A Single Person With No Dependents Buys Life Insurance. Will the Insurance Company Pay Out After Insured's Death?

[Dandy Don]

Does anyone know of any life insurance companies that will pay out to a designated beneficiary after a single person (with no wife or children) has died?

I have been told that it is very difficult to find such a company because even if the single person pays the premiums, if that person's death occurs, then the insurance company will refuse/decline to pay the beneficiary because the beneficiary had no "insurable interest". Does every insurance company operate that way?

 

[xylene]

This is my standard line when the t-word comes up: Who told you this?

 

[LdiJ]

Does anyone know of any life insurance companies that will pay out to a designated beneficiary after a single person (with no wife or children) has died?

I have been told that it is very difficult to find such a company because even if the single person pays the premiums, if that person's death occurs, then the insurance company will refuse/decline to pay the beneficiary because the beneficiary had no "insurable interest". Does every insurance company operate that way?

Ok, if a person buys life insurance on their own life, and they are the owner of the policy, then they are free to name any beneficiary that they like, and the insurance company will pay the benefit to that person. Why? Because the one whose life is insured can cancel the policy or change the beneficiary at any time.

If a person buys life insurance on someone else, and names themselves the beneficiary of that policy, then they need to have an insurable interest. Why, because the one whose life is insured cannot change the beneficiary or cancel the policy.

 

[adjusterjack]

Does anyone know of any life insurance companies that will pay out to a designated beneficiary after a single person (with no wife or children) has died?

Yes, all of them.

I have been told that it is very difficult to find such a company because even if the single person pays the premiums, if that person's death occurs, then the insurance company will refuse/decline to pay the beneficiary because the beneficiary had no "insurable interest". Does every insurance company operate that way?

None of them do.

A beneficiary does not need insurable interest unless that beneficiary is also the owner of the policy. And even then, insurable interest need only exist when the policy is first taken out.

I was going to ad an explanation but LdiJ beat me to it.

 

[LdiJ]

Yes, all of them.



None of them do.

A beneficiary does not need insurable interest unless that beneficiary is also the owner of the policy. And even then, insurable interest need only exist when the policy is first taken out.

I was going to ad an explanation but LdiJ beat me to it.

Daddy was a State Farm insurance agent for 30 plus years. I absorbed some of it...LOL.

 

[adjusterjack]

Daddy was a State Farm insurance agent for 30 plus years. I absorbed some of it...LOL.

Good. Jump in any time. Saves me some typing.

 

[justalayman]

A beneficiary does not need insurable interest unless that beneficiary is also the owner of the policy.

.

your statement is a bit confusing. It isnt the beneficiary who must have the insurable interest but the purchaser/owner of the policy. An owner can name whomever they choose as beneficiary regardless of insurable interest.

Ldij wrote;


If a person buys life insurance on someone else, and names themselves the beneficiary of that policy, then they need to have an insurable interest. Why, because the one whose life is insured cannot change the beneficiary or cancel the policy.

The reason one must have an insurable interest is to avoid a person from realizing a benefit from the death of another where there is no association where the death of the insured would impact (typically financially but not the only impact considered) the policy holder. It has nothing to do with the ability to alter beneficiaries or anything else which is proven by the fact that a person with an insurable interest can purchase a policy and the insured would have no right to make any changes on the policy.

 

[Dandy Don]

If I pay premiums on a life insurance policy and name a sibling as a beneficiary, then ordinarily the sibling can expect to be paid after my death?

 

[LdiJ]

If I pay premiums on a life insurance policy and name a sibling as a beneficiary, then ordinarily the sibling can expect to be paid after my death?

Yes, absolutely. So could a cousin or a friend. They can because you bought the police and are the owner of that policy. However, if they wanted to buy a policy that insures your life, they would have to have an insurable interest.

 

[adjusterjack]

your statement is a bit confusing. It isnt the beneficiary who must have the insurable interest but the purchaser/owner of the policy. An owner can name whomever they choose as beneficiary regardless of insurable interest.

True. But let me clarify my statement. If a person buys and owns a policy on another and names him or herself as a beneficiary, then the beneficiary must have insurable interest as the beneficiary is also the owner.

Examples: Spouses buying insurance on spouses. Businesses buying insurance on valuable employees or executives.

With life insurance the insurable interest must be demonstrated at the time the policy is underwritten because after two years the policy becomes incontestable and the beneficiary gets paid no matter who it is.

 

[justalayman]

True. But let me clarify my statement. If a person buys and owns a policy on another and names him or herself as a beneficiary, then the beneficiary must have insurable interest as the beneficiary is also the owner.

Examples: Spouses buying insurance on spouses. Businesses buying insurance on valuable employees or executives.

With life insurance the insurable interest must be demonstrated at the time the policy is underwritten because after two years the policy becomes incontestable and the beneficiary gets paid no matter who it is.

. There is no requirement the beneficiary have an insurable interest. In your example it is merely a fact they have an insurable interest because they are also the owner of the policy which is actually why they must have an insurable interest. It has nothing to do with them being beneficiary. The fact they are a beneficiary and have an insurable interest is just a coincidental fact.

 

[justalayman]

If I pay premiums on a life insurance policy and name a sibling as a beneficiary, then ordinarily the sibling can expect to be paid after my death?

That is if presuming your statement of paying the premium actually refers to paying the financial obligation of a policy where you are both the owner and insured on the policy.