Question 9

An individual MUST have a reasonable expectation of benefiting from the other person's continued life.

Having an insurable interest in the life of another person means that the individual must reasonably expect to gain from that person's ongoing existence, which is encapsulated in option C.

A) gaining economically by the death of the other person

This option is incorrect because an insurable interest does not arise from expecting to gain economically from someone’s death. Rather, it requires a vested interest in the continued life of the individual, not their demise.

B) continuing on good terms with the other person

While maintaining good relations may be beneficial, it does not constitute an insurable interest. The requirement focuses on the economic or personal benefit derived from that person’s continued life, not merely the nature of the relationship.

C) benefiting from the other person's continued life

This option correctly identifies the essence of insurable interest. It emphasizes the expectation of personal or economic benefit that a person would derive from the ongoing life of another, which is a fundamental principle in the context of insurance.

D) seeing the other person survive to normal life expectancy

Although this option implies a desire for the other person's longevity, it does not directly reflect the concept of insurable interest. The focus must be on the benefit received from their continued life, rather than simply the wish for their survival.

Conclusion

The correct answer, option C, accurately captures the requirement of having an insurable interest by emphasizing the necessity of expecting benefits from the continued life of another. The other options fail to align with this principle, either misrepresenting the nature of the interest or focusing on irrelevant aspects of the relationship.