This is a question we’re asked a lot and the answer is yes, you can cover your family members under your life insurance policy.
Typically, life insurance companies allow you to take out life cover on behalf of your immediate family. This includes your spouse, child, parent, sibling, grandchild or grandparent. Still, whenever you take out life insurance for anyone other than yourself you’ll have to prove insurable interest.
What Is Insurable Interest?
When you take out a life policy on behalf of someone else, that person becomes the “life assured” and you become the “policy owner”. You, as the policy owner, are responsible for paying the premiums and, should the life assured pass away, their chosen beneficiaries receive a lump sum for a valid claim.
In a nutshell, to qualify for coverage, you’d need to prove that you’d be negatively affected if the life assured were no longer around. This negative consequence is not only financial – you have an insurable interest in your direct family members simply because you share a loving familial bond.
Unmarried couples – you have a loving bond too – and may also qualify as being each other’s insurable interests, provided you have proof of joint assets and wills.
Things To Consider
It’s important to remember that, even if you’re the person paying for the policy of the life assured, they still have the right to choose who they list as their beneficiaries – it doesn’t have to be you just because you’re paying for the policy. Also, you can only take out a policy on behalf of someone else with their consent.
Something else to keep in mind? While you can take out life cover for your child, they’ll need to be 18 years or older. Also, many insurance companies, have an entry age limit for the life assured. At MiWayLife, the life assured must be younger than 65 to qualify for life cover.
The Bottom Line
Ultimately, taking out life insurance cover for a family member is entirely possibly provided you have a loving bond and an insurable interest. Then, once covered, you’ll also have peace of mind.
