Can you take out a life insurance policy on someone else?

It depends on if you have insurable interest — and their cooperation.

Generally when people buy life insurance, they are applying to be the insured (the policy owner) and to name someone else the beneficiary. But there are some occasions when it may make sense to purchase and be the owner of a policy that insures someone else and makes youthe beneficiary.

This is legal and it’s common, but you can’t just buy a policy on anyone. You have to have their permission and additionally, you have to be able to show insurable interest, which is basically, proof that you will suffer financially if the insured dies.

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How to buy life insurance for someone else

In order to apply for a policy for someone else, you’ll need their consent for the application process. They’ll not only need to sign paperwork, you’ll also need their cooperation for the application itself, which will include questions about their health and a medical exam.

Once you have their permission, talk to an independent life insurance agent like those at Policygenius who can help you find the cheapest coverage based on the insured’s health profile and background.

During the application process, you’ll need to prove to the insurance company that you have something called "insurable interest." You can roughly translate that to "financial interest" — basically, you need to prove that if the insured were to die, it would put a financial burden on you. Typically, spouses and parents can purchase policies without otherwise proving insurable interest. Other relationships, such as business relationships, will likely need documentation.

You may also want to talk to your lawyer, accountant, or financial advisor to get a better sense of how this policy will work in the context of your larger financial safety net.

Our agents can help you through every step of the application process. You can get started by comparing life insurance quotes.

Buying life insurance for your business partner

If you own and operate a business with a partner, you could buy a life insurance policy on your business partner and name yourself or the business as the beneficiary. The proceeds from this policy would then go either keep the business running.

This type of life insurance is typically called key person insurance. Read more about life insurance for business owners.

Buying life insurance for your spouse or life partner

If one spouse is the breadwinner, it may make sense for her to purchase not only her own life insurance policy, which would name her spouse as the beneficiary if she dies, but also a policy to insure her spouse in case she dies. This especially makes sense if the spouse is not an income earner (and in that case cannot purchase her own policy), but provides child care that the breadwinner would need funds for in case of the spouse’s death.

Read more about life insurance for spouses.

Buying life insurance for your child

Parents and grandparents can both take life insurance policies out on children. Whole life policies are available for young children, or you can add a child rider to your own policy. Read more about buying life insurance for children.

Buying life insurance for your adult child

If you have cosigned private student loans with your children, you may want to take out life insurance policy so that you can pay off those loans if your child dies prematurely. Read more about buying life insurance for your college student.

Buying life insurance for your sibling

It’s unlikely that you have insurable interest in your sibling, but there are some cases in which you might. For example, if your sister is taking care of your elderly parents, if she were to die, your elderly parents may be at risk for losing their care. You could purchase a life insurance policy for your sister, name yourself the beneficiary, and, in the case of your sister’s death, you’d be able to use that money to help continue care of your elderly parents.

Buying life insurance for your parents

Many people are interested in taking life insurance policies out on their parents in order to pay for funeral expenses when they die. While it’s usually hard for children to prove insurable interest on their parents, you can certainly help your parents apply for their own policy and make you the beneficiary.

Read more about purchasing life insurance for your parents.

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Further reading

What does life insurance cover?

When will life insurance pay out, and when will it not? Learn what scenarios are covered by your policy.

Read

What are life insurance premiums?

Premiums keep your policy in-force. Learn how they're determined and how you can lower them.

Read

What are life insurance riders?

Customize your policy and get additional benefits and protection with must-have riders.

Read

Why life insurance isn't an asset

Life insurance protects your family's financial future - but should you consider it an investment?

Read

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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