A life insurance policy was validly issued when the beneficiary had an insurable interest in the insured. Three years later the insurable interest no longer exists. If the insured dies, the beneficiary will MOST LIKELY:

Why this is the answer

Insurable interest doctrine in life insurance requires that the applicant-owner (or beneficiary, depending on structure) have an insurable interest in the insured's life at the time the policy is issued. Once the policy is in force, there is no ongoing requirement for insurable interest to persist. Courts have long held that this prevents the policy from becoming a wagering contract at inception; if it was valid when issued, it remains valid. This distinguishes life insurance from property and casualty insurance, where insurable interest must exist at the time of loss (since the purpose is indemnification). Option A applies the wrong rule. Option B applies the indemnity principle to a non-indemnity contract. Option D misstates the legal effect of a lapsed insurable interest.