Which term describes the financial stake in the life or property that allows a policy to be issued?

Which term describes the financial stake in the life or property that allows a policy to be issued?

• A. Life insurance
• B. Lump-sum
• C. Insurable interest
• D. Survivor protection

Answer: (C)

Insurable interest is the financial stake in the life or property that justifies issuing a policy. It ensures the insurer is covering someone who would suffer a real financial loss if the insured event occurred. For life insurance, this stake comes from relationships or obligations that create a potential loss (such as a spouse, child, or creditor). For property, it includes the owner or a lender who would incur a loss if the property were damaged or destroyed. The other terms describe the product (life insurance), a payout type (lump-sum), or a nonstandard concept, not the requirement that allows a policy to be issued.

Insurable interest is the financial stake in the life or property that justifies issuing a policy. It ensures the insurer is covering someone who would suffer a real financial loss if the insured event occurred. For life insurance, this stake comes from relationships or obligations that create a potential loss (such as a spouse, child, or creditor). For property, it includes the owner or a lender who would incur a loss if the property were damaged or destroyed. The other terms describe the product (life insurance), a payout type (lump-sum), or a nonstandard concept, not the requirement that allows a policy to be issued.