This is the scenario. A person I am close with has a medical condition where the life expectancy now is under 5 years. He has never been close with any of his family members (by choice) for over 20 years. All of a sudden, a cousin of his began emailing him on a regular basis e.g. every 6 weeks. Couldn’t figure it out, then out of the blue he thinks that “someone in his family” took an insurance policy out on him, and is checking in to see if he is still alive, and to set up “plausibility”.
I said there’s no way anyone can take any insurance policy out on someone just like that. He said I was wrong and should get the straight dope on this (exact words!). This was in December around Xmas, but the more I thought about his situation (his family’s only use for him is money) the more reasonable it sounds.
So perhaps this can be done with impunity? Wouldn’t the person being insured have to know about a life insurance policy taken out on them by law? Can the person being insured put a block on the policy? Is there a way to discover what life insurance policies have been taken out on you that you may not know about?
Thanks for any insight.
(I re-read this and it sounds like a murder mystery being set up, and the more I think about my friend’s situation, the creepier it gets!)
In the US insurance is regulated at the state level. So there are at least 50 answers just there. Other countries have their own national and provincial/ regional / whatever laws.
If you tell us where the person and the cousin live it would help us get more accurate answers.
I have small burial policies for my children and they didn’t have to sign anything. And I believe that when I took out a $25,000 policy on my wife, she was not required to sign anything. In both cases, I am the beneficiary. But when I decided to raise the level of insurance on my wife to $100,000, she was required to complete a medical questionnaire and sign it as the insured.
If your friend’s family has a significant amount of insurance on his life, the insurance company would normally require medical questionnaire completed by the insured or even have a physician of the insured complete one.
Insurable Interest! Thank you for that. I read this: " But cousins, nieces/nephews, aunts/uncles, stepchildren/stepparents and in-laws cannot buy insurance on the lives of others related by these connections."
Each jurisdiction I understand may have it otherwise. The 50 different answers.
So my friend is in California, his estranged family is in Florida. He thinks the cousin is doing this OBO/ in cahoots with one of his siblings. I suggested that he put something down on paper that says without a DNA test, none of my living “close” relatives are proveably related to me.
You (and he) make it sound like you think this is some kind of scam against him. It isn’t any money out of his pocket, he’ll be dead before they collect, and they would collect from an insurance company, not his estate. Doesn’t affect him at all.
All I can see is that he is so bitter & hate-filled toward his family that he wants to carry on this feud even after his death! That’s a really obsessive and unhappy way to live his life.
You should advise him to forget about this, stop obsessing about his estranged relatives, and get on with living his life.
Planning to profit from someone’s death using false pretenses (falsely claiming emotional insurable interest - a term I learned just today) is very sketchy, if not dowright creepy, even alarming.
What on earth made you describe us as hate-filled? The only reason he even gave another thought in their direction was when the cousin - out of the blue - began intruding in his life, with weird “check-up” emails.
His family has been described as a bunch of money-grabbing ne’er-do-wells, it is not surprising he would think “what are they up to now”. In any case, it is not a hatred when a man prefers “relative strangers” should NOT benefit from his death, regardless of insurance company money or not.
Here in TN, the policy owner must have an insurable interest in the insured. That means the owner must be either the insured himself or a person whose finances would be adversely affected by the death of the insured. (And, of course, an adult.) So my wife can take out a policy on ms. My business partner can take out a key man policy on me. But my cousin cannon, nor one if my employees.
This is exactly right. Not to say they didn’t cook up something to get the policy issued despite a lack of insurable interest. For a relative small policy the insurance company isn’t going to do a large investigation before issue.
However, there is another thing to consider.
This is not going to be a standard rate policy. Now they might have lied on the application, but if the insured dies before the policy is 2 years old, the company can contest and probably will not have to pay.
General rule of thumb for non-related individuals:
If an individual can show that the death of another may harm them financially, they can usually obtain life insurance on that person with their permission.
The laws about insurable interest are probably not going to matter anyway. For an adult to get life insurance past a certain age they are going to need a medical exam. If they are under that age then they will at least need to fill out a medical report form. Any condition that will kill the person in under five years would render them uninsurable, there is no insurance company in the world who would write a policy for someone with a fatal disease. If the person does not disclose the disease that would be fraud and the company would not have to pay.