General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which of the following is a valid basis for an insurable interest in another person's life or health?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Insurable interest exists where the policyowner would suffer an actual or potential financial loss, or stands in a close relationship (such as spouse or parent–child) with the insured. Close family ties create a presumed insurable interest, and business arrangements create one through economic dependence — a key employee, a business partner, or a debtor whose continued life or health the policyowner relies on. The interest must be legitimate and grounded in a real relationship or loss.
Why the other options are wrong
- B) Mere curiosity creates no interest in another's continued life; such a policy would be a wager.
- C) An interest unrelated to any financial loss or close relationship is not an insurable interest.
- D) A mere expectation of inheritance, without a legally recognized relationship or economic dependency, is generally not an insurable interest.
Memory hook
Love and money create insurable interest; curiosity and scheming do not.