Which of the following statements is true of a life insurance?

Question

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In order for a life insurance policy to be valid, there must be an insurable interest at the time the policy is purchased. This means that the person buying the policy must have a legitimate reason to insure the life of the insured. However, the insurable interest does not need to exist at the time of death or loss for the policy to pay out. This means that even if the relationship between the insured and beneficiary changes, the beneficiary would still receive the payout upon the insured's death. Option A is incorrect because this statement is false. Option C is incorrect because there are instances where the beneficiary and the insured can be the same person, such as in a self-insured policy. Option D is also incorrect because there is no requirement for a blood relationship between the insured and beneficiary.

Which of the Following Statements Is True of a Life