State RegulationsNY specificDifficulty 1/5
Under N.Y. Ins. Law §3205, which of the following correctly describes who has an insurable interest in the life of another person?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under N.Y. Ins. Law §3205, an insurable interest exists on the part of close relatives by blood or marriage — a substantial interest arising from love and affection — and spouses may insure each other; a person outside the family must have a lawful and substantial economic interest in the continued life, health, and bodily safety of the person insured. This is the foundation for requiring that New York life insurance rest on genuine interest rather than wagering on lives.
Why the other options are wrong
- A) Spouses may insure each other, but the class is far broader: relatives by blood or marriage and persons with a substantial economic interest also qualify under §3205.
- B) An expectation of benefit only at death is precisely NOT an insurable interest; the economic interest under §3205 must relate to the person's continued life.
- D) Consent of the person to be insured does not create an insurable interest; interest flows from relationship or economic stake under §3205, not from permission.
Memory hook
Love and affection, or money tied to LIVING — §3205.