Can I get a life insurance policy on my brother?
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UPDATED: Feb 1, 2017
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- You must be able to prove you have an insurable interest in your brother in order to take out life insurance on him
- Life insurance for burial and final expenses should be available, with your brother’s knowledge
- Profiting from life insurance is fraudulent and illegal
In order to take out a life insurance policy on your brother, you will need to prove that you have an insurable interest in him.
This means that he is worth more to you alive than he is dead.
An insurable interest means that, if the insured should die, it would cause a financial hardship or other types of hardship on the beneficiary.
If you depend on your brother for financial support, and this is provable, then you have an insurable interest.
Life insurance companies think of an insurable interest as safeguarding the beneficiary from suffering financially when the insured dies.
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Other Considerations for Proving an Insurable Interest for Life Insurance
An insurable interest usually includes love, blood or a business.
So, spouses have an insurable interest in each other, some relatives have an insurable interest in each other and business partners have an insurable interest in each other.
This is because the beneficiary has a higher interest in the insured living than dying.
Some relatives can have an insurable interest in another, but it is much harder to prove.
If you are not dependent on your brother financially, however, he is the one dependent on you financially, you may experience a harder time getting a life insurance policy on him.
If he has not assets and no income, you should be able to get a burial and final expense type life insurance policy for him.
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Your Brother Must be Aware of the Policy
Unless he is disabled, he must sign the application and may be required to release his medical records.
You can be in charge of paying the premiums, however, he must know about the policy. To make sure that he does not make any changes to the policy, you should name yourself as the owner.
Life insurance policies cannot be written in secret, without the insured knowing about it.
You may feel that you have the right to get the policy based on the current situation, but he must still have knowledge of it. Forging his signature or any other illegal action can void a policy.
Parents can sign for life insurance on minor children, however, these are usually for small amounts to cover burial and final expenses.
The children may be unaware of these policies, until they are told. If your brother is a minor and you are his legal guardian you may be able to get a burial policy for him without his signature.
Ways to Get a Life Insurance Policy on Your Brother
Insurance companies allow a person to take out a life insurance policy on themselves, because they believe that all people have an insurable interest in themselves.
Your brother could apply for his own life insurance policy and you could just make sure that the premiums are paid to keep it in force.
If you are in business with your brother, his death would likely cause you financial stress and hardship. You could get key person life insurance on his life.
In business, if a person has a major role in keeping the business running, their premature death would cause financial hardship.
This is an insurable interest, however he would have to agree to the policy.
When you have a legal document showing that your brother owes you a set amount of money, and an official loan was signed, you have an insurable interest in getting repayment for the loan.
If you were just giving him financial support, periodically without a signed loan form, you will not be able to show an insurable interest in him.
What Insurance Companies Will Not Allow
Life insurance companies will not allow one person to profit off the death of another.
In other words, you cannot wager on whether the insured will live for a long time or die sooner.
If this were allowed, many people would become wealthy by the demise of others. This would lead to chaos in the world.
If people could take out life insurance on any relative or acquaintance they wanted to, there would be a lot more suspicious deaths.
The insurable interest guidelines are set to prevent fraud, and to have life insurance used properly.
In conclusion, to get a life insurance policy on your brother, you must show an insurable interest in your brother.
You must be financially dependent on him for support, or be involved in a business with him, where he is a key factor in the success of the business.
If your brother is a minor and you are his guardian, you can get a burial policy on him.
If he is an adult, you can get a burial policy on him as well, as long as he has knowledge of it and agrees to it.
Other than these situations, you will have a hard time proving an insurable interest in your brother.
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