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KANSAS - Insurable Interest Laws

As of August 1, 2007
Most recent legislation changes:  1993

40-450.   Life insurance; insurable interests; assignments to charitable, benevolent, educational and religious institutions.

(a) A person of competent legal capacity may insure such person's own life and, either at the time the contract of insurance is entered into or thereafter, name any person as the beneficiary thereof irrespective of whether the person named has an insurable interest in the life of the insured. However, except as provided in this section, no person shall procure or cause to be procured any insurance policy upon the life of another person unless the benefits under such policy are payable to the personal representative of the person insured, or to a person having, at the time such contract of insurance was entered into, an insurable interest in the person insured.

(b)  A charitable, benevolent, educational and religious institution qualified under section 501(c) of the internal revenue code shall be deemed to have an insurable interest in the life of an individual insured who has executed a written consent to the assignment of the insurance contract to such institution if such institutional assignee is named as the irrevocable beneficiary thereof.

(c)  If the beneficiary, assignee or other payee under any contract made in violation of this section receives from the insurer any benefits thereunder accruing upon the death of the person insured, the personal representative of the insured may maintain an action to recover such benefits from the person so receiving the benefits.

(d)  Life insurance contracts may be entered into in which the person paying the consideration has no insurable interest in the life of the person insured if a charitable, benevolent, educational or religious institution qualified under section 501(c) of the internal revenue code is irrevocably designated as the beneficiary. In making such contracts the person paying the premium shall make and sign the application therefor as owner. The application must also be signed by the person whose life is to be insured. Such a contract shall be valid and binding among the parties thereto notwithstanding the absence otherwise of an insurable interest in the life of the person insured.

(e)  The provisions of this section shall apply to all insurance contracts in force on and after the effective date of this act and to the procurement, assignment and designation of beneficiaries thereof whenever made.

40-452.   Life insurance; employer's insurable interest in employees; when.

(a) An employer, or a trust which is sponsored by an employer for the benefit of its employees, shall have an insurable interest in each of the lives of the employer's employees, directors or retired employees. Notwithstanding the provisions of K.S.A. 40-433, and amendments thereto, the employer or trust may insure such employees', directors' or retired employees' lives for such employer's or trust's benefit on an individual or group basis with the consent of the insured.

(b)  The consent requirement of subsection (a) shall be deemed to be satisfied if: (1) The employee, director or retired employee is provided with a written notice that the employer or trust intends to obtain life insurance coverage with respect to such person's life; and (2) the employee, director or retired employee fails to provide written notification to the employer or trust, within 30 days from the date that the notice was transmitted, that such person does not consent to the employer obtaining life insurance coverage on such person's life. It shall be unlawful for the employer or trust to retaliate against any person for refusing to consent to the issuance of life insurance on such person's life.

(c)  The extent of the employer's or trust's insurable interest in nonmanagement and retired employees shall be limited to an amount commensurate with the aggregate projected liabilities to such employees under all employee welfare benefit plans, as defined in 29 U.S.C. 1002(1), calculated in accordance with generally accepted actuarial principles.

(d)  For purposes of this section, "employer", means any individual, sole proprietorship, partnership, limited liability company, corporation or any other entity that is legally doing business in this state; the term shall also include all entities or persons which are controlled by or affiliated with any of the foregoing. The determination of whether any entity or person is controlled by or affiliated with another shall be made by applying the principles set forth in subsections (b) or (c) of section 414 of the internal revenue code of 1986, as in effect on January l, 1993, except that all references therein to "80%" shall be changed to 51%.

(e)  This section shall not be interpreted to define all instances in which an insurable interest exists.

(f)  The provisions of this section shall apply to all insurance contracts in force on or after the effective date of this section.

40-453.   Life insurance; insurable interest.

(a) Determination of the existence and extent of the insurable interest under any life insurance policy shall be made at the time the contract of insurance becomes effective but need not exist at the time the loss occurs. In the case of life insurance policies issued or renewed for a specific term, an insurable interest shall not exist for any policy term with respect to any person previously insured by the policy who has, in writing, requested the insurer to terminate or nonrenew the insurance applicable to such person's life.

(b)  Notwithstanding the provisions of subsection (a), an employer's or a trust's insurable interest in any employee, director or previous employee cannot be terminated by such employee, director or previous employee with respect to employee benefit plans described in 29 U.S.C. 1002(3).

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.