LA| The Louisiana Department of Insurance revised and reissued Directive 180 to clarify and enforce regulations regarding life insurance policy forms and marketing practices, specifically concerning insurable interest. The directive highlights that Louisiana law prohibits employers from taking out life insurance policies on employees for the employer’s benefit, except in traditional business scenarios like key person insurance or buy-sell agreements. All life insurers are required to ensure their practices and policy forms comply with state law, with non-compliant filings subject to withdrawal and benefits payable only to those with a legal insurable interest.
Key Points:
- Louisiana law (La. R.S. 22:901) prohibits employers from procuring life insurance on employees unless a valid insurable interest exists, excluding employer-beneficiary arrangements outside traditional business uses.
- Insurers must review and, if necessary, revise and re-file policy forms to ensure compliance with state law and regulations, or risk withdrawal of approval by the Department of Insurance.
- If a policy names a beneficiary without a legal insurable interest, benefits must be paid to the person whose life was insured, as mandated by state law.