Who Can Take Out A Life Insurance Policy On Someone Else?

  1. 12689 POINTS
    Ted Ratliff
    Owner, SFS Associates,
    To take out a life insurance policy on another individual you must have insurable interest.  This means that you may face a financial loss upon the death of an individual.  You must also have the consent and knowledge of that individual or parent of that individual.  Common examples would be an adult child taking a policy out on their parents, an employer taking a policy on a key employee, a family member such as brother or sister taking a policy out on a sibling, a grandparent taking a policy on a grand child or some companies will even allow same-sex couples to take policies out on each other as long as insurable interest can be shown.
    Answered on May 14, 2013
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    David RacichPRO
    Fountain Hills, Arizona
    You have to establish insurable interest to justify taking out life insurance on someone else. Justification is based on the premise of the beneficiaries suffering financial loss because of the death of the insured. Secondary to that issue is the amount of coverage, which also requires economic justification.
     
    Answered on May 14, 2013
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