State RegulationsVA specificDifficulty 3/5
Several people propose to buy life insurance on other individuals. Which proposer has a valid insurable interest under Va. Code § 38.2-3105?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Va. Code § 38.2-3105 restricts who may obtain life insurance on another person to those holding an insurable interest — a substantial interest in the continued life of the insured. A corporation whose leadership is central to its operations has exactly that: the death of its president would impose genuine losses on the business, which is why key-person coverage on executives is a recognized application of the rule. The other proposers describe wagers on strangers' lives, which the statute exists to prevent.
Why the other options are wrong
- A) A neighbor's speculative hope of profiting from events after a death is not a substantial interest in the landlord's continued life under Va. Code § 38.2-3105.
- C) Curiosity about a celebrity's health creates no insurable interest; a casual acquaintance lacks any lawful stake in the person's continued life.
- D) Wagering on a venture's outcome through coverage on an entrepreneur's life is precisely the gambling arrangement the insurable-interest requirement prohibits.
Memory hook
Key person, yes; curious neighbor and celebrity watcher, no — business stake counts, gossip does not.