The correct answer is: A. At the time of taking out insurance.
Insurable interest is a legal concept that requires an insured person to have a financial interest in the life of the insured person in order to collect on a life insurance policy. This means that the insured person must stand to lose something financially if the insured person dies.
Insurable interest is required at the time of taking out insurance because it helps to prevent fraud. If insurable interest were not required, people could take out life insurance policies on people they did not know or care about, and then collect the proceeds when the insured person died. This would be unfair to the insured person’s family and friends, and it would also undermine the integrity of the life insurance industry.
There are a few exceptions to the insurable interest requirement. For example, a spouse or child is always considered to have insurable interest in the life of their spouse or parent, even if they are not financially dependent on them. Additionally, some states allow businesses to take out life insurance policies on their employees, even if the business is not financially dependent on the employees.
Overall, insurable interest is an important legal concept that helps to protect both the insured person and the insurance company. It is required at the time of taking out insurance in order to prevent fraud and to ensure that the insurance policy is used for its intended purpose.
Here is a brief explanation of each option:
- Option A: At the time of taking out insurance. This is the correct answer, as insurable interest is required at the time of taking out insurance in order to prevent fraud and to ensure that the insurance policy is used for its intended purpose.
- Option B: At the time of claim. This is incorrect, as insurable interest is not required at the time of claim. The only time insurable interest is required is at the time of taking out insurance.
- Option C: Insurable interest is not required in case of life insurance. This is incorrect, as insurable interest is required in case of life insurance.
- Option D: Either at time of policy purchase or at the time of claim. This is incorrect, as insurable interest is only required at the time of taking out insurance.