Can I buy life insurance for anyone?


SmartAsset: Can life insurance be taken out on anyone?

SmartAsset: Can life insurance be taken out on anyone?

You can’t buy a life insurance policy for anyone. Before an insurance company approves your application for life insurance on someone other than yourself, you must obtain the consent of the person to be insured. You must also demonstrate that you have an insurable interest. This means that you would be exposed to financial loss if the other person died. It is possible to obtain a life insurance policy for someone else if these conditions are met. And spouses, ex-spouses, business partners, relatives and creditors can all apply for and be approved for life insurance coverage for someone else.

Consider talking to a Financial Advisor about your life insurance needs.

Life insurance: definition and terms

Life insurance is an important risk management tool that guarantees payment in the event of the death of the insured. It is widely used to protect people against the loss of income from someone on whom they are financially dependent.

Most life insurance policies insure the life of the person applying for the policy. For example, a wage earner in a household can take out a life insurance policy for themselves that will provide money to support non-working family members if the wage earner dies.

But life insurance policies can also be taken out for someone else. For example, a trading partner can buy the life insurance cover for their business partner to protect them and the business from financial loss in the event of the partner’s death. However, insuring someone else’s life is only permitted in certain circumstances.

When can you buy life insurance for someone else?

SmartAsset: Can life insurance be taken out on anyone?

SmartAsset: Can life insurance be taken out on anyone?

There are two key issues to settle before you can buy life insurance for someone else. First, you must have the consent of the other person whose life will be insured. Second, you must show that you have a insurable interest in that person’s life.

It is illegal to take out insurance for anyone without their consent, with one exception for minor children. Laws are written to prevent people from committing insurance fraud by insuring someone’s life without their knowledge or approval.

To justify an insurable interest, you must demonstrate that the death of the insured would affect you significantly. Interest can be financial or emotional. But it must be proven to the satisfaction of the underwriting unit of the insurance company when applying for buy life insurance for another person.

Who can take out life insurance on someone else?

Despite the restrictions on insuring someone else’s life, there are a number of situations where someone may want to take out a life insurance policy on someone else. Here are some examples :


One spouse can purchase life insurance for the other if the other is the primary breadwinner. But the spouse buying the life insurance may not have the money to pay the prime.


A parent, grandparent or legal guardian of a child can insure that child and name themselves a beneficiary. This can be done to prevent the child from becoming uninsurable if they later suffer from a chronic illness or other condition.


Partners in a business can ensure the life of the other. Thus, if one of the partners dies, the other will receive a sufficient cash benefit to continue the activity. Or they could buy out the interests of the partner’s heirs.

key employee

Another business-related use is securing the life of a key employee. This is in case a death would have a significant financial impact on the business.


A creditor may want to purchase insurance for someone who has a debt. Thus, if the debtor dies, the creditor will receive sufficient policy benefit to settle the debt.

How to buy life insurance on someone else

get a life insurance policy for someone else approved by policyholders requires obtaining the consent of the prospective insured person and demonstrating an insurable interest.

To show their consent, underwriters will want to see a signed statement accepting coverage. In addition to signing the consent form, the person to be insured must participate in the subscription process. This will usually include answering questions and undergoing a medical examination.

Demonstrating an insurable interest will mean convincing policyholders that you have a significant legal and emotional or financial interest in the well-being of the person whose life will be insured. This will involve answering questions about the insured person’s relationship to the policyholder. Whether insurable interest cannot be proven, the policy will not be approved.

Benefits of buying life insurance for someone else

SmartAsset: Can life insurance be taken out on anyone?

SmartAsset: Can life insurance be taken out on anyone?

Taking out an insurance policy on someone else is not the usual approach. But it can be a wise and even essential financial move in some situations. For example, a parent whose spouse’s life is insured can rest easy knowing that if the worst should happen, the family will be financially supported.

In Business, taking out insurance for a business partner can avoid having to sell the business to pay the interest of an heir in the event of the death of one of the partners. It can also protect against financial loss if an employee with critical technical knowledge dies, preventing operations from continuing.


Purchase life insurance for someone else allows spouses, parents, business partners, employers and creditors to protect themselves against losses in the event of the death of the insured person. Laws and insurance company policies mean that you can only buy a policy for someone who gives consent and if you can demonstrate an insurable interest.

Insurance Planning Tips

  • Your choice of an insurance policy can have lasting effects on your overall finances, especially once you reach retirement. If you are unsure of which policy to adopt, a Financial Advisor may be able to help. Finding a qualified financial advisor doesn’t have to be difficult. SmartAsset’s free tool connects you with up to three approved financial advisors in your area, and you can interview your advisor for free to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, start now.

  • Financial planning is essential to achieving your goals for your future. Life insurance can be an important part of these plans, in addition to investments and other financial strategies. Use SmartAsset guide to creating a financial plan to learn more.

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