New York Child Abuse Identification and Reporting Practice Exam

Which document is essential for proving insurable interest in a life insurance application?

1. Policy declaration page

2. Beneficiary designation form

3. Proof of relationship or financial interest

4. Medical underwriting report

The correct answer is: Proof of relationship or financial interest

In the context of a life insurance application, demonstrating insurable interest is a critical aspect to ensure that the policyholder has a legitimate reason for acquiring the insurance. This is typically substantiated through "proof of relationship or financial interest." This document can take various forms, such as a marriage certificate, birth certificate, business agreement, or any official documentation that confirms a legal or financial connection between the applicant and the insured individual. Such proof is essential, as it establishes that the policyholder would suffer a financial loss or emotional hardship if the insured were to pass away, hence justifying the need for the insurance. The other options, while relevant to the life insurance process, do not directly serve the purpose of establishing insurable interest. The policy declaration page primarily outlines the coverage specifics, the beneficiary designation form indicates who will receive benefits, and the medical underwriting report assesses the risk based on the insured's health. However, none of these documents confirm the necessary financial or relational tie that substantiates the insurable interest required for the application.