Which of the following is an example of a situation where insurable interest exists?

Insurable interest is a key principle in insurance that requires the policyholder to have a legitimate interest in the continued life and well-being of the insured. This concept protects against moral hazard and ensures that the insurance contract is valid and enforceable.

The insured's spouse is a prime example of insurable interest because the spouse typically has a significant emotional and often financial connection to the insured. This relationship creates a valid interest; if a tragedy were to occur, the spouse would face potential financial hardship.

In contrast, relationships with a neighbor, a distant relative, or a friend without financial ties do not establish the same level of risk or financial impact that would justify having insurable interest. Therefore, they wouldn't typically qualify for insurable interest in an insurance contract. This underlines the importance of having a clear, relevant connection between the insured and the policyholder when it comes to life insurance.