State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
Under California law, the insurable interest requirement for a life insurance policy applies to which party?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The insurable interest requirement looks to the policyowner: the person who takes out the policy must have an insurable interest in the life of the insured at the time the policy is issued (CIC Section 10110). Without it, the contract would be a wagering agreement. The beneficiary does not need an insurable interest, and the insured does not need an interest in the beneficiary. Section 10110 recognizes interests based on self, dependency, support, legal obligations, or an estate interest.
Why the other options are wrong
- B) The beneficiary does not need an insurable interest; anyone may be named as beneficiary of a validly issued life policy.
- C) The insurer's interest is the contractual obligation to pay, not an insurable interest in the beneficiary.
- D) The insured need not have an interest in the beneficiary; the requirement runs from the policyowner to the insured.
Memory hook
Insurable interest points from owner to insured, and it must exist at issue. Beneficiary needs no stake.