{"data":{"id":"us-ok/okla.-stat.-tit.-36-36-3604","jurisdiction":"us-ok","citation":"Okla. Stat. tit. 36, § 36-3604","heading":"Insurable interest with respect to personal insurance","body":"A. 1. Any individual of competent legal capacity may procure\n\nor effect an insurance contract upon his or her own life or body for\n\nthe benefit of any person. Except as provided in subsection D of\n\nthis section, no person shall procure or cause to be procured any\n\ninsurance contract upon the life or body of another individual\n\nunless the benefits under the contract are payable to the individual\n\ninsured or a personal representatives, or to a person having, at the\n\ntime when the contract was made, an insurable interest in the\n\nindividual insured.\n\n2. In the absence of an agreement to the contrary, a policy\n\nprocured and owned by a corporation, partnership, association,\n\nlimited liability company, or other legal entity on the life or body\n\nof an officer, director, manager, member, or employee, other than a\n\nsole proprietor, upon the termination of the insurable interest, the\n\nowner of the policy shall, if permitted by the terms of the policy,\n\noffer to sell, transfer, or assign the policy to the insured in\n\nexchange for the cash surrender value of the policy or, if there is\n\nno cash value, in exchange for an amount equal to the total of any\n\npremiums paid for the policy, minus any dividends received, plus\n\ninterest. This offer shall be made in writing to the insured after\n\ntermination of the insurable interest. The offer shall state the\n\ntime for acceptance which shall not be less than thirty (30) days\n\nafter receipt of the offer by the insured. If the insured rejects\n\nthe offer or fails to accept the offer in the time provided, the\n\nowner of the policy may continue to own the policy subject to its\n\nterms.\n\nB. If the beneficiary, assignee, or other payee under any\n\ncontract made in violation of this section receives from the insurer\n\nany benefits thereunder accruing upon the death, disability, or\n\ninjury of the individual insured, the individual insured or an\n\nexecutor or administrator, as the case may be, may maintain an\n\naction to recover such benefits from the person receiving them.\n\nC. \"Insurable interest\" with reference to personal insurance\n\nincludes only interests as follows:\n\n1. In the case of individuals related closely by blood or by\n\nlaw, a substantial interest engendered by love and affection;\n\n2. In the case of other persons, a lawful and substantial\n\neconomic interest in having the life, health, or bodily safety of\n\nthe individual insured continue, as distinguished from an interest\n\nwhich would arise only by, or would be enhanced in value by, the\n\ndeath, disability, or injury of the individual insured;\n\n3. An individual heretofore or hereafter party to a contract or\n\noption for the purchase or sale of an interest in a business\n\npartnership or firm, or of shares of stock of a closed corporation\n\nor of an interest in such shares, has an insurable interest in the\n\nlife of each individual party to the contract and for the purposes\n\nof the contract only, in addition to any insurable interest which\n\nmay otherwise exist as to the life of the individual;\n\n4. A trustee of a trust, whenever established, shall be deemed\n\nto have an insurable interest in:\n\na. the individual insured who established the trust,\n\nb. each individual in whose life the owner of the trust\n\nfor federal income tax purposes has an insurable\n\ninterest, and\n\nc. each individual in whose life a beneficiary of the\n\ntrust has an insurable interest; and the proceeds of\n\nthe life insurance policy are primarily for the\n\nbenefit of the trust beneficiaries having an insurable\n\ninterest in the life of the individual insured; and\n\n5. a. An employer, or a trust which is sponsored by an\n\nemployer for the benefit of its employees, shall have\n\nan insurable interest in each of the lives of the\n\nemployees, directors, or retired employees of the\n\nemployer. Notwithstanding paragraph 2 of subsection C\n\nof this section or Section 4101 of this title, and\n\namendments thereto, the employer or trust may insure\nhe individual insured; and\n\n5. a. An employer, or a trust which is sponsored by an\n\nemployer for the benefit of its employees, shall have\n\nan insurable interest in each of the lives of the\n\nemployees, directors, or retired employees of the\n\nemployer. Notwithstanding paragraph 2 of subsection C\n\nof this section or Section 4101 of this title, and\n\namendments thereto, the employer or trust may insure\n\nthe life of any employee, director, or retired\n\nemployee for the benefit of the employer or trust on\n\nan individual or group basis only with the written\n\nconsent of the insured.\n\nb. The consent requirement of Section 3607 of this title\n\nshall be accomplished as follows:\n\n(1) the employer shall notify the employee, director,\n\nor retired employee by a written notice that the\n\nemployer or trust would like to obtain life\n\ninsurance coverage with respect to the person's\n\nlife, and\n\n(2) if the employee, director, or retired employee\n\nfails to provide written consent to the employer\n\nor trust, the employer or trust shall not\n\npurchase or obtain such insurance.