Under Virginia insurance law, what does it mean for a person to have an insurable interest in the life of another individual?

Why A is correct

Under Va. Code §§ 38.2-301 and 38.2-3105, an insurable interest exists when the person seeking the insurance has a lawful and substantial interest in the continued life of the insured — typically a financial stake or a close family relationship — such that the insured's death would cause the person a real loss. This requirement is what separates legitimate life insurance from a wager on another person's life. If the relationship confers no genuine stake in the insured's continued life, the policy cannot properly be written on that basis.

Why the other options are wrong

• B) Beneficiary designation alone does not create insurable interest; the law requires a substantial interest in the insured's continued life, and Va. Code § 38.2-3105 limits who may properly obtain coverage on another person.
• C) Familiarity sufficient to answer health questions is not a stake in the insured's life; insurable interest turns on a genuine relationship or financial interest, not on knowledge of the applicant's facts.
• D) A signed consent form does not by itself supply insurable interest; the statute looks to the substance of the person's interest in the insured's life, not to paperwork formalities.

Memory hook

Insurable interest = a real stake in the insured's heartbeat, not a signature or a name on a form.