New York State Life Insurance Exam Questions Practice Question
In New York State, insurable interest in the life of another person MUST exist
Correct Answer: A
Rationale: Insurable interest in the life of another person must exist at the time the contract is made (Option A). This requirement ensures that the policyholder has a legitimate interest in the insured's life, preventing moral hazard and promoting ethical underwriting practices.
Option B is incorrect because insurable interest must be established when the policy is initiated, not at the time of a claim. Option C misrepresents the requirement; while insurable interest must exist when the contract is formed, it does not need to be maintained throughout the policy's duration. Option D is also incorrect, as there is no five-year requirement for insurable interest; it is only necessary at the inception of the policy.
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