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INDIANA - Insurable Interest Laws

As of August 1, 2007
Most recent legislation changes:  1995

§ 27-1-12-17. Corporations authorized to insure officers and employees

Any corporation organized under the laws of this state may, when authorized by its board of directors, or its executive committee, cause to be insured, for its benefit, the life of any of its directors, officers, agents or employees, and to pay the premiums for such insurance; and may continue to pay such premiums after the insured shall cease to be such a director, officer, agent or employee of such corporation.

Due authority for such corporation to effect, assign, release, convert, surrender, or take any other action with reference to such insurance, shall be sufficiently evidenced to the insurance company by a certificate to that effect by the secretary, or other corresponding officer of such corporation under its corporate seal. Any such certificate shall protect the insurance company for any act done or suffered by it upon the faith thereof, without further inquiry into the validity of the corporate authority or the regularity of the corporate proceedings. The beneficiary in such a policy shall not be changed except with the consent of such corporation, beneficiary, effecting such insurance.

No person shall, by reason of interest in the subject matter, be disqualified from acting as a director, or as a member of the executive committee of such corporation on any corporate act touching such insurance.

§ 27-1-12-17.1. Insurable interest in life of employee -- Proceeds exempt from creditors or dependents

(a) As used in this section, "employee" includes a director, an officer, a partner, a manager, a nonmanagement employee, and a retired employee of the employer or the employer's affiliates.

(b) As used in this section, "employer" means an individual, a corporation, a partnership, a limited liability company, and any other legal entity that has at least one (1) employee and is legally doing business in Indiana. The term includes an association of employers and the employer's affiliates.

(c) An employer that provides life insurance, health insurance, disability insurance, retirement benefits, or similar benefits to an employee of the employer has an insurable interest in the life of the employee. The trustee of a trust established by an employer for the benefit of the employer has the same insurable interest as the employer in the life of an employee. The trustee of a trust established by an employer that provides life insurance, health insurance, disability insurance, retirement benefits, or similar benefits to an employee of the employer and acts in a fiduciary capacity with respect to that employee or the employee's dependents or beneficiaries has an insurable interest in the life of the employee for whom benefits are to be provided.

(d) An employer or the trustee of a trust established by the employer may acquire insurance upon an employee in whom the employer or the trustee of the trust has an insurable interest as determined under subsection (c) if the employee consents to be insured. An employee consents to be insured if the employee is provided written notice of the insurance coverage and does not object to the insurance coverage within thirty (30) days of receipt of the notice.

(e) An insurable interest must exist at the time the contract of life or disability insurance becomes effective, but need not exist at the time the loss occurs.

(f) Proceeds of a policy issued under this section are exempt from the claims of the employee's creditors or dependents.

27-8-18-1.  Applicability.

  This chapter applies to every life insurance policy issued in Indiana or issued for delivery in Indiana, irrespective of the date of issue.

27-8-18-2.  "Charitable entity" defined.

  As used in this chapter, "charitable entity" means an entity that is exempt from federal taxation under Section 501(c)(3) of the Internal Revenue Code.

27-8-18-3.  "Life insurance policy" defined.

  As used in this chapter, "life insurance policy" means an insurance policy that provides the type of insurance described in Class 1(a) of IC 27-1-5-1.

27-8-18-4.  Powers of charitable entity.

  (a) A charitable entity may:

   (1) Purchase;

   (2) Own; or

   (3) Be transferred ownership of;

   a life insurance policy on the life of an individual if the individual consents to the charitable entity's purchase or ownership of the policy.

(b) A charitable entity that purchases or is transferred ownership of a life insurance policy under subsection (a) has an insurable interest in the life of the individual who consents to the charitable entity's purchase or ownership of the policy.

27-8-18-5.  Inquiry into legal status of charitable entity.

  A life insurance company that is requested to:

   (1) Issue a life insurance policy; or

   (2) Transfer ownership of a life insurance policy;

   to an entity that is purported to be a charitable entity has no obligation to inquire into the legal status of that entity under any law.

27-8-18-6.  Representation of owner of life insurance policy.

  A life insurance company is entitled to rely on the representations made in apparent good faith by the owner or putative owner of a life insurance policy for the purpose of inducing the life insurance company to accept an entity as the owner or beneficiary of the life insurance policy.

This information does not constitute legal advice by the Insurance Barometer LLC and should not be relied upon as such. Every effort has been made to provide correct and accurate information but the reader should verify state laws prior to implementing an insurance program.