According to life insurance contract law, insurable interest exists

• A. at the time of application
• B. after policy issue
• C. at death
• D. during underwriting

Answer: (A)

Insurable interest means the policyowner would suffer a financial loss if the insured died, so the contract is based on a real economic stake rather than a gamble. In life insurance, this interest must be present when the contract is formed, which is at the time the application is signed (and the policy issued). This requirement prevents wagering on a death and ensures the insurer is covering a legitimate risk, not a speculative or gratuitous arrangement.

If insurable interest were only created after issue or at death, the policy could be used like wagering on a life, defeating the purpose of the coverage. Insurable interest isn’t about a moment after underwriting or after death; it needs to exist when the contract is being entered into.