Can I Purchase Life Insurance for a Relative?

Buying life insurance for a relative is absolutely possible. When your relative is in on the plan, it is definitely possible. When you purchase life insurance online, depending on the policy style, there are signatures and possibly medical exams that the insured must be responsible for. If we are talking about a simple term life policy purchased online, there would likely only be a signature required but it must be an authentic signature, obviously.

Nuts and Bolts

The process involved in purchasing life insurance is dependent on the type of policy and the amount of coverage. The more complicated the policy the more complicated the process will be. The more expensive the policy, the more you will reviewed for risk. Life insurance companies are in the business of insuring consumers for one reason, and one reason only, profit. The insurance company business model is always going to look at the risk versus the benefit of covering each customer. Each company has their own way of determining that risk. Of course, they all look at the basics such as age, lifestyle, and amount of coverage, but every company has a formula that they use to calculate just how much to charge each customer in premiums. So when you want to purchase life insurance on a relative you would have to submit that relative's risk portfolio to the underwriting review process. As long as your relative can pass the muster of that test and the premiums are at a price that works for you, you are able to purchase a life insurance policy for a relative.

It is possible but not probable to buy a policy for a relative without their knowledge. Even if you were able to pull it off, the relative could find out and make someone else the beneficiary and all your devious work would be for not. For the purposes of this question, we will assume you are buying the policy for an actual relative and that they are in on the plan. We want to believe that.

Finding a Provider

Most providers would have no real issue with someone buying a policy for a relative. There would be absolutely nothing different about the process except for who pays the premiums. As you move through the process your relative should be made aware that you will be privy to many details about their life. Also, if you bought and paid for a policy and were to have a falling out with the relative they could easily take a loan on the policy and not repay it. They could change the beneficiary designation so that you did not receive the death benefit as agreed. You would need to check with an attorney as to whether a signed agreement outside of the policy would be necessary to protect your investment in these situations.

If you are really thinking about buying term life insurance for a relative you should think about preparing the relative for the experience. If you are looking for a whole life or universal policy, or a large term life policy, you must prepare them for a medical exam and intrusive questions about their lifestyle. If they have no issue with this, and you can pay the premiums, then buying insurance for a relative is a private matter between the two of you. As long as both of you know the pros and cons of the arrangement, then you can move forward and expect no real issue from the provider or the law.

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