State RegulationsCO specificDifficulty 1/5
Under Colorado's insurable interest provisions (C.R.S. § 10-7-701 through 710), at what point must an insurable interest exist in a life insurance policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under C.R.S. § 10-7-701 through 710, an insurable interest in a life insurance policy must exist at the time the policy is issued. Once that requirement is satisfied at issuance, the policy remains valid even if the beneficiary's interest later changes; the issue-time test distinguishes lawful insurance from a wager on another person's life.
Why the other options are wrong
- B) Requiring insurable interest at death is not the Colorado life rule; the statute fixes the requirement at the time the policy is issued.
- C) Policy anniversaries have no bearing on insurable interest; the requirement attaches when the contract is issued.
- D) A claim submission is far too late; by then the policy has long been issued and the insurable interest question was already settled.
Memory hook
Interest at issue — that's the Colorado test.