General Insurance PrinciplesQuestion 578 of 716
Which relationship most clearly satisfies insurable interest for a life insurance policy?
a.A random investor seeking to profit from the policy
b.A competitor hoping to benefit from the insured's death
c.A business partner or spouse who would suffer financial loss at the insured's death
d.A stranger who read about the insured in the news and simply wishes to profit from a future death claim
Explanation
Insurable interest requires a genuine expectation of loss, which a spouse or business partner clearly has. Strangers, competitors, and pure investors have no such interest and cannot lawfully insure another's life.
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Related questions on this topic
- A producer who collects and holds premium money on behalf of the insurer occupies a position described as:
- The principle of indemnity, which limits recovery to the actual amount of a loss, generally does NOT apply to life insurance because a life policy is:
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PrepPass team · 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)