                                 CODE OF VIRGINIA

INSURABLE INTEREST REQUIRED; LIFE, ACCIDENT AND SICKNESS INSURANCE (§ 38.2-301)

A. Any individual of lawful age may take out an insurance contract upon himself
for the benefit of any person. No person shall knowingly procure or cause to be
procured any insurance contract upon another individual unless the benefits
under the contract are payable to (i) the insured or his personal representative
or (ii) a person having an insurable interest in the insured at the time when
the contract was made.

B. As used in this section and § 38.2-302, &#8220;insurable interest&#8221;
means:

   1. In the case of individuals related closely by blood or by law, a
   substantial interest engendered by love and affection;

   2. In the case of other persons, a lawful and substantial economic interest in
   the life, health, and bodily safety of the insured. &#8220;Insurable
   interest&#8221; shall not include an interest which arises only or is enhanced
   by the death, disability or injury of the insured;

   3. In the case of employees of corporations, with respect to whom the
   corporate employer, a trust established by the corporate employer, or an
   employee benefit trust is the beneficiary under an insurance contract, the
   lawful and substantial economic interest required in subdivision 2 of this
   subsection shall be deemed to exist in (i) key employees and (ii) other
   employees who have been employed by the corporation for 12 consecutive months,
   provided that the amount of insurance coverage on such other employees shall
   be limited to an amount which is commensurate with employer-provided benefits
   to non-key employees as a group;

   4. In the case of a party to a contract or option for the purchase or sale,
   including a redemption, of an interest in a business proprietorship,
   partnership or firm or of shares of stock of a corporation or of an interest
   in such shares, the lawful and substantial economic interest required in
   subdivision 2 shall be deemed to exist in each individual party to such
   contract or option and for the purpose of such contract or option only, in
   addition to any insurable interest that may otherwise exist as to the life of
   such individual;

   5. In the case of a trustee, other than the trustee of a domestic business
   trust or foreign business trust, as defined in &#xA7; 13.1-1201, the lawful
   and substantial economic interest required in subdivision 2 shall be deemed to
   exist, whether the life insurance policy is owned by a trustee before, on or
   after July 1, 2005, in (i) the individual insured who established the trust,
   (ii) each individual in whose life the owner of the trust for federal income
   tax purposes has an insurable interest, and (iii) each individual in whose
   life a beneficiary of the trust has an insurable interest; and

   6. In the case of an organization described in &#xA7; 501(c) of the Internal
   Revenue Code, the lawful and substantial economic interest required in
   subdivision 2 of this subsection shall be deemed to exist where (i) the
   insured or proposed insured has either assigned all or part of his ownership
   rights in a policy or contract to such an organization or has executed a
   written consent to the issuance of a policy or contract to such organization
   and (ii) such organization is named in the policy or contract as owner or as
   beneficiary.

HISTORY: 1952, c. 317, § 38.1-329; 1986, c. 562; 1988, c. 831; 1992, cc. 8, 50;
1993, c. 105; 2005, cc. 656, 698; 2007, c. 186.