In contrast to actual insurance policies, there is no requirement that the CDS buyer actually own the underlying reference securities.

Name: In contrast to actual insurance policies, there is no requirement that the CDS buyer actually own the underlying reference securities.
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Quizplus · Accepted Answer

This is true, the CDS buyer does not actually need to own the underlying reference securities. They are essentially betting on the creditworthiness of the issuer and will receive payment if there is a default.

In Contrast to Actual Insurance Policies, There Is No Requirement