48. An insurance policy on the life of another person is valid if the policyowner has an insurable interest in the insured at which of the following ?
Answer: C
An insurance policy on the life of another person is valid if the policyowner has an insurable interest in the insured when the application is made.
An insurance policy is valid when the application is made, provided that the policyowner has an insurable interest in the insured. This requirement ensures that the policyholder has a legitimate stake in the insured's life, which is a fundamental principle in insurance law.
A) When the insured dies
This option is incorrect because the validity of the insurance policy does not hinge on the death of the insured. Instead, it must be established that the policyowner has an insurable interest at the time of application, not afterward.
B) When the beneficiary is changed
This option is also incorrect. Changing the beneficiary does not affect the initial validity of the insurance policy regarding insurable interest. The insurable interest must exist at the time the application is submitted, not when beneficiaries are modified.
C) When the application is made
This option is correct. The law requires that the policyowner demonstrates an insurable interest in the insured at the time the application for the insurance policy is submitted. This ensures that the policyholder has a legitimate reason for obtaining the insurance.
D) When the policyowner dies
This option is incorrect. The death of the policyowner does not establish an insurable interest in the insured. The focus is on the time of application, making this option irrelevant to the question of validity.
Conclusion
The correct answer, C, emphasizes the importance of having an insurable interest at the point of application, which is essential for the legitimacy of the insurance contract. Options A, B, and D fail to address this critical timing, while only C aligns with the legal requirements for an insurance policy to be valid.