We are both correct in that they can do all/some/none of the below:
1. Structure their agreements so that some things are covered and others are not e.g. suicide is sometimes NOT covered for life insurance
2. Choose not to cover certain areas e.g. there were insurance firms choosing not to cover Staten Island even pre-Sandy
3. Set their rates at high levels to discourage people e.g. this happened in my old town house where there were too many claims based around water heaters leaking
Funny side story: I remember reading a book about the British Special Forces (S.A.S.) and there was a note that said only Lloyd's of London was willing to insure them due to the high risk of injuries from their line of work.
Funny side story #2:
One of my family members had a friend who was apparently a crazy driver. He drove a delivery truck so a bunch of the driver's friend (including my family member) took out a life insurance policy on him (driver). I didn't even realize you could do this but apparently you can.
In the end, turned out that the driver outlived all of the people who were on the policy!
>One of my family members had a friend who was apparently a crazy driver. He drove a delivery truck so a bunch of the driver's friend (including my family member) took out a life insurance policy on him (driver). I didn't even realize you could do this but apparently you can.
It's generally restricted, since it can incentivize killing them to collect the money. To life-insure anybody you have to convince the insurer that you have an "insurable interest" in their life. That's easy if they're a breadwinner/caretaker in your family, and you could also show it if they were e.g. critical to your business (edit: or had lent them money). I'd be interested to know what the justification was in that case.
Insurers really try to make sure that the payout isn't so high that you want the insured event to happen ("moral hazard").
Hm, I think the "insurable interest" check is more of a standard practice to protect against being exploited by criminals and less of an "oh man, we'd love to do that but for those pesky regulations". Still, if I had to guess, I'd say it's that they don't look too closely if it's a close-enough family member that has a job.
1. Structure their agreements so that some things are covered and others are not e.g. suicide is sometimes NOT covered for life insurance
2. Choose not to cover certain areas e.g. there were insurance firms choosing not to cover Staten Island even pre-Sandy
3. Set their rates at high levels to discourage people e.g. this happened in my old town house where there were too many claims based around water heaters leaking
Funny side story: I remember reading a book about the British Special Forces (S.A.S.) and there was a note that said only Lloyd's of London was willing to insure them due to the high risk of injuries from their line of work.
Funny side story #2:
One of my family members had a friend who was apparently a crazy driver. He drove a delivery truck so a bunch of the driver's friend (including my family member) took out a life insurance policy on him (driver). I didn't even realize you could do this but apparently you can.
In the end, turned out that the driver outlived all of the people who were on the policy!