Question

Which of the following is a requirement in order for a third-party ownership policy to be issued by a life insurance company?

A. An annual premiums must be paid with the application
B. A proper beneficiary must be named
C. The policy must be for no more than $100,000
D. Insurable interest must exist between the policyowner and the insured

Answer 1

Insurable interest must exist between the policyowner and the insured for a third-party ownership policy to be issued by a life insurance company.

Step-by-step explanation:

The requirement for a third-party ownership policy to be issued by a life insurance company is that insurable interest must exist between the policyowner and the insured. Insurable interest means that the policyowner must have a financial or emotional interest in the life or well-being of the insured. This requirement ensures that the policy is not being taken out purely for speculative purposes.