Life Insurance FundamentalsQuestion 134 of 315
Marco buys a $500,000 life insurance policy on his spouse. They divorce three years later, and Marco continues paying premiums. When his ex-spouse dies four years after the divorce, can Marco still collect?
a.Yes, but only half the face amount
b.Yes — in life insurance, insurable interest only needs to exist at the time the policy is issued
c.No — divorce automatically voids any life policy
d.No — insurable interest must continue throughout the policy
Explanation
In life insurance, insurable interest must exist at policy issue but does not have to continue afterward. Since Marco and his spouse were married when the policy was issued, the policy remains valid even after divorce.
Law Reference: Cal. Ins. Code §10110Practice all 315 questions free — no signup required.
Related questions on this topic
- All else equal, which premium-payment mode produces the highest total annual outlay for a policyowner?
- An applicant has well-controlled high blood pressure and is otherwise healthy. The underwriter accepts the application but adds a flat extra premium for the cardiovascular risk. The applicant has been placed in which risk class?
- What is the primary purpose of the Medical Information Bureau (MIB) report in life underwriting?
- Stranger-Originated Life Insurance (STOLI) is best described as:
- Two business partners want to make sure that when one dies, the surviving partner can buy out the deceased's share and the family receives cash. Each partner owns a life policy on the OTHER partner. This is a:
- Acme Manufacturing buys a life policy on its CEO. Acme pays the premiums, is the policyowner, and is the beneficiary. What kind of arrangement is this?
Last reviewed: · editorial process
Sen Lin, PrepPass Founder · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)