(a) A person of competent legal capacity may procure or effect an insurance contract on the life or body of the person for the benefit of any person. A person may not procure or cause to be procured an insurance contract upon the life or body of another person unless the benefits under the contract are payable to the individual insured, the personal representatives of the individual insured, or to a person having, at the time the contract was made, an insurable interest in the individual insured.
(b) If the beneficiary, assignee, or other payee under a contract made in violation of this section receives from the insurer any benefits from the contract upon the death, disablement, or injury of the person insured, the person insured or the executor or administrator of the person insured may maintain an action to recover the benefits from the person receiving them.
(c) Notwithstanding the other provisions of this section, a charitable organization may obtain, by procurement, assignment, or otherwise, life or health insurance on an insured who consents to the issuance of the insurance. In this subsection, "charitable organization" means a charity that is exempt from taxation under 26 U.S.C. 501(c)(3) (Internal Revenue Code).
(d) Notwithstanding (a) of this section, a trustee, acting in a fiduciary capacity, may procure or cause to be procured an insurance contract that is on the life or body of an individual and under which the proceeds of the insurance contract are payable to the trustee, acting in a fiduciary capacity, if
(1) the trustee, acting in a fiduciary capacity, owns the insurance contract or the trust itself owns the insurance contract;
(2) on the date the contract is made, a settlor of the trust is the individual insured, has an insurable interest in the individual insured, or would have had an insurable interest in the individual insured if the settlor were living at the time the contract was made; in this paragraph, "settlor" means a person, including a person for whom a fiduciary or agent is acting, who executes the trust instrument; and
(3) the proceeds of the contract are primarily for the benefit of a trust beneficiary who has an insurable interest in the individual insured, except that, if the determination of the trust beneficiary's insurable interest is based on (d)(1) of this section, the trust beneficiary's relation by blood or law must be within the third degree.
(e) "Insurable interest," with reference to life, annuity, or health insurance, includes only the following interests:
(1) in the case of persons related closely by blood or by law, a substantial interest engendered by love and affection;
(2) in the case of persons other than those described in (1) of this subsection, a lawful and substantial economic interest in having the life, health, or bodily safety of the person insured continue, as distinguished from an interest that would arise only by, or would be enhanced in value by, the death, disablement, or injury of the individual insured;
(3) an individual party to a contract or option for the purchase or sale of an interest in a business partnership or firm, or of shares of stock of a closed corporation or of an interest in the shares, has an insurable interest in the life of each individual party to the contract for the purposes of the contract only, in addition to an insurable interest that may otherwise exist as to the life of the individual.
(f) A person who has an insurable interest in the life or body of an individual may form a business firm that is substantially or solely for the purpose of purchasing, holding, or administering an insurance contract on the life or body of the individual. In this subsection, "firm" has the meaning given in AS 21.97.900 , but also includes a business trust and a joint venture.
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