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How to take out a life insurance policy on someone else
Get financial protection for yourself and loved ones, even if they don’t want to pay for a policy themselves.
What's in this guide?
- Can I take out a life insurance policy on someone else?
- How do I buy life insurance for someone else?
- What life insurance options should I consider?
- Should I consider insurance with living benefits?
- When should I take out life insurance for someone else?
- How do I find out if someone already has life insurance?
- Compare life insurance policies for someone else
- Bottom line
- Questions about taking out life insurance on someone else
Can I take out a life insurance policy on someone else?
Yes, you can buy life insurance for someone other than yourself as long as you meet a couple criteria first.
- You have to prove an insurable interest. Insurable interest is the possibility that you’ll suffer a financial loss if the person you’re insuring dies. For example, if you rely on your parents for financial support, you could take out a policy on them.
- You need permission. The other person has to give you written approval allowing you to take out the policy. This might be in the form of key man insurance, for example, where a company insures its CEO after getting permission.
Can I get life insurance for someone without them knowing?
Legally, you can’t take out life insurance on someone without notifying them. The person you want to insure needs to give you written permission to buy life insurance for them.
Plus, in most cases, the insured person will need a medical exam. That way the life insurance company can figure out their risk level and set the premium accordingly.
How do I buy life insurance for someone else?
Taking out life insurance on a family member or business partner means you’ll need both people involved in the application process. That process may look like this:
- Research life insurance companies. Come to an agreement on which life insurance company to choose. Make it easier by narrowing down options before the person insured gets involved with quotes or applications.
- The person insured fills out the application. Due to sensitive personal and medical information, ask the person you’re insuring to fill in application questions, though you can help with the process if needed.
- The person insured takes the medical exam. Once you choose an insurance company, the person you’re insuring will take the medical exam. If you want to skip the medical exam, expect fewer choices and higher premiums.
- Both of you sign the final paperwork. After seeing your final quote, review and accept the policy’s terms and sign the policy documents if you’re in agreement.
- Set up your payment method. If you don’t want your loved one to shoulder the cost, you can take on paying the life insurance premiums.
- Start coverage. Your policy starts on the date agreed to in your policy contract.
Still not clear? Check out our short video where we break it down for you, step-by-step.
What life insurance options should I consider?
Consider which options work best for your loved one’s stage of life and your financial situation:
- Term. You can buy this temporary policy for a set time, usually between 10 and 30 years. This policy costs less for wide coverage on young or middle-aged adults, making it an ideal option for insuring the family breadwinner.
- Permanent. Permanent life policies pay out a death benefit and accumulate cash value over time that you can borrow from if needed. It typically costs more than term policies but works well for anyone who might benefit from extra income.
- Funeral. This type of policy offers a lower benefit than the other types of life insurance to help cover funeral costs and minor expenses after a person’s death. You might choose this policy if funeral expenses are your main concern for a parent, spouse or child or if you can’t find an affordable policy.
- Accidental death and dismemberment. This policy pays out a death benefit if the person insured dies in an accident like a car accident. It also pays a reduced benefit if the person becomes disabled during an accident. Since adults from ages 25 to 34 are most likely to experience fatal accidents, consider this policy if you rely on a young, working adult for financial support.
Should I consider insurance with living benefits?
Insurance that pays out while your loved ones are alive can offer additional financial support. Consider adding these riders or buying these as separate policies:
- Critical illness. You might need a policy to pay a benefit early if a parent, spouse or loved one gets diagnosed with a chronic or terminal illness. Many life insurance policies let you add a rider that covers critical illnesses.
- Long-term care. This policy covers the cost of long-term professional care in your home or at a medical center. It works best if you can’t take on these costs out of pocket or provide in-home care to aging loved ones.
- Disability. This policy pays out if a person gets diagnosed with a physical or mental disability and can’t work. It may work best if you rely on a family member for income or childcare. This may include the family breadwinner or stay-at-home parent.
When should I take out life insurance for someone else?
Consider a life insurance policy for someone else if you rely on that person for support or if you’d take on their financial responsibilities after death. People you might consider getting insurance for:
- A spouse. If your spouse provides income or childcare support an individual policy can help cover costs if your spouse dies. You can also get a joint policy or add a rider for a spouse to your life insurance policy.
- Your parents. You might consider buying insurance for your parents if their critical illness or death would stretch your finances thin.
- Your children. While the chances of a child’s death are low, you might lock in a low premium or avoid the possibility of a future coverage denial from medical issues. If you want to protect yourself and your kids, some policies offer child riders to cover you and your children on the same policy.
- A family member with a disability. If you’re caring for a person with a disability, you might need life insurance to cover medical debts if that person dies. Or you might need life insurance for yourself or your spouse to provide the same quality of life after you die.
How do I find out if someone already has life insurance?
Before buying a policy for someone else, ask that person if they have a policy that covers the financial need you’re concerned about.
If you need to find a lost policy, try searching the National Association of Insurance Commissioners Life Insurance Locator. The tool searches databases provided by 29 states to help find lost policies.
If you can’t ask directly or they’re not sure, look for clues of your loved one’s life insurance policy. Look for:
- Payment withdrawals on bank statements or an employer’s check stub
- Files of important documents
- Policy statements in the mail
Compare life insurance policies for someone else
The first step to buying life insurance for someone else is a conversation with that person about your financial concerns. But once your loved one approves of this decision, you can compare the right life insurance policies to suit your needs together.
Questions about taking out life insurance on someone else
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