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All Jurisprudence based

0 tracked cards Commercial and Taxation Laws

A bank provides a PHP 25,000,000 loan to DeltaFoods, Inc. To secure the loan, DeltaFoods procures a life insurance policy on the life of its Chief Financial Officer, Felix Santos, naming the bank as owner and sole beneficiary. Felix Santos is not related to the bank and has no ties beyond his employment. (a) Does the bank have insurable interest in Felix Santos’s life at the time of policy issuance? (b) If no insurable interest exists, explain the consequences for the policy and any claim.

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Yes; the bank has insurable interest because the death of a key officer would impair the borrower's ability to repay the loan. No; there is no insurable interest since the insured is not the debtor and the bank has no pecuniary stake beyond employment. Yes; because a loan security arrangement can include a life policy on a key employee. No; insurable interest exists only if the insured is the debtor or a guarantor who provides direct support to the loan.

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