• Truth is Stranger than Life Insurance
  • December 1, 2010 | Author: James P. Evans
  • Law Firm: Hiscock & Barclay, LLP - Syracuse Office
  • The Court of Appeals recently held that New York Insurance Law § 3205(a) permits individuals to obtain insurance on their life for the purpose of immediately assigning the insurance to a third party who has no “insurable interest” in his/her life. Kramer v. Phoenix Life Ins. Co., Ct. App., Appeal No. 176 (2010). Plaintiff’s late husband had done that very thing, funding trusts with life insurance policies totaling approximately $56 million in benefits pursuant to a “stranger-owned life insurance” scheme. After her husband’s death, Plaintiff refused to turn over copies of the death certificate to investors who held the beneficial interests in those policies. She then sued, claiming that the contract by which the insurance policies were assigned was void because it violated -in letter or spirit- N.Y. Ins. Law § 3205(b)(1), which prohibits an individual from obtaining a life insurance policy on the life of another in whom he/she has no insurable interest, unless the insured person or the person’s personal representatives are the beneficiaries of the policy.