General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
For a health insurance policy, when must the applicant generally have an insurable interest in the person to be covered?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Insurable interest must exist when the insurance contract is applied for. A person has an insurable interest in the health of another when the person would suffer financial loss from that other's death, disability, or illness. Requiring interest at inception prevents insurance from becoming a wager on the health or life of a stranger, and the rule applies to the applicant and the person covered at the outset of the policy.
Why the other options are wrong
- A) Interest must be present at inception; it cannot be created later merely by filing a claim.
- B) In health insurance the relevant moment is application, not death; death timing is irrelevant to insurable interest.
- D) Without insurable interest at inception, the contract would be an unenforceable wager.
Memory hook
Interest at the start, or the contract is just a bet.