Yes, you can buy life insurance for someone else.
But, there are some caveats:
While it is possible and legal, there are restrictions that must be followed. You cannot purchase life insurance for a total stranger, or for someone else without their knowledge. Costs will vary according to the individual being insured, the older they are, the more it will cost.
To purchase life insurance for a family member (i.e. parent - mother, father, grandparent) or child, you must be able to show that your have an "insurable interest." In very simple terms, that means you would experience some kind of financial hardship or loss if the insured person dies.
Often young couples purchase a life insurance policy for their children. Many companies offer these policies, both term and whole. Obviously, the younger you are when a policy is purchased, the lower the monthly premiums. If you have just had a baby, now is the perfect time to purchase a life insurance policy.
Odds are slim that you will use it, but if anything does happen to your child, you would want to be able to grieve without worrying about how to pay for the funeral expenses and lost income while you take time off from your job to grieve.
Finally, life insurance policies can be purchased by sons and daughters for their aging parent or both parents. Often, the elderly allow insurance policies to lapse due to forgetfulness or simply lack of money. Adult children can purchase and become responsible for making the payments instead of allowing their parents to struggle with that monthly expenditure.
Most times, these final expenses policies are to be used, as the name implies, to pay for funeral and burial expenses, or any oustanding debts the parent may have.
|65 year old man||$63.55||$122.63||$141.75||$235.25|
|66 year old man||$71.23||$138.24||$158.12||$257.75|
|67 year old man||$81.48||$155.15||$172.35||$283.50|
|68 year old man||$91.85||$177.62||$191.82||$315.87|
|69 year old man||$105.77||$203.96||$216.30||$355.65|
|70 year old man||$117.59||$229.70||$246.34||$406.23|
|71 year old male||$136.20||$261.45||$278.33||$461.35|
|72 year old male||$151.95||$296.25||$317.20||$524.88|
|73 year old male||$171.17||$338.25||$363.56||$603.35|
|74 year old male||$193.27||$384.15||$422.72||$702.05|
|75 year old male||$220.55||$436.20||$494.70||$820.30|
Premiums shown as off 09/03/2023 - your insurance rates will most likely vary. This table gives just a sampling of average life insurance costs.
|65 Year Old Woman||$38.36||$66.55||$90.23||$148.85|
|66 Year Old Female||$42.30||$73.70||$96.55||$163.36|
|67 Year Old Woman||$48.77||$82.25||$105.54||$177.78|
|68 Year Old Female||$43.72||$86.77||$117.72||$195.31|
|69 Year Old Woman||$53.26||$96.87||$135.75||$222.45|
|70 Year Old Female||$57.03||$106.24||$156.33||$246.85|
|71 Year Old Woman||$63.65||$119.25||$183.74||$274.93|
|72 Year Old Woman||$69.46||$132.35||$212.19||$305.35|
|73 Year Old Female||$79.87||$152.76||$247.72||$352.35|
|74 Year Old Woman||$89.45||$172.70||$288.85||$398.57|
|75 Year Old Female||$102.00||$193.80||$340.75||$453.95|
Rates shown from 09/03/2023 - your premiums will most likely be different. This is just a sampling of typical rates.
For business owners, "insurable interest" also applies, because you have a strong business related connection. Often, business partners, get life insurance on each other.
Business partners often take out life insurance policies on each other when a business is formed. This helps ensure that the business will not suffer if one partner dies unexpectedly.
The money is used to pay off the heirs of the partner that died so that they do not gain shares or control of the business.
The way a life insurance payout is to be used, should be specified on the business partnership documents.
Another scenario where it is natural for someone to purchase a life insurance policy for someone else involves spouses. It is not surprising that husbands and wives would want to purchase a life insurance policy for their spouse.
In case the husband or wife dies, a life insurance policy would ensure that the surviving spouse does not go into debt after losing the income they've become accustomed to. The life insurance death benefit can also be used to pay for funeral expenses, pay the mortgage, pay for kid's education, any outstanding debts, etc.