When is insurable interest required?

Insurable interest is not evaluated at the time of a claim; rather, it is a prerequisite that must be established when the insurance policy is initiated. If insurable interest is absent at the time of the claim, the claim may be denied, as the legitimacy of the insurance relationship hinges on the interest existing beforehand.

While policy loans may require a certain level of interest in the policyholder's life or property, insurable interest is not specifically required at this stage. The primary focus of insurable interest is during the initial application process, not in borrowing against the policy.

Insurable interest must be established before the insurance policy is issued, not specifically within the first year of death. The relevance of insurable interest diminishes after the policy is in force, as the existence of a valid insurable interest is evaluated at the application stage, ensuring the policyholder's legitimate concern over the insured entity.