Under California Insurance Code §10110.1, insurable interest in another's life is generally found in all of the following relationships EXCEPT:
Explanation
California Insurance Code §10110.1 codifies insurable interest categories: (1) close family by blood or law (spouse, domestic partner, parent, child, blood-related dependents) — based on relationship; and (2) parties with a 'lawful and substantial economic interest' in the continued life of another (creditors, business partners, key employees) — based on financial dependency. Strangers who pool money to buy policies on each other for speculative gain LACK insurable interest, and such arrangements are 'stranger-originated life insurance' (STOLI) — invalid and against public policy. Option A and B (family) and Option D (business interest) all have valid insurable interest. Option C describes the speculative STOLI arrangement specifically prohibited under §10110.1(d).
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