Life Assurance Act 1774

The Life Assurance Act 1774 (14 Geo. 3 c.48, also known as the Gambling Act 1774) was an Act of Parliament of the Parliament of Great Britain, which received the Royal Assent on 20 April 1774. The Act prevented the abuse of the life insurance system to evade gambling laws. It was extended to Ireland by the Life Insurance (Ireland) Act 1866, and is still in force. Prior to the Act, it was legally possible for any person to take out life insurance on any other person, regardless of whether or not the beneficiary of the policy had any legitimate interest in the person whose life was insured. As such, the system of life insurance provided a legal loophole for a form of gambling: an insurance policy could be taken out on an unrelated third party, stipulating whether or not they would die before a set date, and relying on chance to determine if the "insurer" or "policy-holder" would profit by this event.

The Act was relatively short, with only four sections:

Sections 2 and 3 were amended by the Statute Law Revision Act 1888, and the requirement in section 2 to name the beneficiaries of a life insurance policy was relaxed by section 50 of the Insurance Companies Amendment Act 1972, to allow insurance by reference to a defined class or description of person. The defendant in the important contract law case of Carlill v. Carbolic Smoke Ball Company (1898) had attempted unsuccessfully to rely on this section to avoid paying £100 to the plaintiff.

The Act did not define what an "insurable interest" was, and it has since been held as the definite expectation of suffering a financial loss directly due to someone's death. It is generally accepted that a person has an insurable interest in the life of someone financially supporting them - for example, in the life of their parent whilst they are still a juvenile - but that this interest can cease if the situation changes. In a 1904 case, it was held that a man insuring the life of his elderly mother in order to pay funeral expenses, where he did not otherwise have a financial interest, was void. However, note that as long as an insurable interest existed at the time the policy was created, it remains valid even if the interest later ceases.

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