State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under California Insurance Code Section 10110, which party must have an insurable interest in the life of the insured for a life insurance policy to be valid?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 10110 requires the person who takes out the policy, the policyowner, to have an insurable interest in the insured's life at the time the policy is issued. The statute lists the recognized interests: the person's own life, persons on whom the owner depends for education or support, persons under a legal obligation to the owner, and persons on whose life an estate vested in the owner depends. The beneficiary, by contrast, does not need an insurable interest in the insured.
Why the other options are wrong
- B) A beneficiary may be anyone the owner chooses and is not required to have an insurable interest in the insured's life.
- C) The agent is not a party to the contract and needs no insurable interest; the agent's role is limited to selling the policy.
- D) An employer must have an insurable interest in key employees, but that is a specific business case, not a universal requirement that an employer be involved at all.
Memory hook
The owner must care enough to insure the life. Beneficiary? Anyone. Owner? Must have a genuine stake in that life.