In life insurance, who must have insurable interest in the insured S?

• A. The owner and the beneficiary
• B. Only the insurer
• C. Only the insured
• D. All parties must have insurable interest

Answer: (A)

Insurable interest means you must have a stake in the insured’s life—enough to suffer a financial or other loss if something happened to them. In life insurance, this stake is necessary at the time the policy is issued between who owns the policy and the person whose life is insured. The owner must have insurable interest because they will be funding the policy and would be financially harmed if the insured dies. The beneficiary, who will receive the payout, should also have a legitimate stake in the insured’s well-being, ensuring the benefit goes to someone with a real reason to be protected by the policy. This combination helps keep the contract tied to a genuine risk or need rather than a random wager. The insurer’s role is to assess and price the risk, not to require that the beneficiary have insurable interest; the valid, legally enforceable arrangement relies on the owner and the beneficiary having a genuine stake in the insured.