What does insurable interest involve?

Insurable interest is a fundamental principle in insurance that requires a policyholder to have a legitimate interest in the life or wellbeing of the person being insured. This means that one person must have a stake in ensuring that another person's life continues, which aligns with the concept of benefiting from the continued existence of that individual.

In essence, insurable interest is designed to prevent individuals from taking out policies on the lives of people with whom they have no genuine relationship. This principle ensures that insurance is used for protection rather than gambling on death. Therefore, when one person is able to benefit from another person's continued life, it illustrates the legal and moral grounds upon which the insurance contract is based.

Options discussing the insurable interest existing at various times during the relationship or focusing on the profits generated from someone's death do not encapsulate the primary function of insurable interest, which is to recognize the value of life and the need for protection rather than exploitation.