Question 21

Insurable interest in another's life may arise out of all relationships except civic organization.

Insurable interest in another's life typically stems from personal, financial, or familial relationships. However, a relationship with a civic organization does not inherently create a financial stake in another's life, making it an exception.

A) business.

A business relationship can establish insurable interest, especially if one party's life is crucial to the operations and financial stability of the business. This allows for the protection of the business's interests in the event of an untimely death.

B) credit-debtor.

The credit-debtor relationship also creates insurable interest, as a creditor may suffer financial loss if a debtor passes away. This relationship justifies the need for insurance to recover debts owed.

C) civic organization.

Civic organizations do not create a financial dependency or stake in an individual's life. While members may care for one another, there is no direct financial interest that would warrant insurable interest, making this option correct.

D) family and marriage.

Family and marriage relationships inherently create insurable interest, as these connections involve both emotional and financial dependencies. The loss of a family member can have significant financial implications, justifying the need for life insurance.

Conclusion

Civic organizations do not establish a financial interest in an individual’s life, making option C the correct choice. In contrast, business, credit-debtor, and family relationships all create valid insurable interests due to their financial implications. Thus, option C stands out as the only relationship that does not support the concept of insurable interest.