LALICAN VS THE INSULAR LIFE ASSURANCE COMPANY LTD

An INSURABLE INTEREST is one of the most basic and essential requirements in an

insurance contract. In general, an insurable interest is that interest which a person is
deemed to have in the subject matter insured, where he has a relation or connection
with or concern in it, such that the person will derive pecuniary benefit or advantage
from the preservation of the subject matter insured and will suffer pecuniary loss or
damage from its destruction, termination, or injury by the happening of the event
insured against. 
The existence of an insurable interest gives a person the legal right to insure the
subject matter of the policy of insurance.
The persons in whose life one may have insurable interest are enumerated in Section
10 of the Insurance code which provides:

Section 10. Every person has an insurable interest in the life and health:

(a) Of himself, of his spouse and of his children;

(b) Of any person on whom he depends wholly or in part for education or

support, or in whom he has a pecuniary interest;

(Pecuniary interest is an interest that a person has in a matter because of a reasonable
likelihood or expectation of appreciable financial gain or loss to the person  or another person
with whom the person is associated)

(c) Of any person under a legal obligation to him for the payment of money, or
respecting property or services, of which death or illness might delay or prevent
the performance; and

(d) Of any person upon whose life any estate or interest vested in him
depends.

A. Blood Relationship

Limited to insurable interest over the life of a spouse or of the children. It tells of a
natural affection and moral forces which generally prompt one such to serve and
protect the other.

B. When mere BR is not sufficient

One has no insurable interest over the life of his parents, brother or sister just
because they are related to him by blood alone. If the person whose life is sought to
be insured is not a spouse or a child, one can have insurable interest only on the life
of a relative if he or she falls under any other par. of sec.10.

Dito papasok par. b

Has II over the life of the parents because his parents are legally obligated under the
fam code to give support to their children. The basis of II is not blood relationship but
pecuniary interest.

C. Read par. c

In other words, a creditor shall have insurable interest over the life of the debtor who
may be obligated to deliver money or property or to provide some service.

Bar Answer:
Yes, Carlo can claim insurance benefit. He had insurable interest on Bianca’s life
under sec. 10 (b) of the insurance code as the problem states that Carlo “always
depend on Bianca both emotionally and financially.” The insurable interest upon the
life of another under the aforesaid provision need not be based on kinship or legal
obligation to give support. The fact that their marriage may be void is irrelevant.
Presence of insurable interest has the following purposes:
1. The presence of Insurable Interest reduces moral hazard – dishonesty or
character defects in an individual that increases the chance of loss;
2. Insurable Interest likewise helps in measuring the loss of the insured.