UPDATED: Nov 26, 2011

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Written By: Laura BerryReviewed By: Daniel WalkerUPDATED: Nov 26, 2011Fact Checked

You cannot buy life insurance for just any random person or casual acquaintance but, if you do it the right way, you should be able to buy life insurance on your mom. When it comes to the question of being able to purchase life insurance on another person, quite a few issues come up.

There are a number of things that life insurance companies need to approve a life insurance policy. In order to take a policy out on someone else, several requirements need to be met in order for it to be legal. This article will answer some popular questions that refer to buying a life insurance policy for someone else.

Who are you able to buy a life insurance policy for?

In order to prevent insurance fraud, you need to have a reason for why you are taking a life insurance policy out on someone. In most cases, this refers to close relatives, although you can’t take a policy out on just any relative.

To buy a life insurance policy for someone, you would need to prove that you have a relationship with this person in which your financial situation would be negatively affected in the event of their death. This being said, if you do not have a close relationship with your mom and you aren’t dependent on her financially, you probably won’t be able to buy a policy on her.

Along with relatives, another person who you may be able to take out a life insurance policy on is an important employer or employee. This is known as a life insurance policy for a key employee.

What does insurable interest mean?

Insurable interest refers to the direct relationship between the beneficiary and insured and financial help. Sometimes just a type of relationship assumes insurable interest, although this is not always the case. These relationships may be between:

  • Spouses
  • Parent and child
  • Fiancées
  • Business partners

The purpose of taking out a policy on someone else is supposed to be for financial compensation for continued help, rather than for profit. For example if you took out a life insurance policy on your mom to be able to pay for her mortgage if she passed away, the amount of the policy should be about equal to the cost of the house and fees associated with it, and nothing more for you to keep on your own.

Without proving insurable interest, the chances of buying a life insurance policy for another individual are slim. You have an even slimmer chance of taking out an insurance policy on someone without their permission or knowledge.

Can you buy a life insurance policy for someone without their knowledge?

In order to protect against wrongdoing and fraud, insurance companies have put in place a number of policies that need to be followed when purchasing life insurance. In order for you to take out a policy on someone else without them knowing about it, you would have to do it illegally and sneakily.

More than likely you would not get away with it, as insurance companies spend a lot of money every year investigating and fighting insurance fraud. If the death of someone you took a policy out on died, there would be many questions for you and proof that you would need to show.

What do you need for a life insurance policy?

If you took out a life insurance policy on your mom, there would be a number of things that the insurance company needed from her. Most companies require medical tests of some kind. For some, this is just a blood test and health related questions. For other companies the tests may be more involved and complicated, especially if there is a history of illness. Often the insurance company will also request not only medical records, but financial records as well.

Life insurance companies usually need a social security number for the life insurance application. You may know your mom’s social security number but that would be difficult to fake for someone else, which is another reason why it can be hard to buy insurance someone else.

Lastly, the insurance company needs the person’s signature of who you are buying the policy for. This shouldn’t be a problem provided the individual knows what you are doing, but it would be more difficult to fake.

How do you buy life insurance for your mom?

If you have insurable interest with your mom and she agrees with you taking out a policy on her, the next step is to speak with a life insurance agent. If you already have life insurance, you can use the same company or you can use the Internet to find one. Once you find a company you want to work with and explain the situation, they will be able to walk you through the next steps.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Written by Laura Berry
Former Insurance Agent Laura Berry

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Car Insurance Agent Daniel Walker