# Taking out life insurance on someone **URL:** \ **Category:** Factual Questions\ **Created:** [January 18, 2003, 5:33am UTC](https://boards.straightdope.com/t/taking-out-life-insurance-on-someone/149425 "2003-01-18T05:33:23Z")\ **Posts on this page:** 10\ **Page:** 1
**Author:** ![Cessandra](https://avatars.discourse-cdn.com/v4/letter/c/59ef9b/32.png) [@Cessandra](https://boards.straightdope.com/u/Cessandra)\ **Post date:** [January 18, 2003, 5:33am UTC](https://boards.straightdope.com/t/taking-out-life-insurance-on-someone/149425/1 "2003-01-18T05:33:23Z")
How exactly does this work? Why are people allowed to take out insurance policies on someone else, without that person even knowing? Who are you allowed to get insurance on? Spouses and kids? What about your parents? Brothers? Girlfriends? Is there any reason that a law couldn’t be passed saying you can only take out insurance on yourself (and you children or other dependents who COULDN’T do it themselves)? While I doubt that this would significantly reduce the number of people murdered in the US, wouldn’t it at least stop some murderers from collecting on their crimes? ---
**Author:** ![happyheathen](https://avatars.discourse-cdn.com/v4/letter/h/b5e925/32.png) [@happyheathen](https://boards.straightdope.com/u/happyheathen)\ **Post date:** [January 18, 2003, 6:00am UTC](https://boards.straightdope.com/t/taking-out-life-insurance-on-someone/149425/2 "2003-01-18T06:00:22Z")
You must have an “insurable interest” in something/someone in order to (collect on) an insurance policy. UL (maybe?) - before that rule was instituted, people _would_ take out a policy on the town drunk, who would shortly be found dead. Who are you thinking of who takes out “suspicious” policies? ---
**Author:** ![Rick](https://avatars.discourse-cdn.com/v4/letter/r/9f8e36/32.png) [@Rick](https://boards.straightdope.com/u/Rick)\ **Post date:** [January 18, 2003, 7:37am UTC](https://boards.straightdope.com/t/taking-out-life-insurance-on-someone/149425/3 "2003-01-18T07:37:31Z")
> [@](#): > > \*Originally posted by Cessandra \* > \*\*How exactly does this work? Why are people allowed to take out insurance policies on someone else, without that person even knowing? \*\* Unless the insured is a minor, the application has a spot for insured signature. Now of course a person could fake that, but the policy is contestable (by the insurance company) for 2 years after issue. So unless you are going to commit fraud, you can’t take out insurance on someone without their knowing. > [@](#): > > \*\*Who are you allowed to get insurance on? Spouses and kids? What about your parents? Brothers? Girlfriends? \*\* Spouse, and kids sure. As Happyheathen pointed out you must have an insurable interest. In other words you would suffer a montery setback in the event of their death. If you spouse dies, besides burial expenses, housekeeper, child care, and of course the loss of income. All of these are insurable. Kids (minors), sure it meets the insurable interest test. Parents? Very common to buy insurance to pay estate taxes. Brothers? Maybe depends. Girlfriend? Again depends. This is why the life insurance companies have underwriters. > [@](#): > > \*\*Is there any reason that a law couldn’t be passed saying you can only take out insurance on yourself (and you children or other dependents who COULDN’T do it themselves)? \*\* There are tax issues depending on who ownes a life insurance policy. To put such a limitation in without revamping the Internal Revenue code would cost some people lots of money in extra taxes. > [@](#): > > \*\*While I doubt that this would significantly reduce the number of people murdered in the US, wouldn’t it at least stop some murderers from collecting on their crimes? \*\* Ah, where did you get this? cite? I spent 7 years in the insurance business. During that time I saw (and heard) of just one case that was murder for insurance. The husband is still in jail for murder. He did not collect. Murder for insurance is not a large problem for the industry. ---
