For life and health policies, insurable interest exists at what time?

• A. At the time of loss
• B. At the time of application
• C. At the time of payout
• D. It does not apply

Answer: (B)

Insurable interest must exist when the policy is created—at the time of application and when the contract is issued. For life and health insurance, you must have a legitimate financial or familial stake in the insured that would be affected by their death or illness, and this relationship is established upfront. If there’s no insurable interest at application, the policy can be void or voidable from the start, regardless of what happens later. The payout itself doesn’t determine insurable interest; it’s about the relationship and stake that existed when the policy was written.