For a life or health insurance policy issued in California, insurable interest must generally exist:

Why A is correct

California law, consistent with Section 10110 and the settled rule for life and health coverage, requires insurable interest to exist when the insurance is procured — at the time of application and issuance. It need not exist at the time of loss. The requirement is tested at inception to prevent wagering policies, but once the policy is in force, the interest may change or even cease without voiding coverage.

Why the other options are wrong

• B) The interest is tested at policy inception, not when a claim is filed.
• C) The moment of loss is not the measuring point; the interest must exist when the contract is made.
• D) The interest need not continue for the entire policy life; it may end after issuance without invalidating the policy.

Memory hook

Check the box at the birth of the policy, not at the death of the insured.

Why A is correct

In life and health insurance, the insurable interest must exist at the time the contract is made (policy issuance). CIC §10110 grants every person an insurable interest in their own life and health and in persons they support or who owe them legal obligations. Unlike property insurance, where insurable interest must exist at the time of loss, life and health insurance look to the moment the contract is created. The interest need not continue after issuance, which is why a policy may remain valid even if the relationship later ends.

Why the other options are wrong

• B) Requiring interest at the time of loss is the rule for property insurance, not for life and health insurance.
• C) The interest must exist at inception; it is not required to continue for the entire policy lifetime.
• D) Claim time is irrelevant to the requirement; the controlling moment is when the policy is issued.

Memory hook

Property checks the heart at loss; life and health check it at birth (of the policy).