(1)An insurable interest, with reference to
insurance on the life of another, exists only as follows:
(a)An individual has an insurable interest in the life of another person in
whom the individual has a substantial interest engendered by love and affection in
the continuation of the life of the insured and who are:
(I)Related within the fifth degree or closer, as measured by the civil law
system of determining degrees of relation, either by blood or marriage to the
insured;
(II)Stepchildren of the insured or their descendants; or
(III)Individuals who are designated as beneficiaries of insurance policies for
life insurance coverage on the life of the insured under a designated beneficiary
agreement executed pursuant to article 22 of title 15, C.R.S.;
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(1) An insurable interest, with reference to
insurance on the life of another, exists only as follows:
(a) An individual has an insurable interest in the life of another person in
whom the individual has a substantial interest engendered by love and affection in
the continuation of the life of the insured and who are:
(I) Related within the fifth degree or closer, as measured by the civil law
system of determining degrees of relation, either by blood or marriage to the
insured;
(II) Stepchildren of the insured or their descendants; or
(III) Individuals who are designated as beneficiaries of insurance policies for
life insurance coverage on the life of the insured under a designated beneficiary
agreement executed pursuant to article 22 of title 15, C.R.S.;
(b) An individual has an insurable interest in the life of another person if such
individual has a lawful and substantial interest in the continued life of the insured,
as distinguished from an interest that would arise only from, or would be enhanced
in value by, the death of the individual insured;
(c) An individual party to a contract for the purchase or sale of an interest in
a business entity has an insurable interest in the life of each other individual party
to the contract, but only for the purpose of carrying out the intent and purpose of
the contract;
(d) A trustee of a trust has an insurable interest in the life of an insured
under a life insurance policy as provided in section 15-5-114;
(e) A guardian, trustee, or other fiduciary, acting in a fiduciary capacity, has
an insurable interest in the life of any person for whose benefit the fiduciary holds
property and in the life of any other individual in whose life the person has an
insurable interest so long as the life insurance proceeds are used primarily for the
benefit of persons having an insurable interest in the life of the insured;
(f) An organization described in section 170 (c) of the federal Internal
Revenue Code of 1986, as amended, has an insurable interest in the life of any
person who consents in writing to the organization's ownership or purchase of that
insurance pursuant to section 10-7-115;
(g) A trustee, sponsor, or custodian of assets held in any plan governed by
the Employee Retirement Income Security Act of 1974, 29 U.S.C. sec. 1001 et seq.,
or in any other retirement or employee benefit plan, has an insurable interest in the
life of any participant in the plan, but only if consent is obtained in writing from the
participant before the insurance is purchased. An employer, trustee, sponsor, or
custodian may not retaliate or take adverse action against a participant who does
not consent to the issuance of insurance on the participant's life.
(h) A business entity has an insurable interest in the life of any of the owners,
directors, officers, partners, or managers of the business entity or any affiliate or
subsidiary of the business entity, or key employees or key persons of the business
entity, affiliate, or subsidiary, but only if consent is obtained in writing from the key
employees or key persons before the insurance is purchased. The business entity,
affiliate, or subsidiary may not retaliate or take adverse action against any key
employee or key person who does not consent to the issuance of insurance on the
key employee or key person's life. For purposes of this paragraph (h), key
employee or key person means an individual whose position or compensation is
described in section 101 (j)(2)(A)(ii) of the federal Internal Revenue Code of 1986,
as amended.
(i) A financial institution or other person to whom a debt is owed, whether for
the purposes of premium financing or otherwise, has an insurable interest in the life
of the borrower or any of the owners, directors, officers, partners, or managers of
the borrower; key employees, guarantors, or key persons of the borrower; or any of
the foregoing of an affiliate or a guarantor of the borrower, but only if consent is
obtained in writing from such persons before the insurance is purchased; except
that such insurable interest is limited to the amount of the debt owed plus
reasonable interest and service charges. The proceeds payable upon the death of
an insured in excess of the total outstanding debt owed shall be paid to the estate
of the individual insured.