Chartered Life Underwriter Exam 2025 – 400 Free Practice Questions to Pass the Exam

Insurable interest is a fundamental principle in insurance that requires the policyholder to have a legitimate interest in the life or property being insured. This means that the policyholder would face financial loss or hardship if the insured individual were to die or if the property were to be damaged or lost.

In the context of a business owner to a business customer, there is typically no insurable interest because the business owner does not stand to suffer a financial loss if a customer dies. The relationship between a business owner and a customer is generally transactional and does not imply any financial stake in the customer's wellbeing. For insurable interest to exist, there needs to be a personal or financial connection, which is absent in this case.

Conversely, a parent to a child, a spouse to a spouse, and a partner to a partner all represent relationships where insurable interest is evident. Parents financially support their children, spouses often have shared financial responsibilities and interests, and business partners would face potential financial repercussions if something were to happen to their partners. Thus, these relationships inherently possess insurable interest due to the potential financial impact of loss on individuals connected in these ways.