NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Basics of Insurance
Which of the following best describes an insurable interest in a life insurance contract on one's own life?
A person is presumed to have unlimited insurable interest in their own life, and in life insurance this interest must exist at the time the policy is taken. It need not be present at claim time and does not depend on having dependants.
- AIt must exist only at the time of claim
- BIt is presumed to exist unlimitedly for one's own life at inceptionCorrect
- CIt is required only if the policy has a savings component
- DIt exists only if the person has dependants
Explanation
For life insurance, insurable interest must exist at inception, and a person is presumed to have unlimited insurable interest in their own life. It is not needed only at claim time, as in property insurance, and does not depend on dependants or on policy type.
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