[Solved] Which of the following statements about 'Insurable Interest' in life insurance is CORRECT? — Ans: It must exist at the time of policy inception | Insurance Awareness

Insurance Awareness - Life Insurance - LIC

Which of the following statements about 'Insurable Interest' in life insurance is CORRECT?

AIt must exist only at the time of claim settlement

BIt is not necessary if the policyholder is the insured person

CIt can be created after the death of the insured

DIt must exist at the time of policy inception

Step-by-Step Solution

Step 1: Define Insurable Interest
Insurable Interest means the policyholder must have a financial or emotional interest in the life insured at the time the policy is taken.
Step 2: Analyze options
It must exist only at the time of claim settlement is incorrect because Insurable Interest must exist at inception, not just claim; It is not necessary if the policyholder is the insured person is wrong as even self-insurance requires Insurable Interest; It can be created after the death of the insured is invalid as Insurable Interest cannot be created after death.
Final Answer:
It must exist at the time of policy inception → Option D
Quick Check:
Insurable Interest is a mandatory condition at policy start.

Quick Trick: Insurable Interest must exist when policy starts.

Common Mistakes:

MISTAKES

Thinking Insurable Interest can be created later or is unnecessary for self-insured.

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Which of the following statements about 'Insurable Interest' in life insurance is CORRECT?