Insurable Interest in Life Insurance
Exists when the policyowner stands to suffer a financial or emotional loss from the insured's death. Always required at policy issuance; not required at claim time.
Drill all 803 terms as flip-card flashcards in the Exam Engine →
Practice This Concept
Which of the following best describes insurable interest in life insurance?
A reasonable expectation of financial or emotional benefit from the continued life of the insured — Insurable interest in life insurance exists when the policyowner stands to suffer a financial loss or emotional harm from the insured's death, or reasonably expects to benefit from the insured's continued life. Close family relationships, such as spouse and parent-child, create the interest through presumed love and affection, while business and creditor relationships create it through economic exposure. California Insurance Code Section 10110 codifies the requirement for life policies. The interest is measured at the time the policy is issued, which is the key distinction from property insurance, where insurable interest must also exist at the time of loss.
CA-specific example
Practice all general insurance questions →