in which the assignee stipulates for the proceeds of the policy beyond the sum advanced by him, he stands in the position of one holding a wager policy. The law might be readily evaded, if the policy or an interest in it could, in consideration of paying the premiums and assessments upon it, and the promise to pay upon the death of the assured a portion of its proceeds to his representatives, be transferred so as to entitle the assignee to retain the whole insurance money.

"The question here presented has arisen, under somewhat different circumstances, in several of the State Courts; and there is a conflict in their decisions. In Ins. Co. vs. Hazzard, which arose in Indiana, the policy of insurance, which was for $3,000, contained the usual provision that if the premiums were not paid at the time specified the policy would be forfeited.

The second premium was not paid, and the assured, declaring that he had concluded not to keep up the policy, sold it for $20 to one having no insurable interest, who took an assignment of it with the consent of the secretary of the insurance company. The assignee subsequently settled with the company for the unpaid premium. In a suit upon the policy, the Supreme Court of the State held that the assignment was void, stating that all the objections against the issuing of a policy to one upon the life of another, in whose life he has no insurable interest, exist against holding such a policy by mere purchase and assignment. 'In either case,' said the court, 'the holder of such policy is interested in the death rather than the life of the party assured. The law ought to be, and we think it clearly is, oppossed to such speculations in human life.' 41 Ind., 116. The court referred with approval to a decision of the same purport by the Supreme Court of Massachusetts in Stevens vs. Warren, 101 Mass., 564. There the question presented was whether the assignment of a policy by the assured in his lifetime, without the assent of the insurance company, conveyed any right in law or equity to the proceeds when due. The court was unanimously of opinion that it did not, holding that it was contrary not only to the terms of the contract, but contrary to the general policy of the law respecting insurance, in that it might lead to gambling or speculative contracts upon the chances of human life. The court also referred to provisions sometimes inserted in a policy expressing that it is for the benefit of another, or is payable to another than the representatives of the assured, and, after remarking that the contract in such a case might be sustained, said: "That the same

would probably be held in the case of an assignment with the assent of the assurers. But if the assignee has no interest in the life of the subject which would sustain a policy to himself, the assignment would take effect only as a designation, by mutual agreement of the parties, of the person who should be entitled to receive the proceeds when due, instead of the personal representatives of the deceased. And if it should appear that the arrangement was a cover for a speculating risk, contravening the general policy of the law, it would not be sustained."

SECTION 31. FORMS OF LIFE INSURANCE POLICIES.

The various kinds of life insurance policies have been thus described by a recent writer:"

"The kinds of life policies are limited in number only by the ingenuity of the actuaries and managers of the numerous competing companies, insuring against the loss of life, and only the more important and usual kinds may be mentioned. The oldest and most frequent form, even at the present time, is known as the 'regular life,' under the terms of which the insured is required to pay a certain fixed premium annually throughout life, and the beneficiary is entitled to receive payment under the policy only upon the death of the insured.

"Another kind of policy which, from the time of its invention by Lorenzo Tonti, an Italian, in 1650, has always proved exceedingly attractive is the 'tontine.' The original tontine contract was for the purpose of securing government loans on advantageous terms from the people, and was based upon a division of the lenders into classes, only the survivors of which ' Vance on Insurance, Secs. 14-15.

were at any given period to participate in the payment of the dividends or principal. This, in its simple form, is seen to be the reverse in many respects of the ordinary contract of life insurance, under which it is to the interest of the insurer that the insured should survive the making of the contract long enough to pay in the premiums an amount equal to, or in excess of the sum received by the beneficiaries under the policy. Under the tontine contract, however, death before the dividend period entirely deprived the decedent, or his nominee, of any benefits from the contract whatever, but the interest of all dying would pass to the survivors, so that the last survivor of any class would receive the dividends that originally accrued to the whole class, and, if the terms of the contract so provided, might also receive the entire principal sum of the loan. A great many of the modern life insurance policies contain tontine features, more or less modified to suit the desires of the insured. Thus, in many endowment policies, it is provided that dividends shall be apportioned to all policies subsisting after a certain period, whether five, ten or twenty years. Under such contracts, those policies maturing or lapsing prior to the expiration of the dividend period receive no dividends, but those still in force at the end of the tontine period receive the benefit, by way of increased dividends, of the maturing or the cancellation of other policies.

"As has been stated heretofore, the modern life insurance contract is as much a contract of investment as of insurance. In the regular life policies defined above, the insurance feature is given prominence, but there are written many and various kinds of life policies in which the investment feature is paramount.