When Is Insurable Interest In Life Insurance Necessary? 
Insurable interest is what ensures that someone can not take a life insurance policy on you with the purpose of making money on your death . It is insurance fraud to take out a policy on an older or terminally ill person just to collect money on their death ; or even worse , to kill someone for the purpose of collecting their life insurance . In order to prevent fraud and to protect their policyholders , all life insurance policies use some measure of insurable interest . 