Which of the following individuals must have an insurable interest in the insured?

The requirement for an insurable interest is foundational in the insurance industry, as it ensures that the policyowner has a legitimate stake in the life or health of the insured person. This means that the policyowner would suffer a financial loss or hardship if the insured were to die or become ill.

In this context, the policyowner must have an insurable interest at the time the policy is issued. This is essential for the validity of the contract because it helps to prevent insurance from being used as a gamble or a speculative investment. For example, a parent insuring their child or a business partner insuring a co-owner both demonstrate clear insurable interest due to the financial implications of a loss.

While named beneficiaries, collateral assignees, and insurers have roles in the insurance process, they do not need to have an insurable interest in the same way the policyowner does. A named beneficiary receives the benefit of the policy upon the insured's death but does not need to demonstrate an insurable interest at the time the policy is created. Similarly, a collateral assignee holds rights to the policy as security for a debt but is not required to have an insurable interest in the insured person. The insurer, as a party to the contract, assesses risk