Question
What is the name of your state? Iowa
I would be grateful if you could also provide some general guide on the the
rules of insurance interest in the state of Iowa. The policy owner could be a private investment company (Cayman) wholly-owned by a trust established by the insured for the benefit of his family members.
The trust would be named the beneficiary of the policy. As I
understand, if there is no insurable interest, the insurance policy is void and the insurance company cannot waive the requirements of insurable interest.
Thus, can the company still own a Universal Life policy under a Trust and not fail the insurable interest rule?
Regards,
Danny
Answer
I am not an Iowa lawyer and not familiar with Iowa's laws to the extent they may differ from those in other states. Further as you propose rather complex structures (asset protection and/or tax avoidance in mind?), I am not sure where the insurance policy would be applied for or issued, or whether a US or foreign company would be the insurer, or what jurisdiction's laws would apply to the policy.
You have an insurable interest in your own life. So would some of your family members. Insurable interest is determined at time of issue; a later sale or transfer to one without insurable interest is not relevant (at least where there is no preconceived plan, hidden from the insurer, to evade rules).
One way around any possible issue may be for you or a family member to be a co-applicant and fully disclose to the insurer what you have in mind, in writing. Then transfer any interest.
Answer
Dear Sir,
Thank you for your reply but it does not address my main issue, which is how can a Trust as a policyowner, can have an insurable interest in a Universal Life policy. The trust estate is a company and the life assured is a major shareholder of the company. The insurer is Transamercian based in Iowa and the Trust is a foreign trust from Singapore. Is the policy voided in this case due to the insurable interest rule?
Thanks,
Danny