State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
In California, insurable interest for a health or disability policy must exist:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Insurable interest must exist when the contract is formed. For life and disability policies under California law, the interest is tested at policy issue; if it exists at that moment, the policy is valid even if the relationship later changes. Unlike property insurance, where the interest must exist at the time of loss, life and health coverage looks to the moment the contract is made.
Why the other options are wrong
- B) The interest is not tested at claim time; it must already exist when the policy is issued.
- C) The interest need not continue throughout the benefit period; the contract's validity is fixed at issue.
- D) The insured's death is irrelevant for health or disability policies, which pay on disability or illness.
Memory hook
Check for insurable interest at the door, not at the payoff.