YOU ASK:

Can you buy life insurance for anyone?

WE ANSWER:

No, the life insurance policy has to be issued with the knowledge and consent of the one being insured. After all, the insured person's signature and medical records will be required when the life insurance application is lodged.

Also, if you are the owner of the policy (and its beneficiary), the underwriting guidelines of life insurance requires that you have insurable interest on the person being insured. This means that you should have a legitimate reason why you are buying life insurance coverage for the person. There should be a financial loss on your part in the event that he or she dies. You cannot just pick up a person on the street, buy insurance for him and name yourself as his beneficiary.

In addition, there should be a relationship with you and the insured in such a way that it will be in your best interest that the person remains alive. This will help prevent insurance fraud, where you insure a person with the intention of gaining from the death benefits.

Examples of cases where there is insurable interest are:

A company insuring key people, as the company stands to lose a substantial amount upon the death of an important company executive. This includes the loss of training, expertise, goodwill with clients and suppliers.
A spouse being insured to ensure that the family has enough to pay for mortgages, debts and daily needs in the event of the death of that spouse.
A borrower who gets life insurance so that in the event of his death, the creditors will get the amount he owes them.

If the insurance company does not see any insurable interest with the persons involved, it may deny the application. Usually, for family situations, you can only buy insurance for yourself, your spouse, children, grandchildren or close relatives that are under your care.

Was this insurance question and its answer useful?

Not a bit

Currently 5/5 Stars
1
2
3
4
5

Very useful

Have an Insurance Question? Ask For Insurance