Is it legal to have life insurance on an employee without their knowledge?

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Is it legal to have life insurance on an employee without their knowledge?

I was recently told by my employer that he wanted to do something for me and my family in the form of a 100k life insurance policy on myself. The company would pay for it. I have now found out that the policy is for 250k and that the beneficiaries is set up for 40% to my family and 60% to the company. Is it legal for him to have the company as the beneficiary of a life insurance policy also is it legal to take out an additional amount with out my knowledge?

Asked on August 27, 2012 under Insurance Law, South Carolina

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

In order to be able to take out a life insurance policy on the life of another, you must have what is known as an "insurable interest" under the law.  Certain relationships have that interest with out question: husbands and wives, parents and children.  Other non familial relationships can also have insurable interests: partners in a corporation or business, etc.  There is a standard that must be met  - a test, so to speak - and it really has to do with financial dependency.  So I would speak with an attorney there as to the sitaution in detail.  Good luck.


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