ALI-ABA
Conference on Life Insurance Company Products:
Current SEC, FINRA, Insurance, Tax, and
ERISA Regulatory and Compliance Issues
November 5 - 6, 2009
Washington, D.C.
Wagering on Life . . . and Death:
From 18th Century England to 21st Century America
By
Jana Lee Pruitt
Life Insurance Council of New York, Inc.
Albany, New York
169
2
170
Wagering on Life … and Death
From 18th Century England to 21st Century America
September, 2009
Jana Lee Pruitt
Senior Vice President
Life Insurance Council of New York, Inc.
Life insurance is an aleatory contract … it offers the
potential of a return out of all proportion to the investment
in the contract.1
The Birth of Insurable Interest
Insurable interest: a relationship between the person
applying for insurance and the person whose life is to be
insured in which there is a reasonable expectation of
benefit or advantage to the applicant from continuation of
the life of the insured or an expectation of loss or
detriment from the cessation of that life.2
• Wagering on human life became sport in 18th century England, with anyone in
the public eye a favorite target.
•
In 1774, Parliament enacted the Life Insurance Act, which required anyone
contracting for life insurance to have an insurable interest in the life being
insured.
• The Life Insurance Act became the model for insurable interest laws in the
United States.
• Control wagering on human life.
• Reduce the threat of murder.
•
In 1876, the United States Supreme Court rules that life insurance cannot be
used to wager on human life. “Any person has a right to procure an insurance on
his own life and assign it to another, provided it be not done by way of cover for a
wager policy.”3
1 McGill’s Life Insurance, 1994, Edward E. Graves, Editor, The American College/Bryn Mawr,
Pennsylvania, page 774.
2 McGill’s Legal Aspects of Life Insurance, Second Edition, Edward E. Graves and Burke A. Christensen,
Editors, The Am