Who is allowed to take out a life insurance policy on me?
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Asked July 29, 2013
Anyone who can show the insurance company that they have an insurable interest is allowed to take out a life insurance policy on you. This could be your wife, children, brother, or even an employer or business partner. As long as the person buying the policy stands to lose, emotionally, physically, financially, or productively, they can insure against your demise.
With that being said, no one can buy a life insurance policy on you without your consent. If you are the only person who can keep the company machines operating efficiently, your boss could take out a policy to cover the expected losses she would face if you suddenly passed away, but you would have to put your signature on the contract giving her permission to gain for your demise. Your estranged wife could take out a life insurance policy to cover the losses she would suffer without your regular contributions to the children, but only if you agreed.
The reason the insured person has to agree to a life insurance policy purchased by a third party is to prevent people from setting up insurance scams where they purchase an insurance policy on someone who is wealthy and getting up in years, or from purchasing policies on movie stars, performers, politicians, or other people in high-wage brackets. Beyond demonstrating an acknowledged insurable interest, the insurance companies are willing to write life insurance policies for third parties, with any set of beneficiaries.
Keep in mind that the person who buys the policy is the one who names the beneficiaries in the policy. If your best friend took out a life insurance policy on you, they could name a charity or even someone you don't even know, as the beneficiary, or split the benefits among any number of different people and organizations. The point is, you can control who is able to buy a life insurance on you, but you cannot control who the person that pays for the policy names as the benefactors of the policy payout.
Answered July 29, 2013 by Anonymous