Class: Senior Secondary School 1 (SS1, SS 1, SSS1, SSS 1)
Term: 1st Term
Week: 10
Age: 15 years
Duration: 45 minutes
Subject: Insurance
Curriculum Theme: Insurance
Previous Lesson: Benefits of Insurance.
Topic: Insurable interest
Subject Matter: meaning of insurable interest, legal requirements of insurable interest, insurable interest in life assurance, insurable interest in property insurance, insurable interest in other classes of insurance

Specific Objectives

By the end of the lesson, pupils should be able to:

Cognitive Domain:

Define insurable interest.
State the legal requirements of insurable interest.
Explain insurable interest as it applies to life assurance.
Explain insurable interest as it applies to property insurance.
Mention other classes of insurance where insurable interest is required.

Affective Domain:

Appreciate the importance of insurable interest in insurance contracts.
Recognise the role of insurable interest in preventing fraud.

Psychomotor Domain:

Identify examples of insurable interest in given scenarios.
Classify different types of insurable interest.

Discuss situations where insurable interest is present or absent.
Collaborate with peers to identify examples of insurable interest.

Reference Materials

The following resources were used in planning this lesson:

Senior Secondary Education Curriculum for Business Studies.
State Unified Scheme of Work.
Ojo, A.A. (2018). Fundamentals of Insurance for Senior Secondary Schools. Lagos: Macmillan Nigeria Publishers Ltd.
https://www.investopedia.com/terms/i/insurable-interest.asp
https://www.law.cornell.edu/wex/insurable_interest

Instructional Materials

The teacher will teach this lesson with the aid of:

A magazine with insurance advertisements.
A chart illustrating different types of insurance.
Whiteboard/chalkboard.
Markers/chalk.

Rationale for the Lesson

Understanding insurable interest helps pupils grasp a fundamental principle of insurance, which ensures that only those who stand to suffer a financial loss can take out a policy. This knowledge is important for making informed decisions about personal and business insurance needs and for understanding the legal basis of insurance contracts.

Prerequisite/Previous Knowledge

Pupils have a basic understanding of what insurance is and the concept of risk from previous lessons.

Lesson Content/Board Summary

Insurable Interest

Meaning of Insurable Interest

Insurable interest is the legal right to insure, arising out of a financial relationship, recognised at law, between the insured and the subject matter of insurance. It means that the insured person must stand to benefit from the continued existence of the subject matter and suffer a financial loss if it is damaged or destroyed.

Legal Requirements of Insurable Interest

For an insurable interest to be valid, it must meet the following legal requirements:

It must be a financial or pecuniary interest.
It must be recognised by law.
It must exist at the time of loss in most non-life insurance policies.
In life assurance, it must exist at the inception of the policy.
There must be a legal relationship between the insured and the subject matter.

Insurable Interest in Life Assurance

In life assurance, insurable interest exists when there is a close relationship, either by blood, marriage, or financial dependency, between the person taking out the policy and the life being insured. This interest must exist at the time the policy is taken out.

Examples of insurable interest in life assurance include:

A person in their own life.
A husband in the life of his wife, and vice versa.
Parents in the lives of their minor children.
An employer in the life of a key employee.
A creditor in the life of their debtor (up to the amount of the debt).

Insurable Interest in Property Insurance

In property insurance, insurable interest exists when a person stands to suffer a direct financial loss if the property is damaged, lost, or destroyed. This interest must exist at the time of loss.

Examples of insurable interest in property insurance include:

An owner of a house or car.
A mortgagee (lender) in the property mortgaged to them.
A bailee (e.g., dry cleaner, warehouse owner) in goods entrusted to their care.
A tenant in improvements made to a rented property.
A partner in partnership property.

Insurable Interest in Other Classes of Insurance

Insurable interest is a fundamental principle across almost all classes of insurance.

Examples include:

Marine Insurance: The owner of a ship or cargo has an insurable interest.
Liability Insurance: A person has an insurable interest in their own legal liability to third parties.
Motor Insurance: The owner of a vehicle has an insurable interest in the vehicle and in their potential liability to others.

