The rules surrounding the life insurance process can be quite complicated. For instance, when establishing a life insurance policy on someone other than yourself, the first step is to make sure you have permission to do so.
Once you do, life insurance can be very affordable, and it can provide a safety net that no other type of insurance can offer. There are many reasons you will want to make sure that someone else has life insurance.
Some people depend more on their spouse than others, but even those who aren’t employed full-time should be covered.
It is possible to take out life insurance for your spouse, child, parents or even business partner. However, it’s not possible to buy insurance for someone not impacted by your finances. You must have an insurable interest.
Here we will take a look at who you can buy life insurance on, and why.
Consent is essential for a life insurance policy to be considered legitimate.
Since most policies require a medical exam, it is difficult to get coverage without consent. Also, a signature is required.
Parents of a minor will find that consent is not applicable.
If you intend to buy life insurance on another person, you need to be able to prove that their death would directly affect your finances.
So, even if your spouse is a stay at home parent, their death could mean that you may not be able to attend work for some time. There would be a level of childcare required that would mean you would need to find an alternative, whether it be financial or with your time.
You can purchase coverage for anyone under eighteen without the need to consult them; however, anyone over eighteen will need to provide consent.
Some parents will want their children to get a head start with the cash accumulation advantage that comes with a whole life policy. This can cover funeral costs and also help towards any loss of earnings that could occur. When your children are old enough, you can transfer the policy over to them, and they can continue with the payments.
You can purchase life insurance for your parents if you can prove that there is an insurable interest.
For example, if you took out a joint loan, or you rely on them financially, then you should be able to take out coverage for them.
Do I Have To Be Married?
No, you can be in a long-term relationship and establish life insurance policies on one another.
If you live together and share payment of the household bills, then this shows that you financially rely on each other. Also, if you are both listed on a lease or mortgage, share the responsibility of a loan, and are both named on it, then you can purchase life insurance for each other.
Also, if you have children, then this will suffice.
When the loss of a business partner or key person can negatively impact the business, you may be able to purchase life insurance on them.
Small businesses are particularly susceptible to losses of personnel, especially decision making persons.
This is also the case if there are buy-sell agreements. Instead of protecting a family member, life insurance can protect a business and its employees. The death benefit can be used to buy the deceased partner’s share of the business and protect it.
Key persons life insurance is the coverage that many business owners use. A key person is someone who works in the day to day operations and ensures that a day’s work goes the way it is supposed to. Alternatively, it can be an actual business partner.
If the death of the person disrupts revenue or impacts the company’s reputation as a whole, then they can also be considered a key person.
Are There Discounts For Getting Life Insurance On Other People?
To put it simply, no.
There are no discounts whether it is for a couple, or for adding further family members. You will not find life insurance companies offering bundles like other industries.
Remember, no matter who you are looking to get an insurance policy on, there must be consent as well as insurable interest. Otherwise, you should reconsider why you are looking to provide insurance on the person in question.
If you have any special request that is not covered above, then it is always best to contact a life insurance company to speak with them directly.