Can I Buy Life Insurance For Someone Else?

September 2, 2010 1 Comment »

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First things first, yes, it is possible to buy life insurance for someone other than yourself.

There are really only two reasons why people ask this question. One involves good intentions and the other…not so good.

The Good

Let’s discuss the “good” first. There are occasions where it makes sense for an individual to purchase life insurance for someone other than themselves.


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Perhaps you want to purchase life insurance for your children, which is pretty common nowadays. There is nothing to stop you from doing so, and it could benefit them in the future.

The phrase “Key individual” is another type of life insurance policy where a company will purchase coverage that pays out in the event of the death of a person who the company relies on to stay in business.

For example, large stock trading firms may obtain this type of policy for their highest paid, most important personnel, such as the CEO or the CFO.

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Smaller companies may also purchase this coverage for a similar reason. For example, a company that employs only one person who plays an integral part in their business would likely close their doors in the event that person dies unexpectedly.

And the company may suffer extreme loss of income while they search to replace the key individual.

The main concern here, as far as whether or not you can purchase a life insurance policy for someone else, is proving an insurable interest in the person’s life.

Meaning you would have to demonstrate how the loss of this person’s life would have a direct negative effect on your financial well-being, as evidenced in the examples outlined above.

The concept of insurable interest is a great segue into the seedier side of this topic.

The Bad

The idea of obtaining a life insurance policy for someone else, or worse, someone obtaining one on you, may be a novel topic of discussion…even though the odds of the policy being issued are astronomical.

There are a few aspects of a life insurance policy that make this prospect a long shot.

First, we touch on insurable interest again. You would have a hard time convincing a life insurance company to issue a policy for someone whose life is in no way connected to your financial well-being.

The second hurdle to obtaining a policy for someone other than yourself is that most polices require the person whose death is being insured against to undergo a battery of health tests.

It would certainly raise a red flag to the unwary individual when they were asked to donate blood and urine for analysis, as well as potentially having to undergo some sort of physical or stress test.

It’d definitely be a surprise if someone showed up to their home unannounced to ask for these things.

Finally, and this would be the trickiest part of all, the individual who is being insured typically has to sign the application.

You would have a tough time obtaining that signature if all of the other necessary criteria were met and you were trying to pull a scam of some sort.

Even if you were able to trick the insurance company and the individual to the point where a policy is issued, perhaps by obtaining a simple issue or guaranteed issue policy, you can certainly expect to have to explain yourself to them (and the police) before being issued your check in the event of their death.

So that should sum it up. If you’re in the market for a legitimate life insurance policy for someone other than yourself, get insurance quotes online or visit an independent insurance agent.

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One Comment

  1. william scates February 20, 2017 at 12:52 pm -

    This may sound terrible or cold hearted,but the fact is,,I am a realist and people die it happens.My reason for the interest is I have a very close friend I have known for years 20+.we’ve been through a lot with each other.She recently has been diagnosed with cancer again,she’s beat breast cancer already but now has pancreatic,it doesn’t look good.she’s lost her job her home and is now living with me.she has no family(well, not much of one anyway).I myself am living on disability and things are very tough right now financially,but I would never turn her away. my concern is how I could ever pay for her final expences,thus is why I was looking into life insurance.Certainly NOT looking to cash in on her death.Any information would be greatly appreciated..Sincerly ,William Scates

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