Life Insurance Legal Questions

[regrubtaf]

California

Question regarding life insurance

Can I purchase a life insurance policy for someone else, naming myself as the beneficiary?

If I can, do the heirs of the insured have any rights to the proceeds of the insurance policy should he die?

What is the legal relationship between the insured and the insurer in this case? there is no contract between them, as that is between the insurer and myself.

Where can I find information like this about life insurance?

 

[cbg]

I've been out of the life insurance industry for a lot of years so things may have changed, but it used to be that you could buy a policy on someone else and name yourself as beneficiary, as long as you had the permission of the insured. Better have the permission in writing, and even better have them participate in filling out the application form.

Whether the heirs have any rights to the proceeds will be dependent upon state law. The best source for the answers to your questions will be the state insurance commission.

 

[ALawyer]

In order to buy life insurance on someone, you have to have an insurable interest in his or her life AND he or she would have to particpate in the insurance application process (physical exam, medical underwriting, etc.) I could not buy life insurance on a neighbor, or friend, or a stranger. I can see no insurable interest UNLESS you have a business partnership or other business-type dealings with the person. That's a matter of state law, designed to prevent gambling type policies.

Also, as a matter of practice, insurance companies would not want to issue a policy on the life of X to Mr. Y, an unrealted party. They KNOW from experience that if X is insured they are giving Y and his freinds motive to kill X; and they also fear Y may know a lot more about X's health and habits and risk factors than they do, or are pricing for. Insurers are not as stupid as some of their agents are greedy.

If X has a need for insurance, and buys the policy himself, he has an insurable interest. If X then assigns the policy to Y and Y pays the premium from then on, that's allowable, at least in most states, absent fraud.