Florida Life and Health Insurance License Practice Test

When must a policyowner have insurable interest in the insured for a life policy to be valid?

1. At the time of loss

2. At the time of application

3. At all times

4. Only after the first premium payment

The correct answer is: At the time of application

A) At the time of loss is incorrect because insurable interest must exist at the time of application, not at the time of loss. Being related to or having a financial relationship with the insured at the time of loss is not enough to establish insurable interest. C) At all times is incorrect because while insurable interest must exist at the time of application, it does not need to be maintained throughout the policy's duration. Insurable interest only needs to exist at the time of application for the policy to be considered valid. D) Only after the first premium payment is incorrect because, similar to the previous option, it suggests that insurable interest must be maintained for the entire duration of the policy. This is not true, insurable interest only needs to exist at the time of application.