Tag Archives: Other People’s Life Insurance
Life Insurance companies are in the business of making profits from the policies that they sell. This means that for each policy they issue they expect to receive more premiums, and the associated investment income from those premiums, than the amount they agree to pay out upon the event of your death. If they didn’t do this they would go out of business.
This means that they have to judge and assess your lifestyle with a view to evaluating how much risk there is of you dying an unnatural or early death. The greater risk of you dying an early death, then the higher the premium the insurance company is going to charge you.
This risk is based on a set of industry wide statistics used by most life insurance companies.
Can I buy life insurance on someone else? Or here is the one that really scares people. Can someone else buy life insurance on me and then collect the money if I die? I hear people asking these questions all the time and wanted to address both issues.
Can I buy life insurance for someone else?
The simple answer is, “yes”. You are allowed to pay the premiums and collect the benefits on a life insurance policy that insures a life that is not your own. For example, many people have life insurance on their children. Another example is that companies sometimes buy life insurance on their key employees so that they can recover from the negative financial effect that losing that employee might cause.