Insurable Curiosity in Life Insurance coverage – Bankrate.com

We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
Buying a home
Refinancing your existing loan
Finding the right lender
Additional Resources
Elevate your Bankrate experience
Get insider access to our best financial tools and content
Compare accounts
Use calculators
Get advice
Bank reviews
Elevate your Bankrate experience
Get insider access to our best financial tools and content
Compare by category
Compare by credit needed
Compare by issuer
Get advice
Looking for the perfect credit card?
Narrow your search with CardMatch™
Personal Loans
Student Loans
Other Loans
Loan calculators
Elevate your Bankrate experience
Get insider access to our best financial tools and content
Best of
Brokerages and robo-advisors
Learn the basics
Additional resources
Elevate your Bankrate experience
Get insider access to our best financial tools and content
Get the best rates
Lender reviews
Use calculators
Knowledge base
Elevate your Bankrate experience
Get insider access to our best financial tools and content
Car insurance
Homeowners insurance
Other insurance
Company reviews
Elevate your Bankrate experience
Get insider access to our best financial tools and content
Retirement plans & accounts
Learn the basics
Retirement calculators
Additional resources
Elevate your Bankrate experience
Get insider access to our best financial tools and content
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for . This content is powered by HomeInsurance.com (NPN: 8781838). For more information, please see our
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and reviewed by subject matter experts, who ensure everything we publish is objective, accurate and worthy of your trust.
Our insurance team is composed of agents, data analysts, and customers like you. They focus on the points consumers care about most — price, customer service, policy features and savings opportunities — so you can feel confident about which provider is right for you.
All providers discussed on our site are vetted based on the value they provide. And we constantly review our criteria to ensure we’re putting accuracy first.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information.
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.
Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.
We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.
Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.
This content is powered by HomeInsurance.com, a licensed insurance producer (NPN: 8781838) and a corporate affiliate of Bankrate.com. HomeInsurance.com LLC services are only available in states were it is licensed and insurance coverage through HomeInsurance.com may not be available in all states. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
If you want to buy life insurance for another person, you must first prove you have an insurable interest in their life. Insurable interest means you will face a significant emotional, financial or other type of loss that will negatively impact you upon the insured’s death. The insured also has to consent to the purchase, which is usually done by signing a form attesting to the life insurance company they are aware someone is purchasing the policy on their life.
Even if you can afford to, you cannot take out a life insurance policy on anyone you choose. When it comes to taking out a life insurance contract on someone other than yourself, life insurance companies require you to first prove you have an insurable interest in the insured person. To have insurable interest most typically means you are financially dependent or would have financial hardship if the insured person were to pass away.
For example, Bob and Sally are married and have two children. Both Bob and Sally work, but Sally only works part-time, so she can also take care of the children. Bob takes out a life insurance policy on Sally’s life because he can prove that losing Sally would cause him financial hardship. He would either have to quit his job, take on different hours or hire someone to care for the children while he worked. The same would be true if Sally took out a life insurance contract on Bob’s life. The death benefit would help Sally and the children maintain their lifestyle up to the policy’s limits without Bob’s financial assistance, while allowing Sally time to adjust to depending on just her income alone.
Insurable interest is most common in immediate family relationships, though other relationships can qualify as insurable interest:
Proof of insurable interest is part of the initial life insurance application. Insurable interest and consent of the insured person (if different from the policyholder) is a requirement before a life insurance company can approve and issue a life insurance contract. This can be done in person by verifying the identity and relationship of the policyholder and insured person. A phone interview may also be conducted between the life insurance company and the person buying insurance or the person listed as the life insurance beneficiary.
If you purchase a life insurance policy as the policyholder and insured, insurable interest automatically exists for you and your beneficiaries. In a direct relationship, either through blood, marriage or adoption decree, insurable interest is generally easy to prove based on the relationship status. In a business partnership, such as a corporation purchasing a life insurance policy on a key officer, a business contract or other form of proof that the company will experience financial hardship and loss upon the insured’s death is needed.
If you do not have an insurable interest in the insured person, you cannot buy a life insurance policy. Proving insurable interest also requires consent and acknowledgement from the insured person that the policy owner wants to take out a life insurance contract on their behalf. This prevents someone from taking out a life insurance policy on someone without their knowledge.
When you are both the policy owner and insured, insurable interest is absolute for both the insured person and the chosen beneficiary. If the insured does not designate a beneficiary, anyone seeking the insured’s death benefit will also have to prove insurable interest when the insured person passes away. These safeguards are in place to prevent life insurance company insolvency from death benefit payouts and increases in the cost of life insurance.
Sometimes, insurable interest cannot be proven. For instance, you would not be able to take out a life insurance policy on your elderly neighbor just because they are sick and may die soon if you cannot prove you would face financial hardship after they pass. Similarly, while your spouse has an insurable interest in your life and can take out a life insurance policy with your consent, they cannot name their best friend as the beneficiary, since they will not face financial loss upon your death.
When you take out a life insurance policy, you have several choices to make. The amount of coverage and the type of life insurance needed are the first decisions to make.
You can buy life insurance on a parent, but not without their consent. Life insurance on a parent is worth considering if you will incur costs — whether for medical bills, funeral expenses or other costs — you cannot afford when they pass. You can use the life insurance death benefit to pay for various expenses.
If you can prove insurable interest and have consent from your child’s parent, you can buy life insurance on your child’s mother or father. If your co-parent provides alimony or child support payments, that could prove insurable interest for an ex-spouse. If you or your child would experience financial hardship because their other parent passes away, this also demonstrates insurable interest.
When buying life insurance, insurable interest must exist at the time the life insurance policy is purchased. If the policyholder and insured person are different, both the policyholder and named beneficiary must have an insurable interest and prove financial loss and hardship if the insured were to pass away.
Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.
Bankrate, LLC NMLS ID# 1427381 | NMLS Consumer Access
BR Tech Services, Inc. NMLS ID #1743443 | NMLS Consumer Access
© 2022 Bankrate, LLC. A Red Ventures company. All Rights Reserved.

source

Leave a Comment

Your email address will not be published. Required fields are marked *