It has become more common to buy senior life insurance coverage of some kind over the last few years, but there’s also another trend we’re seeing in this market. It’s becoming more popular that the interested party is not looking for coverage on themselves. Most of the time, they’re looking for coverage for a spouse, an elderly parent, or possibly another family member.
This brings up another question we deal with. A lot of people want to know if they can purchase a policy on someone’s behalf. To answer this question, it’s important to clarify what the individual is meaning by purchase on someone’s behalf. Are they wishing to pay for the policy or do they want to purchase a policy without the other party knowing?
If the individual simply wants to pay for the policy, the answer is yes. That individual will be required to sign a form authorizing the insurance company to draft money from their account. But most insurance companies do not feel that it’s a problem for the individual to pay for the policy. In our office, we don’t mind dealing with this because this means that the family is involved in the process. When a family is involved in the decision process, it means that value is placed on this policy. When the value is placed on the policy and family members participate in the decision, we often find that these policies do not get canceled down the road because there are more responsible people that see thru value and importance in getting covered.
The second question, however, regarding purchasing a policy on someone’s behalf is a little different. If an individual is looking to purchase a policy on someone’s life without that person’s knowledge, it is not possible. This is due to the fact that the insurance policy is covering that individual. Therefore, by law, that individual must be aware that there is a policy covering their life. Also, that individual will have to give permission to review medical records or to partake in a medical exam if applicable. That senior will also have to sign the application stating that the information on the application is true and valid.
Now a policy can be purchased on another individual if they give permission to do so. However, an insurance company will want to confirm that there is what is known as insurable interest. Some examples of insurable interest are things relating to a business partnership or a key man in a company, etc. If the proper paperwork is produced, the insurance company will review and potentially accept the application.
Knowing there are a lot of reasons that individuals would wish to purchase a policy for someone else, we always recommend seeking out the assistance of a trusted advisor or an insurance professional. If you would like to speak to one of our agents. We can also help you locate quotes for a guaranteed issue life insurance policy if health problems are a concern.