MANAGEMENT

Detailed explanation-1: -The correct answer is (b) An insurable interest must exist when the policy is issued and when any loss occurs.

Detailed explanation-2: -For life insurance, the insurable interest only needs to exist at the time the policy is purchased. Since a policyowner must have an insurable interest in the insured at the time the policy is purchased, individuals cannot arbitrarily take out a life insurance policy on anyone they want.

Detailed explanation-3: -In the case of a life insurance policy, the owner of the policy must always have an insurable interest in the life of the insured. Also, if the owner of the policy is not the beneficiary then the beneficiary named in the contract would also need an insurable interest in the insured person.

Detailed explanation-4: -Insurable interest specifically applies to people or entities where there is a reasonable assumption of longevity or sustainability, barring any unforeseen adverse events. Insurable interest insures against the prospect of a loss to this person or entity.