(a)  Any individual of competent legal capacity may procure or effect an insurance contract upon his or her life or body for the benefit of any person. Any life insurance company doing business within the state may issue policies of insurance predicated upon the life or lives of any person or persons with the consent of the insured, payable at maturity to any educational, religious, benevolent, or charitable corporation or association which can legally take and receive testamentary legacies and which are exempt from taxation under 26 U.S.C. § 501(c), irrespective of a financial interest on the part of the corporation in the life of the person or persons insured. No person shall procure or cause to be procured any insurance contract upon the life or body of another individual unless the benefits under the contract are payable to the individual insured or his or her personal representatives, or to a person having, at the time when the contract was made, an insurable interest in the individual insured.

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(b)  If the beneficiary, assignee, or other payee under any contract made in violation of this section receives from the insurer any benefits under that contract accruing upon the death, disablement, or injury of the individual insured, the individual insured or his or her executor or administrator may maintain an action to recover the benefits from the person so receiving them.

(c)  “Insurable interest” as to personal insurance means that every individual has an insurable interest in the life, body, and health of himself or herself and of other persons as follows:

(1)  In the case of individuals related closely by blood or by law, a substantial interest engendered by love and affection;

(2)  In the case of other persons, a lawful and substantial economic interest in having the life, health, or bodily safety of the individual insured continue, as distinguished from an interest which would arise only by, or would be enhanced in value by the death, disablement, or injury of the individual insured;

(3)  In the case of employees of public and private corporations, with respect to whom the corporate employer or an employer-sponsored trust is the beneficiary under the insurance contract, a lawful and substantial economic interest exists in:

(i)  Key employees; and

(ii)  Employees other than those identified in subdivision (c)(3)(i), and former employees and retirees for the purpose of funding, in the aggregate, all or part of the corporation’s cost for pre-retirement and post-retirement benefits; provided, (A) that the amount of insurance coverage on these employees will be limited to an amount commensurate with employer-provided benefits to those employees, (B) that an insurance program used to finance these employee benefits includes former employees, retirees, or a broad class of employees selected by objective standards related to age, service, sex, or category of employment, and (C) that the proceeds created by that insurance program used for the sole purpose of funding the corporation’s pre-retirement or post-retirement benefit programs; and

(4)  An individual party to a contract or option for the purchase or sale of an interest in business, partnership, or firm or of shares of stock of a corporation or of an interest in the shares, has an insurable interest in the life of each individual party to the contract and for the purposes of the contract only, in addition to any insurable interest which may exist as to the life of that individual.

(d)  Insurance effectuated under a group life insurance policy pursuant to the program described in subdivision (c)(3)(ii) need not comply with the provisions of § 27-4-22 to the extent the provisions of that section would be inconsistent or would conflict with the purposes expressed in subdivision (c)(3)(ii).

(e)  An insurer shall be entitled to rely upon all statements, declarations, and representations made by an applicant for insurance relative to insurable interest of the applicant in the insured, and no insurer shall incur legal liability except as set forth in the policy by virtue of any untrue statements, declarations, or representations relied upon in good faith by the insurer.