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Can you take out Life insurance on someone else?




Yesterday's post had me do some research.

The reason why people takeout life insurance is to financially protect a loved one after they pass. But can my sons, take out a life insurance policy on me?  It is called Insurable Interest. Having “insurable interest” means that you would be adversely affected financially if the person who is insured died. In other words, you cannot purchase life insurance on the stranger you met at the grocery store yesterday. That person has no bearing on your finances. If that person died, you would not be affected financially. The reasoning behind requiring insurable interest is so that the death of the insured person does not create personal gain for the policyholder. However, being related to someone does not automatically mean you can buy life insurance on them. To buy life insurance on anyone, even a family member, you still need to prove that their death would negatively impact your finances.

Well, that's a bummer! Now if one of my son's lived with me - I believe that would count as "insurable interest"especially if we had to co-mingle our finances because we had to.

http://www.investopedia.com/terms/i/insurable-interest.asp

Life insurance is a good thing to have. My husband will do fine, if I should die before him. But a policy on me, enough to pay for any expenses would help ease that pain. We do plan this year, to start paying for our funeral plans so that our children won't have to. We paid for my father-in-law's funeral arrangements, last year - it's is like a insurance policy that the funeral home takes out, when he dies. It's all paid for. He will be 91 in May, so it could come at any time.





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