Under California Insurance Code Section 10110, when must the policyowner have an insurable interest in the insured's life for a life insurance policy to be valid?

Why A is correct

California Insurance Code Section 10110 requires an insurable interest in the insured's life at the time the policy is effected, that is, when it is issued. If the policyowner lacks an insurable interest at inception, the contract is an invalid wager on human life. Once the policy is validly issued, the subsequent loss of insurable interest does not invalidate the policy or defeat the claim, which distinguishes life insurance from property insurance, where insurable interest is required at the time of loss.

Why the other options are wrong

• B) The requirement is measured at issuance, not at death; a valid policy pays even if the owner's insurable interest has since disappeared.
• C) No continuous-interest rule applies to life insurance; the validity of the contract is fixed at the time it takes effect, and later events do not undo it.
• D) Changing the beneficiary does not retrigger the insurable-interest requirement; only the policyowner's interest at the time the policy is issued matters.

Memory hook

The owner must care about the insured's life at issue; that is the Section 10110 rule.