Franco loaned $1 million to Rocco. At the time the loan was made Franco purchased $1 million life insurance on Rocco's life. Rocco repaid the debt then died. Can Franco collect on the life insurance policy?

Question

Quizplus · Accepted Answer

Franco had an insurable interest in Rocco's life at the time the policy was purchased because the policy was intended to protect Franco against the financial loss he would suffer if Rocco died before repaying the loan. Insurable interest needs to exist only at the time the policy is initiated, not necessarily at the time of the claim.

Franco Loaned $1 Million to Rocco