Casualty Actuarial Society (CAS) Practice Exam

When insuring a life estate, Amanda's principal challenge lies in the presence of two independent insurable interests. A life estate creates a scenario where one party, the life tenant, has the right to use and benefit from the property during their lifetime, while another party, often referred to as the remainderman, holds the future interest in the property after the life tenant's passing. This dual structure complicates the insuring process as both parties have a vested interest in the property, yet their motivations and benefits can differ significantly.

For example, the life tenant may have a different perspective on risk and insurance needs compared to the remainderman, who may be more concerned about the property's condition and upkeep for future benefit. Consequently, the insurer must navigate these complexities to appropriately assess risks and determine coverage that satisfies both parties’ interests. This added layer of complexity is unique to life estates and significantly impacts the insuring process.