At what time must a policyowner demonstrate insurable interest for a life policy to be valid?

For a life insurance policy to be valid, it is essential that the policyowner demonstrates insurable interest at the time of application. Insurable interest refers to a legitimate interest in the continued life of the insured, which protects against moral hazard and ensures that the insurer's risk is fair and reasonable.

When applying for a life insurance policy, the applicant must show that they would suffer a financial loss or hardship should the insured individual pass away. This alignment is critical in ensuring that the applicant is not taking out a policy solely for speculative purposes.

While other moments, such as premium payment or underwriting, are important to the overall process of securing a life insurance policy, they do not involve the initial establishment of insurable interest. For a policy to be valid right from the outset, it is essential to confirm the existence of insurable interest at the application stage.