Insurable interest in a life insurance contract exists at what point?

• A. At the time of application
• B. At the time of policy issuance
• C. At death
• D. At claim

Answer: (A)

Insurable interest must exist when the contract is formed. In life insurance, this means the applicant must have a legitimate financial stake in the continued life of the person insured at the moment they apply for the policy. That requirement prevents insurance from being a mere bet on someone’s death and ensures the policy serves a genuine risk-protection purpose. If there’s no insurable interest at the time of application, the contract would not be enforceable, even if it’s later issued.

Reasoning for the other moments: the policy’s validity hinges on the initial formation, not on death or the claim stage. Insurable interest isn’t about what happens at death, and it isn’t created anew at a later claim; by that point the contract should already be based on an eligible relationship established at application.