Question 17

An applicant for an insurance policy is presumed to have an Insurable Interest in his spouse.

An applicant is presumed to have an insurable interest in their spouse, as this relationship implies a financial dependency and concern for the other person's well-being.

A) spouse

This option is correct because spouses typically have a significant financial and emotional interdependence, which establishes a clear insurable interest. Insurable interest requires that the policyholder would suffer a financial loss if the insured were to die, and this is inherently true in the case of spouses.

B) friend

While a friend may have some level of emotional connection, they typically do not establish a significant financial dependency. Therefore, an applicant is generally not presumed to have an insurable interest in a friend, making this option incorrect.

C) neighbor

Similar to a friend, a neighbor does not usually create a financial relationship that would establish insurable interest. The absence of financial loss or dependency in this relationship makes this option incorrect.

D) employer

Although an employer-employee relationship may involve some financial considerations, it does not inherently imply insurable interest in the same way that a spouse does. Thus, this option is also incorrect as it does not fulfill the criteria for insurable interest in a personal relationship.

Conclusion

The concept of insurable interest is fundamentally tied to financial dependency and risk. Among the options provided, only a spouse naturally fulfills these criteria, making it the definitive correct answer. Other relationships like friends, neighbors, and employers lack the necessary financial implications that would establish an insurable interest.