Affordable Life Insurance Protection for Your Family

How to Buy a Life Insurance Policy on Someone Else

Are You Interested in Purchasing a Life Insurance Policy on Another Person?

If so, you’ve come to the right place. Yes, many people buy policies for life insurance on other people. It’s actually more common than you might expect. 

However, there are some key issues for you to understand about buying life insurance on someone other than yourself.

For example, there are a couple things that are required in order to make your purchase.


Conditions Needed to Buy Life Insurance on Someone Else:


  • Insurable Interest – Required by all insurers.
  • Signature on Application – Required by some insurers.


What is Required to Buy Life Insurance on Another Person?

In order to take out a life insurance policy on somebody you need to have an Insurable Interest in that person. This is generally required by all insurance companies.


What is an Insurable Interest?

This means you either rely on the person for some means of financial support, or you would suffer a financial cost or loss if the person were to pass away.


Definition of Insurable Interest

The expectation of a monetary loss that can be covered by insured. Insurable interest varies according to the type of policy.


  • Each individual has an unlimited insurable interest in his or her own life, and therefore can select anyone as a beneficiary.
  • Parent and child, husband and wife, brother and sister have an insurable interest in each other because of blood or marriage.
  • Creditor-debtor relationships give rise to an insurable interest. The creditor can be the beneficiary for the amount of the outstanding loan, with the face value decreasing in proportion to the decline in the outstanding loan amount.
  • Business relationships give rise to an insurable interest. An employee may insure the life of an employer, and an employer ay insure the life of an employee. Some plans are referred to as Key Man life insurance policies.


Insurable interest must exist at the inception of the contract for life insurance, not necessarily at the time of loss. 

For example, because a woman has an insurable interest in the life of her fiancé, she purchases an insurance policy on his life. Even if the relationship is terminated, as long as she continues to pay the premiums she will be able to collect the death benefit under the policy. 


What is a "Signature on the Application"?

When you apply for a life insurance policy the insurer will require a signature on the application.

However, some insurers may not require the insured’s signature, they may allow you (the owner of the policy) to sign for the insurance.

The owner of the policy is the person who pays the premiums and selects the beneficiary of the policy.


Who Can You Insure for Life Insurance? 

There may exist Insurable Interest between several parties to a life insurance contract, including spouses, partners, parents and their adult children, siblings, family members and business partners, among others. 


Examples of Life Insurance on Another Person:


  • Husband and Wife
  • Sister and Brother
  • Adult Child and Parent
  • Business Partners
  • Mortgagor and Mortgagee


How Many Life Insurance Policies Can You Have?

If you want to buy life insurance on more than one person, including yourself, you can. 

Actually, you may be able to buy several life insurance policies.

There is no limit to the number of policies, only the amount of life insurance coverage in total on any one specific person.

Life insurers don’t want you to be over-insured which may give rise to a reason to commit suicide at some future date. However, suicide is a standard exclusion in life insurance policies if it occurs within the first two years (one year in some states) you are insured.

So, if you wanted to buy life insurance plans on your mother and your father you could do so.

Or, if you wanted to buy individual life insurance policies on you, your spouse, and each of your children, that’s alright too.


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How to Buy a Life Insurance Policy on Someone Else

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