State RegulationsAZ specificDifficulty 1/5
Under A.R.S. 20-1104, an insurable interest in the life of another based on love and affection exists for which parties?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
A.R.S. 20-1104 treats a substantial interest engendered by love and affection as an insurable interest for individuals closely related by blood or by law. Other persons, such as business partners or creditors, qualify instead through a lawful and substantial economic interest in the insured's continued life.
Why the other options are wrong
- A) Friendship alone does not create the love-and-affection interest; the statute requires a close relationship by blood or law.
- B) Business partners rely on their lawful and substantial economic interest, such as a buy-sell arrangement, not on love and affection.
- D) Creditors have an economic interest limited to the debt, not an interest engendered by love and affection.
Memory hook
Love and affection: blood or law, not friendship.