Insurable interest in life insurance exists at the time of application. (Reframed for testing)

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

Answer: (A)

Insurable interest must exist when the policy is applied for. This requirement ensures the applicant has a legitimate stake in the insured’s life and would suffer a financial loss if the insured dies, preventing policies from being taken out on strangers as bets. If insurable interest is present at the time of application (and thus at inception), the policy can be issued and remain enforceable as long as the insured dies and the terms are met. The existence of insurable interest at death or at the claim stage isn’t what determines validity; payout hinges on the policy being valid from its inception, based on the interest shown at application.