In PA can a grandparent have insurable interest in a grandchild in order to get a life insurance policy on them?

Yes it seems. Think of a situation where parents are either not surviving or deserted their children and it is the grandfather who is the only surviving responsible member to take care of grand child then it may be presumed that grand father is carrying an insurable interest in grand child as being the nearest in blood propenquity.

Surjit.