Under Ship Bank plc's group mortgage protection policy, which person would NOT be legally required to be insured?

• A. Alex, aged 30
• B. Frank, aged 47
• C. Megan and Morgan, both aged 49
• D. Pat, aged 48

Answer: (C)

The main idea is insurable interest and who bears the legal liability for the mortgage. A group mortgage protection policy is designed to protect the lender if a borrower dies, so that the outstanding loan can be repaid. Only those with a legal obligation to repay the loan—the borrowers or guarantors—have insurable interest and are required to be insured. If someone isn’t legally liable for the mortgage, there’s no insurable interest from the lender’s perspective, so they aren’t required to be insured under the policy. In this scenario, Alex, Frank, and Pat have direct liability on the mortgage and would be required to be insured, while Megan and Morgan do not have such liability, so they would not be required to be insured under the bank’s group policy.