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A bill to be entitled

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An act relating to insurable interests; amending s.

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627.404, F.S.; providing definitions; providing for the

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requirement of an insurable interest in an insured at the

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time of an insurance contract; providing for actions by

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the insured to recover benefits under such a contract paid

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to a person lacking such an interest at the time such

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contract was executed; requiring the consent of the person

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insured for certain contracts; providing exceptions;

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providing applicability; providing intent; providing an

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effective date.

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Be It Enacted by the Legislature of the State of Florida:

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     Section 1.  Section 627.404, Florida Statutes, is amended to

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read:

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     627.404  Insurable interest; personal insurance.--

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     (1) Any individual of legal capacity may procure or effect

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an insurance contract on his or her own life or body for the

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benefit of any person, but no person shall procure or cause to be

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procured or effected an insurance contract on the life or body of

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another individual unless the benefits under such contract are

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payable to the individual insured or his or her personal

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representatives, or to any person having, at the time such

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contract was made, an insurable interest in the individual

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insured. The insurable interest need not exist after the

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inception date of coverage under the contract.

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     (2) For purposes of this section, the term:

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     (a) "Business entity" includes, but is not limited to, a

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joint venture, partnership, corporation, limited liability

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company, and business trust.

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     (b) "Insurable interest" as to life, health, or disability

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insurance includes only the following interests:

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     1. An individual has an insurable interest in his or her

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own life, body, and health.

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     2. An individual has an insurable interest in the life,

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body, and health of another person to whom the individual is

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closely related by blood or by law and in whom the individual has

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a substantial interest engendered by love and affection.

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     3. An individual has an insurable interest in the life,

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body, and health of another person if such individual has an

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expectation of a substantial pecuniary advantage through the

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continued life, health, and safety of that other person and

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consequent substantial pecuniary loss by reason of the death,

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injury, or disability of that other person.

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     4. An individual party to a contract for the purchase or

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sale of an interest in any business entity has an insurable

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interest in the life of each other party to such contract for the

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purpose of such contract only.

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     5. A trust, or the trustee of a trust, has an insurable

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interest in the life of an individual insured under a life

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insurance policy owned by the trust, or the trustee of the trust

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acting in a fiduciary capacity, if the insured is the grantor of

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the trust; in an individual closely related by blood or law to

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the grantor; or in an individual in whom the grantor otherwise

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has an insurable interest, and the life insurance proceeds are

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primarily for the benefit of trust beneficiaries having an

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insurable interest in the life of the insured.

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     6. A guardian, trustee, or other fiduciary, acting in a

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fiduciary capacity, has an insurable interest in the life of any

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person for whose benefit the fiduciary holds property, and in the

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life of any other individual in whose life such person has an

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insurable interest.

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     7. A charitable organization meeting the requirements of s.

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501(c)(3) of the Internal Revenue Code of 1986, as amended, has

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an insurable interest in the life of any person who consents in

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writing to the organization's ownership or purchase of that

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insurance.

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     8. A trustee or custodian of assets held in any plan

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governed by the Employee Retirement Income Security Act of 1974,

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29 U.S.C. ss. 1001 et seq., or in any other retirement or

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employee benefit plan, has an insurable interest in the life of

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any participant in the plan with the written consent of the

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prospective insured. An employer, trustee, or custodian may not

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retaliate or take adverse action against any participant who does

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not consent to the issuance of insurance on the participant's

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life.

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     9. A business entity has an insurable interest in the life,

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body, or health of any of the owners, directors, officers,

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partners, and managers of the business entity or any subsidiary

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of the business entity, and in key employees of the business

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entity or key persons whose services and qualifications are such

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that the death, injury, or disability of the key employee or key

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person would cause the business entity or its subsidiary to incur

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a substantial pecuniary loss.

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     (3)(1) An insurer shall be entitled to rely upon all

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statements, declarations, and representations made by an

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applicant for insurance relative to the insurable interest which

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such applicant has in the insured; and no insurer shall incur any

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legal liability except as set forth in the policy, by virtue of

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any untrue statements, declarations, or representations so relied

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upon in good faith by the insurer.

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     (4) If the beneficiary, assignee, or other payee under any

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insurance contract directly or indirectly procured by a person

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not having an insurable interest in the insured at the time such

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contract was made receives from the insurer any benefits

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thereunder by reason of the death, injury, or disability of the

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insured, the insured or his or her personal representative or

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other lawfully acting agent may maintain an action to recover

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such benefits from the person receiving them.

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     (5) No contract of insurance upon a person, other than a

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policy of group life insurance or group or blanket accident,

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health, or disability insurance, shall be made unless, on or

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before the time of the making of the contract, the person

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insured, having legal capacity to contract, applies for or

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consents in writing to the making of the contract, except in the

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following cases:

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     (a) A spouse may effectuate a policy of insurance upon the

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other spouse.

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     (b) Any person having an insurable interest in the life of

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a minor or any person upon whom a minor is dependent for support

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and maintenance may effectuate a policy of insurance on the

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minor.

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     (c) Family policies may be issued insuring any two or more

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members of a family pursuant to an application signed by either

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parent, a stepparent, or a husband or wife.

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     (6) For purposes of this section, the signature of the

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proposed insured, having capacity to contract, on the application

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for insurance shall constitute his or her written consent.

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     (7) This section does not apply to any policy of life

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insurance to which s. 624.402(8) applies.

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     (2) A charitable organization that meets the requirements

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of s. 501(c)(3) of the Internal Revenue Code of 1986, as amended,

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may own or purchase life insurance on an insured who consents to

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the ownership or purchase of that insurance.

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     Section 2. The amendments to s. 627.404, Florida Statutes,

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made by this act are intended to clarify existing law.

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     Section 3.  This act shall take effect July 1, 2008.