Who must have an insurable interest in the insured at the time a life insurance policy is issued?

Insurable interest is the legal requirement that the policyowner have a genuine financial or familial stake in the continued life of the insured at the time of application. It prevents life insurance from being used as gambling on strangers' lives. Insurable interest is presumed in close family relationships (spouses, parents, children). For business or non-family relationships, the applicant must demonstrate financial dependence or loss exposure (a business partner, key employee, creditor with substantial debt outstanding). Unlike property insurance — where insurable interest must exist at the time of loss — life insurance requires insurable interest only at policy inception. Once issued, the beneficiary or owner need not maintain insurable interest as the relationship changes.