Which of the following is a consequence of insurable interest?

Insurable interest is a critical concept in insurance that ensures individuals can only purchase insurance on policies where they have a legitimate interest in the subject matter. This principle is based on the idea that a person should only insure something they have a financial stake in, as it prevents moral hazard and fraud, such as taking out an insurance policy on someone else's life with no legitimate concern for their well-being.

Limiting who can purchase insurance ensures that the policies are issued responsibly and to those who would suffer a loss or financial impact due to the insured event occurring. For example, a person can only insure their own life or the life of a dependent, or an investor can insure a business in which they have an ownership stake. This limitation is essential for maintaining the integrity of the insurance system.

In contrast, the other choices do not accurately reflect the consequences of insurable interest. While insurable interest does not increase the value of a policy, terminate it automatically, or allow for unlimited insurance purchases, it plays a foundational role in guiding who is eligible to buy insurance in the first place, which is why that response is the correct one.