Can You Buy Life Insurance for Someone Else?

Yes, you can certainly buy a life insurance policy for someone else. The person who is covered by life insurance is known as the ‘life insured’, while the person who purchases the policy is known as the 'policyholder’. Generally, the policyholder and life insured are the same person, but it is possible to purchase a policy while nominating another person for the life cover. Buying a policy for someone else is quite straightforward if you are related to that person. You can freely purchase a policy for your spouse, parents, and your children.

Buying Life Insurance for Your Spouse

You can purchase a life insurance policy for your spouse as long as they provide their consent. When you buy a policy for your spouse, you remain the policyholder while your spouse will be the life insured. Meaning that the life cover for the policy will be provided in case of your spouse’s unfortunate passing.

When it comes to buying life insurance for your partner, it might be wiser to opt for a joint insurance plan. Joint insurance plans not only provide you, the policyholder, with life cover, but they also provide secondary insurance to your spouse. This means that you can get life cover for you and your partner in one single plan. In most joint insurance plans, the secondary life cover provided to your spouse is generally around 50% of your own primary life cover amount.

The life cover for each person is triggered individually. Some joint plans even have a waiver of premium benefit in case you or your spouse pass away, which keeps your policy active without needing any more premium payments.

Buying Life Insurance for Your Parents

If your parents don’t have life insurance, then you can buy a policy for them. Once again, you only need their consent to proceed with the policy purchase. If your parents are senior citizens, you should consider buying a plan that also offers an element of savings or pension payments.

Pension plans are a must have to ensure that your parents have a source of income even after their retirement. Some pension plans only provide payouts after the premium paying term is already over, but if your parents need immediate care, consider getting a pension plan that starts providing payouts immediately after purchase.

Buying Life Insurance for Your Child

It is possible to buy a life insurance plan for your child even if they are a minor. In fact, some insurance plans are specifically catered towards children. Child plans not only provide life cover but also offer high returns to ensure a bright and secure future for you little one. Generally, child insurance plans provide additional benefits until your child reaches the age of 25.

You can also pass on the ownership of the insurance policy to your child once they turn 18. Certain plans, such as Edelweiss Tokio Life- Legacy Plus, provide joint life cover that secures the lives of you and your child.

Can You Buy Life Insurance for Someone Not Related to You?

Generally, you cannot buy life insurance for your friends or someone unrelated to you. You definitely cannot buy insurance for a stranger. However, you may be able to buy certain types of life insurance policies for your employees or business partners.

Group Life Insurance- If you want to purchase life insurance for multiple people at once, then you need to consider getting a group insurance plan. These plans are generally purchased by employers for their employees. While group insurance plans are great for covering multiple people at an affordable price, the downside is that the individual life cover for each person is lower when compared to other types of life insurance plans.

Keyman Insurance- Keyman insurance is a type of life insurance policy that aims to safeguard a business/company against the sudden death of one of its key members. Consider buying a keyman insurance plan for your business partners if their unexpected death has the potential to harm your business operations. Keyman insurance provides high life cover, but the death benefit provided by such a plan is not covered under Section 10(10D) and will not be tax exempt.

Conclusion

Another simple way of buying insurance for someone else would be to just pay for their premiums. This way, the insured individual will still be the policyholder, you will only be responsible for the premium payments. However, paying for someone else’s policy (where you are not the policyholder) is inadvisable, as payments made towards such plans cannot be claimed under Section 80C.

Ideally, each member of your family should be insured in some capacity. If you are the sole breadwinner of the family, then the responsibility of insuring your entire family falls on you. Consider buying joint plans whenever possible if you want to secure all your loved ones without having to purchase multiple plans.

 

Aastha Mestry - Portfolio Manager       
An Author and a Full-Time Portfolio Manager, Aastha has 6 years of experience working in the Insurance Industry with businesses globally. With a profound interest in traveling, Aastha also loves to blog in her free time.