The theory of a life insurance contract differs very materially from that of any other kind of insurance contract. Although in an early case an attempt was made to reconcile the contract of life insurance with the indemnity principle existing in all other forms of insurance,1 this view has been abandoned, and it is now the doctrine that life insurance is not a contract of indemnity, but an agreement to pay a certain sum in the event therein specified, in consideration of the payment of the stipulated premium or premiums.2

In Phoenix Mutual Life Insurance Co. vs. Bailey,3 the Supreme Court of the United States said on this point as follows:

"Policies of life insurance are governed, in some respects, by different rules of construction from those applied by the courts in case of policies against marine risks or policies against loss by fire.

" Marine and fire policies are contracts of indemnity, by which the claim of the insured is commensurate with the damages he sustained by the loss of, or injury to, the property insured. Such being the nature of the contract, it is clear that an absolute sale of the property insured, prior to the alleged disaster, is a good defense to an action on the policy, as the insured cannot justly claim indemnity for the loss of or injury to property in which he had no insurable interest at the time the loss or injury occurred.

1 Godsall vs. Volders, 9 East., 72. 2 See American & English Ency.

of Law, Vol. XVI, page 843. 3 13 Wallace, 616.

"Life insurances have sometimes been construed in the same way, but the better opinion is that the decided cases which proceed upon the ground that the insured must necessarily have some pecuniary interest in the life of the cestui que vie are founded in an erroneous view of the nature of the contract; that the contract of life insurance is not necessarily one merely of indemnity for a pecuniary loss, as in marine and fire policies; that it is sufficient to show that the policy is not invalid as a wager policy, if it appear that the relation, whether of consanguinity or of affinity, was such, between the person whose life was insured and the beneficiary named in the policy, as warrants the conclusion that the beneficiary had an interest, whether pecuniary or arising from dependence or natural affection, in the life of the person insured. Dalby vs. India and Lon. Ins. Co., 15 C. B., 365; Loomis vs. Eagle L. & H. Ins. Co., 6 Gray, 396; Lord vs. Dall, 12 Mass., 118; Trenton L. & F. Ins. Co. vs. Johnson, 4 Zab, 576; Rawls vs. Am. L. Ins. Co., 36 Barb., S. C, 27 N. Y., 282.

"Insurers in such a policy contract to pay a certain sum, in the event therein specified, in consideration of the payment of the stipulated premium or premiums, and it is enough to entitle the insured to recover if it appear that the stipulated event has happened, and that the party effecting the policy had an insurable interest, such as is described, in the life of the person insured at the inception of the contract, as the contract is not merely for an indemnity, as in marine and fire policies."