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Igor started up his own business many years ago, installing insulation in new housing developments. He hired a fully qualified and much-in-demand installer, Boris, to
Igor started up his own business many years ago, installing insulation in new housing developments. He hired a fully qualified and much-in-demand installer, Boris, to work with him. Because much of the success of the business relied on the work done by Boris, Igor insured against possible loss because of the death of Boris by taking out a term life insurance policy on him for $100,000. Unfortunately, much of the insulation that the two installed in the early years contained urea formaldehyde and both Igor (55) and Boris (45) are now suffering from serious lung disease. The business had to be closed down due to their illnesses and Igor has been told by his doctor that he has less than a year to live. Boris, being younger and in better health to begin with, is expected to live another five years. Since Boris has no wife, family or dependents, Igor decided, as a practical matter, to keep the life insurance policy on Boris' life in force and transfer it to Igor's own wife. The death benefit would help Igor's wife financially when Boris does eventually die. Igor has approached you, his agent, to arrange the transfer of ownership of the policy to his wife. Will the insurance company have any issue with the transfer? A) No, because owning insurance on the life of a person in whom the policyholder has no current pecuniary interest and is not a criminal offense. B) Yes, because once issued a life insurance policy is only transferrable to the policyholder's spouse or to the life insured under the policy. C) Yes, because Igor's spouse has no insurable interest in the former employee who is the life insured under the policy. D) No, because the matter of insurable interest is only an issue at time of application and Igor previously had a pecuniary interest in his employee
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