Under North Carolina common law, when must an insurable interest in the life of the insured exist for a life insurance policy to be valid?

Why D is correct

Under North Carolina common law, an insurable interest in a life insurance context must exist when the policy is issued, because the law requires a legitimate relationship between the policyowner and the insured at the moment coverage is created. It need not continue to the insured's death, so a beneficiary who loses the underlying relationship — for example a former business partner — may still collect on a validly issued policy. This reflects North Carolina common law, as applied through the policy-provisions framework of G.S. 58-58-22.

Why the other options are wrong

• A) Requiring the interest only at death would validate wagering policies taken out by strangers, which the inception rule prevents.
• B) The interest is required at inception only; demanding it again at death contradicts the common-law rule.
• C) Continuity through the policy period is not required once the legitimate interest existed at issuance.

Memory hook

Insurable interest at the start, not at the stop.