Can You Buy Life Insurance on Someone Else?

You cannot buy life insurance on just anyone. When you apply for a policy on another person, the insurer generally needs to establish an insurable interest: a family relationship or a real economic interest in that person's continued life. The NAIC says a stranger cannot simply insure your life. State rules and insurer requirements also govern the insured person's permission, so do not assume a relationship alone lets you apply without their involvement.

What counts as insurable interest?

Immediate family members commonly have an insurable interest. A business partner, employer, or major creditor may have one in a particular situation, but a casual acquaintance does not automatically qualify. The reason and amount of coverage should fit the potential loss. New York's insurance department explains that close family ties and substantial economic interests can establish insurable interest, depending on the relationship. Ask a licensed insurer or your state insurance department how its rules apply before submitting an application.

Does the person have to agree?

Expect the insured person to know about the application and to provide information or sign consent when required. There are state-specific exceptions, so the old claim that every policy always requires the insured person's signature was too broad. For example, Washington's insurance commissioner describes a spousal exception, written permission for employer-owned coverage, and special rules for children. Other states may differ. Never sign on someone else's behalf or submit their health information without authorization.

Who owns the policy and receives the benefit?

The owner controls the policy and usually pays its premiums; the insured person is the life being covered; beneficiaries receive a covered death benefit. These can be different people. Before applying, agree on the owner, beneficiaries, coverage amount, premium payer, and what should happen if the relationship changes. Our policy ownership guide explains the practical differences.

If someone asks you to participate in a policy you do not understand, ask for the completed application and policy details before signing. Check the insurer and agent with your state insurance department. A legitimate financial need does not mean an insurer must approve a particular amount or application.