Dana loans her brother, Marcus, $500,000 with which to start a movie production company. The business assets are shown in the loan agreement as collateral for the loan. Dana can insure Marcus's life because:

Question

Quizplus · Accepted Answer

Insurable interest exists when the policy owner has a financial interest in the continued life of the insured. In this case, Dana has a financial interest in Marcus's continued life because he is using the loan to start a business with assets that will serve as collateral for the loan. Therefore, she can insure his life to protect her financial interest in the event of his death.

Dana Loans Her Brother, Marcus, $500,000 with Which to Start