Can I purchase a Life Insurance Policy for a friend?

Answer:
You can’t simply buy life insurance on someone else unless you have an insurable interest in that person.

Generally, spouses and dependents qualify based on their relationship to you and your economic interest in each other. If your spouse were to die, you’d lose out on the spouse’s income or child care services and be impacted economically. Likewise, a business partner would have an insurable interest in you and vice versa. If your business partner dies, your business could be impacted economically.

But if your golf buddy dies and you have no insurable interest, life insurance is not appropriate nor is it permitted. In order to purchase any type of insurance, you must have an insurable interest in the item or person being insured. You can insure your own life, your spouse’s life, and your dependent’s lives but not your friend’s life unless you have an insurable interest should your friend die.

The reason for this is to prevent people from taking out insurance policies on others for financial gain such as a gambling device or by killing the person and collecting the insurance money.


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