Life · Chapter 10 · Personal Uses
Life Insurance as Property
Definition
Life insurance is unique: it is both protection AND an asset that can be bought and sold. Insurable interest is required only at purchase (inception) — it need not persist for the policy to stay valid.
Example
A wife owns a policy on her husband; they divorce. The policy remains valid and in force as long as premiums are paid — unlike health or homeowners coverage after the relationship/property is gone.
Exam tip
The policy's value is an asset in the OWNER'S estate at death — taxable if the estate exceeds the federal exemption.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms