State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under California Insurance Code Section 10110, a person is considered to have an insurable interest in the life of:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
CIC Section 10110 provides that every person has an insurable interest in their own life and health and in the lives of persons on whom they depend wholly or in part for education or support, as well as persons under a legal obligation to them for the payment of money, and other economic relationships. The policyowner must have an insurable interest when the policy is issued; without it, the contract is an unenforceable wagering agreement. This requirement distinguishes insurance from gambling and is fundamental to a valid life insurance contract.
Why the other options are wrong
- A) Who pays the premium does not create an insurable interest; the ownership relationship to the insured's life is what matters under the statute.
- B) Mutual consent does not create an insurable interest in California; a mere agreement between strangers cannot support a valid life insurance contract.
- C) The statute is not limited to spouses and minor children; dependents, creditors, and business associates can also hold insurable interests.
Memory hook
Insurable interest = you stand to lose financially if the life ends. No loss, no valid policy.