Can I Take Out Life Insurance Policies for Other People?
Life insurance is usually purchased for yourself to give your family financial security in the event of your death, but it can also be beneficial to buy a life insurance policy for someone else. Your relationship, as well as a few other factors, will determine your ability to purchase a policy for another person.
Reasons to Buy Life Insurance for Someone Else
Buying life insurance for someone else can safeguard you against unexpected financial obligation when your money or assets are mingled. Securing a life insurance policy for another person will protect you from:
Unexpected utility bills, childcare costs, and living expenses
An unpaid mortgage, student loans, or other large debts
Funeral and burial costs
We will ask for proof of insurable interest, which establishes that your finances would be negatively impacted by the death of the insured. Situations may include signing a loan together, considerable debt, starting a business, or covering final expenses.
The Most Common People to Purchase Life Insurance For
The person you are buying life insurance for does not have to be related to you, and in fact sometimes two people who are related cannot take out life insurance policies without proven financial dependence. The following are some of the most common people you might purchase life insurance for.
Spouses often have very intertwined finances. If you own a home or have children together, a life insurance policy can ensure that the surviving spouse has enough money to continue paying the mortgage, bills, and expenses for the children. This may even include money for the child’s college education. Life insurance policies can be especially comforting for a stay-at-home parent who doesn’t work.
Taking out a life insurance policy for your parents can be difficult because they may have health conditions that prevent them from qualifying. However, it is still something to investigate for those who rely on their parents for childcare, need to pay off any debts or final expenses after their passing, or want to offset long-term care expenses. If your parents have a pre-existing condition, you will likely need a graded death benefit policy.
Purchasing a life insurance policy for your child will lock in their insurability for years to come. Proving their insurability from a young age will protect them if they are diagnosed with a serious medical condition early in life. Your child can also purchase additional coverage at a preferred rate as they get older without additional medical examinations.
Starting a business together has many financial implications. Partners will decide to take out life insurance policies on each other to provide financial stability and protect one another’s family from taking on a business loan in the event of the insured’s passing.
Your Options for Life Insurance
Life insurance policies will vary based on the insured’s age, occupation, medical history, and other factors. Our insurance professionals will help you evaluate your unique situation against state and local laws to find you the best life insurance solution.