Teaching Methods/Instructional Techniques

Discussion, Lecture, Demonstration, Question and Answer, Visual Aids

Instructional Procedures

Step 1: Introduction

Time: 5 minutes
Teaching Skill: Set Induction
Teacher’s Activity: The teacher greets the pupils and reviews the previous lesson briefly. The teacher then asks pupils: “If your neighbour’s house burns down, can you claim insurance on it?” and “Why do you think insurance companies ask if you own the property you want to insure?” The teacher introduces the topic, “Insurable Interest”.
Pupils’ Activity: Pupils respond to the questions and listen attentively to the introduction of the new topic.
Learning Point: Pupils are prepared for the new lesson and understand the context of the topic.

Step 2: Meaning of Insurable Interest

Time: 10 minutes
Teaching Skill: Explanation/Definition
Teacher’s Activity: The teacher explains the meaning of insurable interest, emphasizing that it is a financial stake in the subject matter of insurance. The teacher uses simple examples to illustrate the concept.
Pupils’ Activity: Pupils listen, take notes, and ask questions for clarification.
Learning Point: Pupils understand the definition of insurable interest.

Step 3: Legal Requirements of Insurable Interest

Time: 7 minutes
Teaching Skill: Elaboration/Listing
Teacher’s Activity: The teacher lists and explains the key legal requirements for insurable interest to be valid, such as pecuniary interest, legal recognition, and timing of existence (at inception for life, at loss for property).
Pupils’ Activity: Pupils copy the points from the board and engage in a brief discussion.
Learning Point: Pupils identify the conditions for a valid insurable interest.

Step 4: Insurable Interest in Life Assurance

Time: 7 minutes
Teaching Skill: Illustration/Examples
Teacher’s Activity: The teacher explains how insurable interest applies specifically to life assurance, providing clear examples of relationships that give rise to insurable interest (self, spouse, children, employer-employee, debtor-creditor).
Pupils’ Activity: Pupils provide their own examples and discuss the scenarios.
Learning Point: Pupils understand insurable interest in the context of life assurance.

Step 5: Insurable Interest in Property Insurance

Time: 6 minutes
Teaching Skill: Illustration/Examples
Teacher’s Activity: The teacher explains insurable interest in property insurance, giving examples like property owners, mortgagees, and bailees. The teacher stresses that this interest must exist at the time of loss.
Pupils’ Activity: Pupils listen, ask questions, and contribute examples.
Learning Point: Pupils understand insurable interest in the context of property insurance.

Step 6: Insurable Interest in Other Classes of Insurance

Time: 5 minutes
Teaching Skill: Generalisation
Teacher’s Activity: The teacher briefly mentions that insurable interest is a universal principle in insurance and provides examples from marine and liability insurance.
Pupils’ Activity: Pupils listen and note the general application of the principle.
Learning Point: Pupils recognise the broad applicability of insurable interest.

Step 7: Evaluation/Review

Time: 5 minutes

Teaching Skill: Questioning/Assessment

Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

Define insurable interest.
State two legal requirements of insurable interest.
Give two examples of insurable interest in life assurance.
Mention two examples of insurable interest in property insurance.

Pupils’ Activity: Pupils answer orally and in writing.

Learning Point: Pupils demonstrate understanding of the lesson.

Step 8: Conclusion

Time: 2 minutes
Teaching Skill: Summarisation
Teacher’s Activity: The teacher summarises the key points of the lesson, reiterating the importance of insurable interest as a fundamental principle of insurance. The teacher assigns homework: “List five scenarios where insurable interest would be present and five where it would be absent.”
Pupils’ Activity: Pupils listen to the summary and copy the homework.
Learning Point: Pupils consolidate their understanding and are given a task to reinforce learning.

Lesson Keywords

Insurable Interest – The legal right to insure, arising from a financial relationship between the insured and the subject matter of insurance.
Life Assurance – Insurance on human life, where insurable interest must exist at the inception of the policy.
Property Insurance – Insurance covering physical assets, where insurable interest must exist at the time of loss.
Pecuniary Interest – A financial interest; a stake that can be valued in money.
Subject Matter of Insurance – The person or property that is being insured.

Differentiation

The teacher will provide additional support to pupils who are struggling by using simplified language and more visual aids. Advanced pupils will be encouraged to research and present more complex examples of insurable interest in different insurance contexts.

Note for teachers using this lesson plan

Teachers should ensure that pupils understand the distinction between when insurable interest must exist for life assurance versus other types of insurance. Real-life examples from the local context can greatly enhance understanding.