State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under California Insurance Code Section 10110, an insurable interest in the life of the insured must exist:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
California requires that the policyowner have an insurable interest in the insured's life at the time the policy is issued. Section 10110 recognizes insurable interest in oneself, in anyone on whom one depends wholly or in part for education or support, in anyone under a legal obligation to pay the policyowner money, and in anyone upon whose life an estate vested in the owner depends. Once the policy is in force, the interest need not continue: if the relationship later ends, such as after a divorce or the dissolution of a business, the policy remains valid and payable.
Why the other options are wrong
- B) Insurable interest is tested at issue only, not continuously; a policy does not lapse merely because the relationship later ends.
- C) The claim stage is too late; coverage could not legally be issued if no interest existed at inception.
- D) Insurable interest applies to all life insurance, not only business policies; an individual always has an insurable interest in himself or herself.
Memory hook
Insurable interest is a photo taken at issuance; it need not exist on claim day.