Can You Take Out Life Insurance on Someone Without Them Knowing?

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Getting life insurance for someone else may be a good idea if their death will affect you financially. For instance, if you rely on income from your spouse, buying a policy for them can ensure you’ll be financially protected if they pass away.

While you can’t take out a life insurance policy on anyone without them knowing, you can purchase a plan for another person with their consent. Keep reading to learn more about how to take out a life insurance policy on someone else.

How buying life insurance for someone else works

To understand who you can buy a life insurance policy for, it’s helpful to know what parties are involved in a standard plan. Here are 3 typical parties included:

• The policyholder: This person owns the life insurance policy and makes payments on the monthly premium.
• The insured: This is the person whose life is being insured by the life insurance policy.
• The beneficiary: The beneficiary is the person listed on the life insurance policy that will receive the death benefit when the insured person dies.

In many cases, the insured and the policyholder are the same person. But, if you purchase an insurance policy for someone else, you would be the policyholder, and they would be the insured. 

For this to work, the insured would have to give you consent to purchase a policy in their name, and you would also need to have an insurable interest. Insurable interest means that you benefit financially from the insured being alive, and you would suffer financial loss when they pass away.

Who can you buy life insurance for?

People you can buy life insurance for include:

• Spouse or life partner: You and your spouse or life partner can have a policy on each other to cover things like funeral expenses, debt, and household expenses if one of you dies before the other. 
• A former spouse or life partner: If you’re going through a divorce, there is a chance that a life insurance policy may be required as a part of your spousal support agreement.
• Close relatives: Your close relatives can include your siblings, cousins, aunts, and uncles. You can purchase a life insurance policy with their permission if you have an insurable interest. 
• Children or grandchildren: A life insurance policy for children and grandchildren is beneficial for many reasons. The policy could help cover their education when they’re older and offer them protection if they develop a serious health condition later in life. It also provides a solid foundation for your children when they become adults. 
• Business partner: If you share a stake in a business with another person, you can purchase a life insurance policy on them with their permission to ensure that your business, family, and employees are protected. This also enables you to continue running your business after your partner dies. 

What you’ll need to take out life insurance on someone else

If you’d like to buy a life insurance policy for someone you rely on, there are a few things you’ll need from the other party to purchase a policy:

• Provide proof that you would be affected financially if that person dies. 
• Get written permission from the person you’re purchasing a policy for. Either the person or their parent or guardian will have to sign the insurance forms. 
• The person you’re getting insurance for will most likely need to complete a medical examination when you apply for life insurance. 
• The insured will need to provide their personal information, including their name, address, birth date, and social security number.

As long you have permission from the person you intend on insuring and provide that you have an insurable interest, you can take out life insurance on another person.  If you have any more questions about how to get a policy for someone else, contact a life insurance agent to get more clarity and smooth out the process.