Life insurance is intended to provide for the income lost by a person’s dependents at the time of their death or incapacitation. Typically, responsible family leaders and heads of household obtain life insurance policies for themselves to safeguard the stability of loved ones should their ability to earn an income ever be lost. Life insurance policies can help those going through the most difficult transitions in life endure the process more comfortably and ensure that the crippling loss is not economic as well as emotional.
Having typed that, if you look at it the right way, it’s a bit like hitting the jackpot under the right circumstances. Yes, it is a tragedy when a close family member passes away even with the financial impact of a large life insurance payout, but if a distant, eccentric uncle that you last saw when he was gazing into your bassinet ends up kicking the bucket and leaving you with a pile of cash, it’s not so bad, is it? What if you could take it one step further and simulate the effect yourself? What if…you could take out a life insurance policy on someone you barely know without their knowledge?
It seems like a pretty good scheme, doesn’t it? Fill out a few forms, name the local old cat lady or some drugged-out celebrity as the policyholder, keep up with the premiums and play the waiting game. Pretty soon, life takes its course and there you are, cashing in and planning a vacation. It’s a fairly airtight plan, provided nobody screws it up and lives long enough to destroy your profit margin. Why don’t more people do it (besides that it’s pretty despicable)?
Well, as you might have expected, taking out a life insurance policy on someone without their knowledge is harder than it seems. First, you must prove to an insurance provider that you can claim an “insurable interest” in the party to be insured. This means that you are dependent on this person for your quality of life, and that your financial standing would suffer considerably were the person to die.
Perhaps you could manage to talk the insurance company into believing that that wino you see heading into the bar at 10 a.m. every morning is central to your economic health and that you will end up in the poorhouse when he dies of cirrhosis in a few years, but then you’ll have to prove your relationship with him. Establishing a relationship with the person you want to ensure is critical to your case.
Common relationship types accepted as proof of insurable interest are married couples, blood relatives and long-term domestic partners. If you can somehow make it appear as if you fall into one of these categories or are the high-functioning disabled child of the insurance target, you have a shot.
An life insurance provider will likely want to know what kind of health a policy holder is in, as it has a significant effect on their risk assessment, so another obstacle to buying life insurance in another person’s name is the medical exam that is often required. You may have some difficulty influencing a person to undergo a medical examination without asking a few questions. There are some insurance companies that do not require an exam before providing coverage, but these policies are typically more expensive than traditional policies, less comprehensive or both.
Perhaps the toughest part of getting life insurance in another person’s name is the consent required. Federal law mandates that insurance companies must get written consent from applicants before accessing their medical records, and even when an insurance company does not require such access, the insured party must sign off on the policy before it is active. It is possible that you will be able to get these papers signed unknowingly under the guise of asking for your postman’s autograph or something similar, but this may arouse some suspicion.
It seems nearly impossible to get a life insurance policy on someone other than yourself in practice, but there are some exceptions that make it easier. If you are willing to marry the target of your grand design for insurance purposes, it is possible to take out such a policy without their knowledge.
Some states allow a minor child age 15 or younger to be insured without consent. Interestingly, a financial stake in someone else’s life is considered insurable interest in some jurisdictions, so if you are the owner of a large company with employees that are worth as much or more dead or have a business partner in questionable health, you may also be able to profit from their demise.
It’s extremely hard to get a life insurance policy on someone else for a number of very good reasons. In most cases, it is illegal to obtain a life insurance policy for someone besides yourself. It is also immoral to do so, but there are some people whose plans neither sentence can appreciably impede. It is technically possible to effectively gamble with another person’s life through significant deception and an aptitude for bending the law, but remember: someone could be doing it to you as well.