Unfortunately it’s a common trope for people to kill their relatives or spouses, just in order to collect the insurance policy. In this post we will propose some rules aimed to deter people from killing people for the reason mentioned above.
1. Only the person whose death is covered by the policy is allowed to purchase a life insurance policy, provided that this person is an adult and mentally competent.
2. The maximum benefit which the insurance company is allowed to pay is equal to five times the annual income of the person who purchased the policy, at the time of purchase.
3. All life insurance policies have to be registered by the national financial authorities, in order to prevent people from buying multiple life insurance policies.
Ad 1. Too often someone purchase a life insurance policy on another person, possibly without the knowledge of this individual, only with the intent of of killing the insured. Since a life insurance policy is typically purchased to compensate the next of kin for the loss of income as a result of the death of the insured, there’s no reason to insure those who are not economically active.
Ad 2. Even if a life insurance policy is purchased in good faith, a beneficiary might be tempted to kill the insured for financial gain. By putting a limit on the benefits to be paid, the incentive to kill someone for financial gain is reduced.
Ad 3. In order to prevent people from circumvented rule 2 by purchasing multiple life insurance policies, it’s necessary that there’s a central registry of such policies. When a person wants to purchase a life insurance policy, the insurance company is obliged to check whether the applicant has already purchased such policy, if so the new application has to be refused.