Which financial protection product typically requires proof of insurable interest?

In the context of financial protection products, life insurance uniquely requires proof of insurable interest because it is essential for determining the validity of the insurance contract. Insurable interest exists when the policyholder stands to suffer a financial loss or disadvantage if the insured event occurs. This principle ensures that individuals cannot take out life insurance policies on another person without having a legitimate interest in their life, preventing moral hazard.

In life insurance, the most common form of insurable interest is the relationship between the policyholder and the insured, such as spouses or family members, where the policyholder would experience financial loss upon the death of the insured. This requirement is pivotal in maintaining the integrity of the insurance market.

Other products, like home insurance, health insurance, and pet insurance, have different requirements and generally do not require proof of insurable interest in the same stringent manner as life insurance. Home insurance is implicitly understood to be taken out by property owners to protect their own assets. Health insurance is typically linked to the individual being insured, and pet insurance is often purchased by pet owners without a strict mandate for insurable interest. Therefore, life insurance stands out as the financial protection product that explicitly requires proof of insurable interest.