State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under CIC Section 10110, who must have an insurable interest in the insured's life for a life insurance policy to be valid?
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 D is correct
CIC Section 10110 requires the person who takes out and owns a life insurance policy to have an insurable interest in the insured's life at the time the policy is issued. The policyowner must stand to suffer a genuine financial loss from the insured's death — through love and affection in close family relationships or through a pecuniary interest in business and creditor situations. The beneficiary does not need an insurable interest, and neither the insurer nor the agent is subject to the requirement; their roles are entirely different.
Why the other options are wrong
- A) The beneficiary merely receives the proceeds and needs no insurable interest; a person may name anyone as beneficiary.
- B) The insurer assumes the risk in exchange for premium and is not required to hold an insurable interest in the insured.
- C) The agent represents the insurer in selling the policy and is not a party to the insurable interest requirement.
Memory hook
The buyer, not the payee, must have the interest.