Under CIC §10110, which of the following relationships gives a person an insurable interest in another person's life?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
CIC §10110 provides that every person has an insurable interest in their own life and in any person on whom they depend wholly or in part for education or support; in any person under a legal obligation to them for the payment of money, property, or services; and in any person upon whose life an estate or interest vested in them depends. Dependence for support creates a financial stake in the person's continued life, which is the foundation of insurable interest in life insurance. Without a financial or legal stake, a contract would be a wagering agreement and unenforceable, so the statute carefully defines which relationships qualify.
Why the other options are wrong
- B) Mere friendship lacks a financial or legal stake, so insuring a friend's life without more would amount to a wager on that person's death. California requires a support, obligation, or estate-based interest.
- C) Admiration is not a financial interest; insuring a celebrity's life without a business or support relationship is a classic example of a prohibited wagering contract. No economic stake means no insurable interest.
- D) An ended employment relationship with no present obligation provides no economic stake in the person's continued life and therefore no insurable interest. The statutory categories require a present dependence or obligation.
Memory hook
Insurable interest = money on the line. Dependence, debts, and estates count; admiration does not.