We’ve all seen this story in a movie. A character dies mysteriously, and while investigating, the police discover that someone close to the deceased recently took out a life insurance policy on them. (Cue eerie music and dramatic crash of lightning.)
It’s an open-and-shut plot device in a crime flick, but in real life, you can’t go around buying life insurance on just anybody. In fact, usually, the only person you can insure is yourself. That’s not to say applying for life insurance isn’t a team sport. In fact, it’s probably a best practice to work together with a loved one and seek input as you search for the right coverage.
When you’ve found the right policy and are ready to apply, though, it’s usually time for the insured to take the lead.
In this article:
What’s stopping an individual from buying a policy on someone else?
Life insurance protects the people who depend on you financially. If you died with a policy in force, the proceeds of your policy could help your family with the mortgage, childcare, day-to-day living expenses, and burial expenses.
That’s how it’s supposed to work, but what’s stopping an individual from buying a policy to insure whomever they want? Why couldn’t you buy a policy on, say, your child’s preschool teacher?
In short, it’s against the law. It’s illegal for an insurance company to sell life insurance to someone without the presence of insurable interest. Insurable interest exists when you would suffer financially from the death of the insured person.
Your child’s preschool teacher may be a wonderful, big-hearted person whose loss would be traumatic for your family, but that doesn’t mean you’d suffer financially.
And then there’s the need for consent of the insured and acknowledgment that the health and financial information provided is accurate. You can’t buy a policy on someone without getting permission from them. So, with apologies to Hollywood, buying insurance on someone else is usually a non-starter in the real world.
Times when it’s tempting to insure another individual
Most people who buy life insurance never have to worry about legal terms such as insurable interest and consent. That’s because the majority of buyers are insuring themselves, and they name a partner or child as a beneficiary.
For most families, the discussion about life insurance ends when both partners think they have the right amount of coverage in force for their needs — although people should still revisit their coverage periodically to see if they still have the “right amount” for their financial situation. They pay the premiums and know that, in return, their loved ones have a financial safety net in place if they were to die way too soon.
Not every family works the same way, though, and you may wonder how to encourage someone for whom you have an insurable interest to buy a policy. Here are a few situations where that idea might come up.
For a spouse or partner
When you have coverage, it’s natural to want your spouse to get coverage, too. In fact, in many cases, it’s necessary for both partners to have coverage.
Even if your partner doesn’t earn income, think about the other ways you depend on him or her financially.
Does your partner take care of the kids all day? If so, you may need to pay for childcare if your partner died unexpectedly. What if your family’s health insurance is connected to your partner’s job? How would you replace that?
The proceeds of life insurance coverage can be used to address needs like those.
But what if your partner is busy at work and putting off buying coverage? Since it was so easy to get coverage for yourself, applying for a policy on behalf of your partner would be simple enough, too, right?
Not exactly! You should show your partner just how easy applying can be by opening up the laptop and going to havenlife.com.
Then you can help your spouse how to fill out the application because it requires in-depth lifestyle and health information. It’s important that all of this information is presented factually to the insurance company. Additionally, in many cases, the person being insured will need to take a medical exam to finalize coverage. And, there’s no way to do that for another person.
If your partner is too busy to get the process started, you can get the ball rolling yourself. Since you know your partner’s age and basic health condition, start by getting an estimate for how much they would be paying each month for their coverage amount.
For a child with co-signed debt
More and more college students rely on loans to pay for higher education. The average graduate leaves campus with more than $30,000 in debt.
If you have co-signed on your child’s college debt, you may have wondered how you’d pay if the unthinkable happened and your child died. This is especially true if your child took out private student loans which, unlike federal student loans, may not be forgiven if the borrower dies, or if you have co-signed on your adult child’s mortgage or auto loans.
Term life insurance is a common and efficient way to address this concern. Your child could apply for enough coverage to pay off the debt in the event of his or her death, allowing you to grieve your loss without also having to worry about the huge bills coming due. It’s such a simple solution that you may have considered taking out a term life policy on your child yourself. You’d need your child’s full cooperation since the application process requires personal health and financial information.
It’s easier to encourage your child to get term life coverage for at least as long as the debt is a threat to your financial security. (Term lengths range from 10 to even 30 years.)
