IIQE Paper 3 Practice Questions - IIQE Paper III - Long Term Insurance Examination Exam

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A company wishes to purchase a key person life insurance policy on its star research scientist. How is the insurable interest of the company in the scientist's life measured and limited at policy inception?

It is unlimited because it is a corporate policy It is limited to the financial loss the company would reasonably incur due to the scientist's death, such as replacement costs and lost profits It is limited to the total salary paid to the scientist since their employment began It is limited to the company's total registered share capital

Correct Answer:

It is limited to the financial loss the company would reasonably incur due to the scientist's death, such as replacement costs and lost profits

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