You can’t take out a life insurance policy on a stranger or even someone you just casually know. “You have to have an insurable interest in that person,” says Dennis LaVoy, founder of Telos Financial in Michigan. That’s one of the requirements for buying a policy for someone else. The other is consent.

What does it mean to take out a life insurance policy on someone?

What Does It Mean to Buy Life Insurance for Someone? When you take out a life insurance policy on someone else, you’re taking on the responsibility of monthly premiums to cover another person. You own the policy, so you control who is the beneficiary (typically, you’d choose yourself).

Can you take out life insurance on a boyfriend?

Yes, you can buy life insurance on your boyfriend or girlfriend as long as you have their consent and insurable interest. We’ve talked about insurable interest before in other Q&As but as a reminder insurable interest exists when one person financially benefits from another being alive.

Can a person buy life insurance on someone else?

In order for someone to purchase life insurance on someone else, life insurance companies require insurable interest. Insurable interest means there has to be financial relationship (dependence) between the person whose life is insured and the person (s) who will receive the payout of the life insurance money upon death of the insured.

Can a person take out a life insurance policy?

Insurable interest. The person taking out the life insurance policy must have an “insurable interest” in you. Basically, that means he or she must be at risk of a financial loss if you die. Examples of people with an insurable interest in your life include your spouse,…

Can you buy life insurance on your parents?

Yes. You need insurable interest and your parents’ consent to buy life insurance on them. Examples of insurable interest: You would become responsible for any of their financial obligations if they passed away. You currently rely on them financially. You and your parents co-signed on a loan together.

Who is at risk in a life insurance policy?

Insurable interest. The person taking out the life insurance policy must have an “insurable interest” in you. Basically, that means he or she must be at risk of a financial loss if you die. Examples of people with an insurable interest in your life include your spouse, blood-related family member or a business partner.