In which situation must insurable interest exist at the time of application?

The correct answer revolves around the concept of insurable interest, which is a fundamental principle in insurance that requires an applicant to have a legitimate interest in the insured object or person at the time the insurance policy is created. This principle is especially critical for preventing moral hazards and ensuring that insurance is not misused.

In the case of naming a third party as a beneficiary, insurable interest must exist at the time of application. This is because the beneficiary has a financial stake in the continued life of the insured. If the applicant is naming themselves or another individual as the beneficiary, it is crucial that they have a legitimate interest in that individual's life, which ensures that the insurance is valid and ethical. For example, if someone were to take out a life insurance policy on a person who has no connection to them, it could lead to unethical behavior if that person were to pass away.

When the applicant is applying for their own coverage, they inherently possess an insurable interest in their own life, so this does not apply similarly to other scenarios. In the case of minors, while there are special considerations, they typically do not apply in the same way regarding insurable interest requirements as an adult would. Joint life policies, though they involve multiple insured parties, have