Question

When must an insurable interest legally exist in life insurance?

a) Only at the inception of the policy
b) Throughout the entire policy term
c) Only at the time of a claim
d) Only during the grace period

Answer 1

An insurable interest must legally exist only at the inception of the policy.

Step-by-step explanation:

In life insurance, an insurable interest must legally exist only at the inception of the policy. Insurable interest refers to the financial or emotional relationship between the policyholder and the insured person. For example, in life insurance, a person can only take out a policy on their own life or on the life of someone else if they have a valid reason, such as being a spouse or dependent.