Legally, you can take out cover on someone else, but there will be other factors at play before you can sign on the dotted line to have them insured. Here is what you need to know.

You will need their consent

Taking out a life insurance policy for someone you are not related to in South Africa is possible, but before an insurer can make the policy active they will require consent from the person you are planning on doing this for. Depending on the insurer you will need the person's I.D number, their signature, and insurable interest before the policy is made active.

Proving insurable interest

Whether you are taking out a policy for a family friend, a business partner, a partner or friend, you will most likely be asked to prove insurable interest. But what does this mean?

The 'life assured' is the person who you are planning on taking out a policy on behalf of. It also means you will have to give a reason for covering the life assured. For example, you will prove that should the life assured pass away you will suffer a financial consequence or less. Your application could be denied if you are unable to prove insurable interest.

Keep in mind that even if you are able to take out a policy for a person you are not related to, they still have the choice of choosing who they will list as a beneficiary. Even if this means not adding you as a beneficiary.

Why do insurers insist on you proving insurable interest?

Having insurable interest is a way in which insurers try to reduce the risk of insurance fraud by having people participating in illegal activities to get access to a life insurance payout. This is a protective method that protects insurers and policyholders alike when it comes to something as crucial as creating such a financial safety net.