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If you’re here, you know life insurance is important. Perhaps you already have life insurance yourself, or you’ve seen recently how the death of someone impacted a family.

You want your family to be financially-stable and their futures secure. Life insurance protects the family finances in the event that there’s an unexpected death.

However, while you can easily buy life insurance on yourself, it’s not as simple if you’re looking to buy life insurance on others.

To buy life insurance on someone else, even family members, you need insurable interest and consent. The family member must be willing to go through with the application process and agree to you owning the policy.

What’s insurable interest?

Insurable interest is simply defined as the level of hardship a person will suffer as a result of someone else’s death. In other words, how much does a beneficiary stand to lose if the insured person died?

Insurable interest is required when someone buys life insurance to prevent nefarious plans and insurance fraud.

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Which family members can I buy life insurance on?

Spouses/partners, parents, children, siblings, grandparents, and grandchildren are some family members that you may consider purchasing life insurance on. Of course, this isn’t the case for everyone. Let’s go over when it might make sense.

Spouses or Partners

It’s easy to understand the insurable interest between partners. If you share a home, you likely share the bills. If you’re parents, you’re raising children together. The death of one of you would have a significant impact on the other.

Partners who work outside the home need life insurance to replace their income in the event of their unexpected death. Stay-at-home parents also need life insurance. These people dedicate a lot of energy to running the household. Hiring people to do this work would cost a lot of money.

Term life insurance is the most affordable type of life insurance for families. Permanent life insurance is another option, but most families find term life insurance to be the best choice.

Parents

It’s not uncommon for adult children to be helping care for their aging parents. It’s also not uncommon for these children to want to purchase life insurance on their parents to help recoup caregiving costs and have money for a funeral and end-of-life expenses.

The issue comes when you’re trying to find affordable coverage. Life insurance is more expensive to buy on an older individual and product options can be limited depending on how old your parent is.

Buying life insurance on an older person isn’t impossible, but it’s not as easy as buying it on yourself. You will need to prove your insurable interest and make sure your parent consents to the insurance.

If you’re thinking about buying life insurance on your parents, read more on the subject here: Can I Buy Life Insurance on My Parents?

Grandparents

Buying life insurance on grandparents is a similar concept to buying life insurance on your aging parents. You’re probably considering it because you’re caring for the person.

The age and health of your grandparents will determine your options. And, don’t forget, you also need to have insurable interest and their consent. Providing proof of insurable interest will be more challenging than other family relationships.

If your grandparent has dementia, Alzheimer’s, or would otherwise be physically unable to consent, you will not be able to buy life insurance on him or her.

If you’re thinking of buying life insurance on a grandparent, it’s best to contact us directly to figure out your options.

Children

Buying life insurance on a child is common. Parents never want to consider that their child may die before them. But should the worst occur, a life insurance policy can help pay for a funeral and allow the parent to take much needed time off work without worrying about bills.

You can’t buy term life insurance on minor children, but whole life insurance is an option and you can lock in low rates. Because of these low premiums, many choose to have the policy completely paid off in 10 or 20 years. The policy accumulates cash value and will continue to grow even after it’s paid up.

There is one main requirement to buy life insurance on your child. You, the owner of the children’s whole life insurance policy, need to have your own life insurance in an amount equal or greater to the face amount you want to buy on the child.

Grandchildren

Many grandparents buy whole life insurance policies for their grandchildren. It’s a way to give them a head start on their financial future, while also protecting their future insurability.

A children’s whole life insurance policy has the potential to accumulate cash value each year. This cash value can grow to a substantial amount once the child is an adult.

Once an adult, many grandparents gift this policy to the grandchild by transferring ownership. The adult child can now access this cash value and borrow against it to pay for things like a down payment on a home, to help pay for college, to fund a business opportunity, or to provide a comfortable retirement.

In addition, once the policy is issued, the policy cannot be canceled as long as premiums are paid. This can ensure the child always has life insurance even if they become uninsured.

If the grandparent is the child’s primary caretaker, insurance companies typically do not require the child’s parents’ consent. If the grandparent is not the primary caretaker, some carriers do require the child’s parents’ to sign off on the application.

Siblings

It’s definitely less common for someone to take out an insurance policy on a sibling. Parents and children often find themselves in the position of caring for one another, but siblings, less so.

However, situations can occur in which insurable interest exists and siblings may want to buy life insurance on one another. If you and your siblings are roommates, then life insurance may make sense. If you and your siblings share responsibility of caring for your aging parents, a life insurance policy can help cover the extra costs the surviving sibling would take on if a sibling died unexpectedly.

Life insurance can be life-saving if a loved one dies too soon. Take time and consider if you should buy life insurance on certain family members.

Life insurance helps ensure your family’s financial well-being in the face of tragedy. Start the process by getting free life insurance quotes. No contact information required.

About the writer

Headshot of Natasha Cornelius, a life insurance writer, for Quotacy, Inc.

Natasha Cornelius, CLU

Senior Editor and Life Insurance Expert

Natasha Cornelius, CLU, is a writer, editor, and life insurance researcher for Quotacy.com where her goal is to make life insurance more transparent and easier to understand. She has been in the life insurance industry since 2010 and has been writing about life insurance since 2014. Natasha earned her Chartered Life Underwriter designation in 2022. She is also co-host of Quotacy’s YouTube series. Connect with her on LinkedIn.