Which relationship does NOT support an insurable interest?

Which relationship does NOT support an insurable interest?

• A. financial dependency.
• B. a debtor-creditor.
• C. an investor-initiated purchase.
• D. a business partnership.

Answer: (C)

Insurable interest requires a real stake in the insured’s life—someone would suffer a financial or emotional loss if the insured dies, and this must exist when the policy is issued. Relationships like financial dependency, debtor-creditor, and a business partnership all create that stake: the policyowner would incur a loss if the insured dies, so insurable interest is established. An investor-initiated purchase does not. If someone buys a policy mainly to profit from the death benefit, they have no genuine risk of loss tied to the insured’s death. There’s no inherent stake or financial consequence for the investor, so insurable interest does not exist in that scenario. Hence, an investor-initiated purchase does not support insurable interest, making it the correct answer.

Insurable interest requires a real stake in the insured’s life—someone would suffer a financial or emotional loss if the insured dies, and this must exist when the policy is issued. Relationships like financial dependency, debtor-creditor, and a business partnership all create that stake: the policyowner would incur a loss if the insured dies, so insurable interest is established.

An investor-initiated purchase does not. If someone buys a policy mainly to profit from the death benefit, they have no genuine risk of loss tied to the insured’s death. There’s no inherent stake or financial consequence for the investor, so insurable interest does not exist in that scenario. Hence, an investor-initiated purchase does not support insurable interest, making it the correct answer.