Can I Buy Life Insurance For Another Person?
April 11, 2023 | Tom Peterson
Life insurance is important for your loved ones, and getting them insured may be a concern of yours, but what if they don’t take out life insurance on their own? In this article we’ll talk about how you can purchase life insurance for someone other than yourself.
How To Take Out Life Insurance on Someone Else
Though it’s not possible to take out a life insurance policy for a stranger or someone you casually know, you can purchase a policy for someone you have insurable interest with or consent from the insured.
Insurable Interest: To buy a policy for someone other than yourself, you need to show the life insurance policy that you would suffer financially if that person died.
Consent from Insured: The person that you are buying the insurance policy must be involved in the application process. He or she will have to go under an underwriting process, which can be handled by our experts at Twin City Underwriters. The insured will also have to sign the application if over the age of 18.
Related: Are You Protected? Why You Should Review Your Life Insurance Policy.
Who Can You Buy Life Insurance For?
Depending on your relationship with the person, you can buy a life insurance policy for:
Business Partner/ Key Employees
It’s pretty common for business partners to have a buy-sell agreement that stipulates what happens if something goes wrong with either of them. Each business partner can buy a life insurance policy on the other to receive a death benefit partner’s share of the business from a surviving spouse or family member.
Your Child
Depending on if you’re a parent, grandparent, or legal guardian, you can name yourself beneficiary and buy them a life insurance policy. The main goal with your child’s life insurance policy is to make sure they’re covered if health conditions occur later down the line.
Your Spouse
The most practical reason you’d want to buy a life insurance policy for your partner is if one spouse is a main source of income and the other has little or no income to purchase their own policy. If the main source of income is paying for the policy, they would also want to be the policy owner.
Former Spouses
In the case of a divorce, you might want to think about getting a life insurance policy for a former spouse if you have spousal support or child support payments, he or she would have insurable interest.
Parents
Taking out an insurance policy for your parents makes sense in many situations. If they don’t have a policy of their own, you might want to buy policies to help cover funeral and final expenses for them.
Related: Helping a Parent with Medicare Coverage
Siblings
If one of your siblings is caring for one of your parents, you have insurable interest, in which case you can purchase a life insurance policy for that person, naming yourself as a beneficiary of the policy and get a payout that would help cover the cost of your parents’ care.
Life insurance is no joke, it can make or break financial situations, and it will provide security for those in times of loss. Before you buy life insurance, it’s best to get in contact with an expert. Contact us for any questions you may have about purchasing a life insurance policy for another individual.
Choosing a life insurance plan can be difficult. Working with an insurance broker can help you find a plan that fits your needs. Schedule a one-on-one meeting with one of our life insurance brokers to get your insurance questions answered!
