Are insurable interests required for all life insurance applications in Virginia?

In Virginia, the requirement for insurable interest is fundamental to the validity of a life insurance policy. This means that the person applying for the insurance must have a legitimate interest in the life of the insured, which typically exists when the applicant and the insured have a close relationship, such as family ties or a financial dependency. The insurable interest must be present at the time of application, ensuring that the applicant stands to suffer a loss if the insured were to pass away.

This requirement helps prevent moral hazards, where someone could take out a policy on another individual without any genuine connection or interest in their well-being, potentially leading to unethical situations. By affirming that insurable interest must exist at the time of application, it protects both the insurance company and the public by ensuring that policies are made for valid reasons and not for speculative purposes.

The other options do not accurately reflect the legal standards in Virginia regarding insurable interest, making the understanding of its critical role important for both agents and applicants in the life insurance process.