\n\nc. It shall be unlawful for the employer or trust to\n\nretaliate against any person for refusing to consent\n\nto the issuance of insurance on the person.\n\nd. The insurable interest of the employer or trust in\n\nnonmanagement and retired employees shall be limited\n\nto an amount agreed to by the employee or, in the\n\nabsence of an agreement, an amount of aggregate\n\nprojected death benefits commensurate with the\n\naggregate projected liabilities to the employee under\n\nall employee welfare benefit plans, as defined in\n\nSection 1002(1) of Title 29 of the United States Code.\n\nCalculations of life insurance benefits and welfare\n\nbenefit liabilities shall be made in accordance with\n\ngenerally accepted actuarial principles. Matching of\n\nlife insurance benefits and welfare benefit\n\nliabilities may be done on cash flow, present value,\n\nor other appropriate basis.\n\ne. For purposes of this section:\n\n(1) \"employer\" means any individual, sole\n\nproprietorship, partnership, limited liability\n\ncompany, corporation, or other legal entity that\n\nis legally doing business in this state; the term\n\nshall also include all entities or persons which\n\nare controlled by or affiliated with any of the\n\nforegoing. The determination of whether any\n\nentity or person is controlled by or affiliated\n\nwith another shall be made by applying the\n\nprinciples set forth in subsection (b) or (c) of\n\nSection 414 of Title 26 of the United States\n\nCode, as in effect on January 1, 1993, except\n\nthat all references therein to eighty percent\n\n(80%) shall be changed to fifty-one percent\n\n(51%), and\n\n(2) “employee” means any common law employee of an\n\nemployer.\n\nf. This section shall not be interpreted to limit other\n\ninsurable interests which may exist by statute or at\n\ncommon law.\n\ng. Determination of the existence and extent of the\n\ninsurable interest under any life insurance policy\n\nshall be made at the time the contract of insurance\n\nbecomes effective, provided however, the insurable\n\ninterest need not exist at the time the loss occurs.\n\nD. Life insurance contracts may be entered into in which the\n\nperson paying the consideration for the insurance has no insurable\n\ninterest in the life of the individual insured, where charitable,\n\nbenevolent, educational or religious institutions, or their\n\nagencies, are designated as the beneficiaries thereof. In no event\n\nshall an individual be named as a beneficiary. In making these\n\ncontracts, the person paying the premium shall make and sign the\n\napplication therefor as owner and shall designate a charitable,\n\nbenevolent, educational, or religious institution, or an agency\n\nthereof, as the beneficiary or beneficiaries of the contract. The\n\napplication or any subsequent change of beneficiary designation\n\nshall be signed by the individual whose life is to be insured.\nng these\n\ncontracts, the person paying the premium shall make and sign the\n\napplication therefor as owner and shall designate a charitable,\n\nbenevolent, educational, or religious institution, or an agency\n\nthereof, as the beneficiary or beneficiaries of the contract. The\n\napplication or any subsequent change of beneficiary designation\n\nshall be signed by the individual whose life is to be insured.\n\nThese contracts shall be valid and binding among the parties,\n\nnotwithstanding the absence otherwise of an insurable interest in\n\nthe life of the individual insured.\n\nE. Life insurance contracts may be entered into in which the\n\nmembers of an alumni association of an institution of higher\n\neducation accredited by the Oklahoma State Regents for Higher\n\nEducation are insured under a group insurance policy and either the\n\ninstitution is the designated beneficiary thereof or the association\n\nis the designated beneficiary with the stipulation that the\n\nassociation will use the proceeds of the policies for direct grants\n\nto the institution or for scholarships for students of such\n\ninstitutions. In no event shall an individual be named as a\n\nbeneficiary to such a policy. In making such contracts, the person\n\npaying the premium shall make and sign the application therefor as\n\nowner and shall designate an institution or alumni association as\n\nthe beneficiary or beneficiaries of such contract. The application\n\nor any subsequent change of beneficiary designation shall be signed\n\nalso by the individual whose life is to be insured. These contracts\n\nshall be valid and binding among the parties thereto,\n\nnotwithstanding the absence of an insurable interest in the life of\n\nthe individual insured.","path":["OK Code","Title 36"],"source_url":"https://www.oklegislature.gov/OK_Statutes/CompleteTitles/os36.pdf","current_through":"2026-08-14","vintage":"open-us-law v2026.08, retrieved 2026-09-14","retrieved_at":"2026-09-14T18:32:36Z","sha256":"e52bbda3169dbe9004be11edf7f755619c2d483a3c86acfb58a14cfe3b7116d6","source_id":"us-ok","stale":false,"prev":"us-ok/okla.-stat.-tit.-36-36-3603","next":"us-ok/okla.-stat.-tit.-36-36-3605"},"notice":"GroundRules: Original legal text. Not legal advice."}