Curious about who you take out life cover for? You definitely can take out a life cover policy for someone else, provided your relationship meets certain criteria.
Life insurance is a great way to create a financial safety net for the people you care about. If you have your own policy, congrats on making this smart financial decision. If you’re now wondering if you can take out life cover for others, you’ll be glad to know you can.
In South Africa, you have the option to secure life cover for your parents and immediate family members, including children, provided they are 18 years of age or older. You can even obtain life cover for individuals that aren’t related to you, but, in every case, you’ll have to demonstrate insurable interest.
What Is Insurable Interest?
Insurable interest refers to a valid reason for taking out a policy on behalf of another person, known as the "life assured." It involves showing that you would suffer a financial consequence or loss if the life assured were to pass away. If you can’t establish insurable interest, this may lead to the rejection of your application.
It's worth noting that even if you’re the person paying for the life insurance policy, the life assured still retains the right to select their beneficiary, and they are under no obligation to choose you.
Which Relationships Are Typically Considered Insurable Interest?
Immediate family members, such as spouses, children, parents, siblings, grandchildren, and grandparents, are generally recognised as having insurable interest. Unmarried couples may also be eligible if they can provide evidence of joint assets and wills.
In certain cases, a creditor who is owed money can take out a life insurance policy on the debtor up to the amount owed, based on an insurable interest. Just remember, you’ll need this person’s consent.
A business relationship can also establish insurable interest if you can show that it’s in the best interest of the insurer for the insured individual to remain alive. These relationships may include business partners, major stockholders, or key employees of a company.
The Bottom Line
If you’re wanting to take out life insurance for someone in your family or a person that’s not related to you – provided you can prove insurable interest – why not get in touch with MiWayLife?
Our affordable 4-in-1 policy includes comprehensive life insurance, accelerated funeral cover, an accelerated terminal illness benefit and funeral cover for your family members including your spouse, 8 children, 4 parents and 8 wider family members.
