Which statement about insurable interest is true?

The statement that everyone has an insurable interest in his own life is accurate because insurable interest is fundamentally about the relationship between the insured and the policyholder in which the policyholder has something to lose if the insured suffers a loss, such as death or disability. In the case of an individual insuring their own life, that person certainly has a vested interest in their own well-being and financial security for themselves and their dependents. This intrinsic connection is what validates the issuance of a life insurance policy.

When it comes to insurable interest in general, it is a necessary legal and ethical requirement for the issuance of an insurance policy, ensuring that the insured does not have incentive to bring about a loss. While family members typically have insurable interest in one another, insurable interest also extends beyond familial relationships to include business partners and creditors, among others, for whom financial connections exist. Thus, the blanket statement limiting insurable interest to only family members does not hold true.

Moreover, the requirements for insurable interest do not change on an annual basis nor are they only applicable to beneficiaries. Once insurable interest is established at the time of policy issuance, it does not need to be demonstrated annually. This solidifies why the selected statement is the