If Jack's mum gifts £200k to her son but the payout is in 6 months, why might the payout be declined?

The option indicating no insurable interest as the policy hasn't commenced is pertinent in understanding why the payout could be declined. Insurable interest is a fundamental principle in insurance, which states that the insured must have a legitimate financial interest in the subject of the insurance. This means that the individual or entity purchasing the policy must stand to suffer a loss if an event covered by the policy were to occur.

In the scenario described, if Jack's mum has pledged the £200k gift but it is set to be paid out only in 6 months, there would be a period during which the insurance policy has not yet commenced. Without an active policy at the point when any insurable event occurs, there is no valid claim to make for a payout. Thus, if something were to happen that would otherwise necessitate a claim, there is no legal ground for Jack to receive the funds since there has been no insurance contract in effect during that critical time.

This understanding reinforces the importance of having insurable interest when a policy is active, as any claims made outside of that period or without sufficient coverage would naturally be denied due to the lack of established contractual obligations.