Can Someone Else Purchase Life Insurance for Me?

Purchasing life insurance on other people is a relatively straightforward process. When it comes to minors, insurance is up to the parents who want it for their kids. Amongst fellow adults, anyone with an insurable interest in your life can buy a policy on you as long as they have your consent. But anyone old enough to sign a legally binding document can go ahead and purchase life insurance themselves, and also decide who will receive copies of policy. So with all things considered, you'd need to know the intentions behind someone else buying you a life insurance policy.

Buying Insurance for Other People

When parents wish to protect their children with life insurance, they'll usually get policies for themselves and name their children as beneficiaries. But some parents wish to get life insurance policies for their children, because premiums can be locked at low rates when the subjects are young. Low premiums, however, are usually still available for people once they've reached adulthood. Therefore, it's often considered dubious for parents to buy their kids insurance when those kids can buy it themselves once they turn 18. So even though these choices are personal matters for every household, parents should always weigh the practicality of each option.

Some people seek to buy insurance on the lives of non-relatives, but this is usually due to monetary reasons. If someone believes that they would be financially impacted by the death of a key individual in their company, they might claim to have an insurable interest in that person. But proving these interests as tangible to an insurance agent can be difficult, even if the working relationship is verifiable. Furthermore, the individual might have to undergo some awkward health tests just to qualify for this third party insurance purchase. Therefore, the issue of buying policies for non-relatives on the basis of insurable interests is a controversial matter.

Types of Insurance to Consider

Parents expect their children to live for many decades into the future, so any policy that a parent buys should either be convertible or permanent. If you buy your child a permanent policy, you could be committing him or her to premiums for many years to come. You could opt instead for a term plan, but you'd need to find a company that would convert the policy into something more lasting once they reach adulthood.

Term policies can be purchased in durations of anywhere from 5 to 30 years. People will often buy shorter terms to pay off debt and longer ones to handle mortgages. The premiums of term policies are low, but the funds will only pay out to the benefiting entities if the term is still active at the time of the policyholder's passing.

Whole life insurance is one of the most common choices amongst younger policyholders, because the coverage is everlasting. The premiums are higher with whole life coverage, but they can be locked down low when the subjects are young and in good health. The high premiums in a whole life policy build towards a large cash crate, which ultimately pays big to the beneficiaries after the policyholder's death. That cash can also be tapped by the policyholder to pay off his or her major expenses in life.

Different forms of coverage are designed to suit the needs of individuals everywhere. If you're looking to provide for others beyond the remaining years you'll have together, you can buy yourself an insurance policy and name them as your beneficiaries. But if you do wish to buy someone else an insurance policy, it should only be done with the best intentions.

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