Pursuant to Rule 2:12A, the New Jersey Supreme Court may accept for decision cases involving unanswered questions of state law certified to it for consideration by the Third Circuit. One such case is Sun Life Assurance Company of Canada v Wells Fargo Bank, NA, decided by our Supreme Court on June 4, 2019. By their very nature, questions of law are certified because of a lack of controlling state precedent, and therefore the court’s rationale in certified cases make particularly interesting reading.
In the Sun Life case, the court considered the novel issue of whether “the swift transfer of control over a life insurance policy and its benefit, from a named beneficiary who had an insurable interest to investors who did not, satisfies New Jersey’s insurable interest requirement.“ Stated differently, may a person or group of persons with no insurable interest, as defined by statute in NJSA 17B:24-1, be permitted to fund the purchase of a life insurance policy through a person or entity with an “insurable interest,” such as a family member, and take transfer of the beneficial interest by payment, or otherwise, of that interest. Put bluntly: can a stranger invest in the life of someone for purposes of making a profit through life insurance proceeds—usually with the hope or expectation of a short “turn around” on the investment?
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