Asked by Nelli Vartanian on May 17, 2024
Verified
Which of the following is an inaccurate statement about the insurable interest requirement?
A) The beneficiary named in a life insurance policy may recover under the policy if she possessed an insurable interest in the relevant person's life at the time she (the named beneficiary) procured the policy but no longer possessed the insurable interest at the time the relevant person died.
B) When an equitable interest in a property translates into a legal interest,it is considered to be an insurable interest.
C) Persons who are business partners are generally held to possess insurable interests in each other's lives.
D) A policy owner may recover under a property insurance policy if he possessed an insurable interest in the relevant property at the time he procured the policy but no longer possessed the property.
Insurable Interest
A requirement stating that a person seeking to purchase an insurance policy must have a direct interest in protecting the object of the insurance from loss.
Equitable Interest
A legal interest in property that gives a party a financial stake or benefit in the property, though not necessarily an ownership interest.
Life Insurance Policy
A contract between an individual and an insurance company, where the company pays a designated beneficiary a sum of money upon the death of the insured person.
- Identify the criteria and prerequisites for having an insurable interest in property and life insurance coverage.
Verified Answer
JN
Jacee NorizsanMay 21, 2024
Final Answer :
C
Explanation :
If an insurable interest existed when the holder thereof purchased the property insurance but the interest was no longer present when the loss occurred,the policy owner is not entitled to payment for the loss.
Learning Objectives
- Identify the criteria and prerequisites for having an insurable interest in property and life insurance coverage.