State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A woman buys a life insurance policy on her husband at the time of their marriage. They later divorce, and the woman remarries and has no financial connection to her ex-husband. Under California law, what happens to the existing policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under California Insurance Code Section 10110 and general life insurance law, an insurable interest must exist at the inception of the policy — the time of application and issue. A later divorce does not retroactively invalidate the contract; the policy remains in force even though the insurable interest has disappeared. This is the key difference from property insurance, where insurable interest must exist at the time of loss.
Why the other options are wrong
- B) Divorce is not an automatic voiding event; the contract was valid when issued and stays valid.
- C) No new consent is needed to keep the policy in force — the insurable interest requirement applies at issue only.
- D) The policy continues per its own terms; nothing in California law forces a lapse tied to the divorce.
Memory hook
Life insurance checks for insurable interest at the door, not at the exit. Divorce after issue? The policy stays. Property insurance would not.