Why was Lisa's application for a life assurance policy on her father declined?

The correct choice indicates that Lisa has no insurable interest in her father. Insurable interest is a fundamental principle in insurance, which establishes that the person applying for the policy must have a legitimate reason to insure the life of another individual, typically based on a close relationship, such as family ties or financial dependency. Since Lisa's application was declined on the basis of insurable interest, it suggests that the insurer determined there was not enough of a financial or emotional stake she had in her father's life to warrant providing coverage.

While the other reasons could also play a role in the rejection of a life assurance application, they were not the primary factors in this instance. For instance, if Lisa were not of legal age, it could have affected her ability to enter into a contract; however, in this scenario, the core issue centers on her lack of insurable interest. Similarly, her father's residency and health issues are valid considerations in life insurance underwriting but do not solely determine eligibility in cases where insurable interest is not established. Thus, the emphasis on insurable interest is crucial in understanding why Lisa's application was rejected.