The right to effect a contract of insurance on the life of a debtor by the creditor is?
Question 1 Report
The right to effect a contract of insurance on the life of a debtor by the creditor is?
Answer Details
The right to effect a contract of insurance on the life of a debtor by the creditor is called insurable interest.
Insurable interest means that a person or entity must have a financial interest in the insured person's life or property in order to purchase an insurance policy. In the case of a creditor, they have an insurable interest in the life of their debtor because the debtor owes them money. If the debtor were to pass away, the creditor would suffer a financial loss.
Therefore, the creditor has the right to take out a life insurance policy on their debtor as long as they have an insurable interest in their life. This is an example of how insurance can help manage risk and protect financial interests.
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