If your child hasn’t gotten around to getting coverage and you’re afraid he or she may never make it happen, keep urging them to do so. Sit down together at the computer or with a mobile device. It’s easier than ever to get coverage since startups such as online life insurance agency Haven Life has made it possible to apply for coverage easily online.
Additionally, coverage of student loans is typically very affordable since the amount needed is lower, and the insured is young and healthy. For example, a 25-year-old woman in excellent health can buy a 20-year, $250,000 Haven Term policy issued by MassMutual or its subsidiary, C.M. Life for $10.82 per month.
Consider “buying a life insurance policy” just another life skill that you’re passing along to the next generation.
For a business partner
If you’ve started a company with a business partner, your personal finances may be intertwined with them to some degree. If your business partner died and you couldn’t pay off the business loans, you and your family could suffer, mainly if you’ve put up your own personal property as collateral.
Term life coverage could help keep things rolling while your business recovered from losing your partner. That’s why business partners often buy term life policies naming one another, or the business itself, as the beneficiary.
Before applying for coverage, find out how much money would be needed to overcome the challenges your partner’s death would create. Be sure your plan at least considers business debts, especially if you have personal property as collateral. For details, consult an attorney who is familiar with the business partnership rules in your state.
But what if your partner is too busy to apply for coverage? Could you apply for your partner?
Again, say it with us, the underwriting process is personal. You may have known your business partner since elementary school. You may have been through a lot together over the years as your business has grown. But you still probably don’t know your partner’s family health history and other personal details that underwriters will need to know.
Plus, not all insurers would allow you to apply on behalf of your partner so you may limit yourself to companies that do not offer the best rates.
Invite, encourage, insist: it’s the right thing to do
If you’d like someone else to have life insurance coverage and have even thought about getting a policy on that person yourself, then you already know that insurance can give you peace of mind in a world full of uncertainty.
It’s your job to share that knowledge with the person you’d like to be insured. Let he or she know that not only can you get a quote online, but with a life insurance agency like Haven Life, you can actually apply online too. And get a decision on coverage immediately. You no longer have to wait weeks for underwriters to decide whether you qualify and how much you’ll pay.
It’s so easy that answers like “I haven’t had time to apply” and “Maybe next week” are less valid than ever. If there’s someone in your life whose death would impact you financially, they owe it to you to apply for coverage.
So remind them, encourage them, help them. Keep “apply for term life insurance” on the to-do list each week until it’s taken care of. When it’s all done, and their coverage is in place, celebrate that the future has become just a little less uncertain. You’ve earned it.
About Brittney Burgett
Brittney Burgett is the marketing and communications director at Haven Life, a customer-centric life insurance agency backed and wholly owned by MassMutual. She joined the startup more than five years ago as one of the first ten employees and oversees external communications, content, SEO and various other growth marketing initiatives. Brittney is a passionate leader who believes that managing your financial life doesn’t need to be intimidating or complicated and brings that philosophy to all the editorial and brand work at Haven Life. Prior to her role at Haven Life, Brittney worked in public relations, her client list included brands in the tech, food and nutrition spaces.
Our editorial policy
Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.
Our editorial policy
Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.
Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.
Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.
Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.
MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.
Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://havenlife.com/plus
Wonderful company!! I definitely recommend Haven life!! Awesome at finding the best coverage for me! Great coverage that is affordable!! Glad I listened to the recommendation that was given to me about this company
I looked into two other companies. The coverage was comparable but I was most impressed with Haven Life’s customer service. I was also impressed with the pricing tools.
-Easy online application
-Can get coverage immediately after applying online
-Pretty seamless process throughout the experience Cons:
-Although told I was covered initially after applying online, I was informed that I needed to get physical check up in order to continue the plan.
-Although I’m very healthy, my plan price increased 2x after the physical checkup.
Applying for life insurance in your 40’s is exhausting!! But at least Haven made it as easy as possible! Everything is efficiently handled through email. Communication is excellent, they give updates all along the way. Scheduling the bloodwork is easy and convenient. Plus, the rate was better than other companies. Easy to sign off on paperwork.
The application was easy to complete and the rate quoted was very competitive. The amount applied for required an examination and that process was very convenient, efficient, flexible, and the medical professional was friendly and capable. The policy approved was exactly as quoted with an option to add to the amount originally applied for and I took advantage of the offer. Haven Life is a subsidiary of MassMutual, one of the highest rated companies in the insurance industry. I couldn’t be happier!