**Author:** ![Tree\_Boy](https://avatars.discourse-cdn.com/v4/letter/t/9dc877/32.png) [@Tree\_Boy](https://boards.straightdope.com/u/Tree_Boy)\ **Post date:** [January 18, 2003, 8:15am UTC](https://boards.straightdope.com/t/taking-out-life-insurance-on-someone/149425/4 "2003-01-18T08:15:07Z")
Also worked in the insurance biz, and the most bizarre attempt at fraud I ever heard was this: Guy takes out a life insurance policy on his brother; brother “mysteriously” dissapears and according to state laws is pronounced legally dead 5 years later. Guy collects insurance money, phones his brother whom has been hiding in Borneo for the last 5 years to come home so they can enjoy their earnings. Brother gets stopped at customs, identified and the two guys end up admitting the whole scam. Wow…5 years in exile just to make a few hundered grand. ---
**Author:** ![Squink](https://avatars.discourse-cdn.com/v4/letter/s/b5e925/32.png) [@Squink](https://boards.straightdope.com/u/Squink)\ **Post date:** [January 18, 2003, 2:49pm UTC](https://boards.straightdope.com/t/taking-out-life-insurance-on-someone/149425/5 "2003-01-18T14:49:34Z")
> [@](#): > > Companies routinely take out secret life insurance policies on the lives of their low-level employees and collect thousands of dollars when they die. The families never know the policies are in place and typically receive none of the money. [Profiting from death? Lawsuit filed in Wal-Mart life insurance case](http://www.walmartwatch.com/info/internal.cfm?subsection_id=131&internal_id=350) ---
**Author:** ![hammerbach](https://avatars.discourse-cdn.com/v4/letter/h/73ab20/32.png) [@hammerbach](https://boards.straightdope.com/u/hammerbach)\ **Post date:** [January 18, 2003, 3:06pm UTC](https://boards.straightdope.com/t/taking-out-life-insurance-on-someone/149425/6 "2003-01-18T15:06:20Z")
> [@](#): > > \*Originally posted by Squink \* > \*\*[Profiting from death? Lawsuit filed in Wal-Mart life insurance case](http://www.walmartwatch.com/info/internal.cfm?subsection_id=131&internal_id=350) \*\* We’ve had a few threads on [that](http://boards.straightdope.com/sdmb/showthread.php?s=&threadid=121647&highlight=dead+peasant) . ---
**Author:** ![KidCharlemagne](https://avatars.discourse-cdn.com/v4/letter/k/ed8c4c/32.png) [@KidCharlemagne](https://boards.straightdope.com/u/KidCharlemagne)\ **Post date:** [January 18, 2003, 4:27pm UTC](https://boards.straightdope.com/t/taking-out-life-insurance-on-someone/149425/7 "2003-01-18T16:27:21Z")
I’ll often go up to strangers at the airport and ask if I can take out life insurance on them for their flight because “I just got a feeling.” ---
**Author:** ![hammerbach](https://avatars.discourse-cdn.com/v4/letter/h/73ab20/32.png) [@hammerbach](https://boards.straightdope.com/u/hammerbach)\ **Post date:** [January 18, 2003, 4:32pm UTC](https://boards.straightdope.com/t/taking-out-life-insurance-on-someone/149425/8 "2003-01-18T16:32:07Z")
> [@](#): > > \*Originally posted by KidCharlemagne \* > \*\*I’ll often go up to strangers at the airport and ask if I can take out life insurance on them for their flight because “I just got a feeling.” \*\* I’m sure you’re very popular at the airpoirt. Although it’s a fine line between “popular” and “notorious”. ---
**Author:** ![Violet](https://avatars.discourse-cdn.com/v4/letter/v/ebca7d/32.png) [@Violet](https://boards.straightdope.com/u/Violet)\ **Post date:** [January 18, 2003, 4:57pm UTC](https://boards.straightdope.com/t/taking-out-life-insurance-on-someone/149425/9 "2003-01-18T16:57:07Z")
How about student loan companies that say the loan is forgiven if the student/former student dies? Does this also involve a life insurance policy? ---
**Author:** ![Cessandra](https://avatars.discourse-cdn.com/v4/letter/c/59ef9b/32.png) [@Cessandra](https://boards.straightdope.com/u/Cessandra)\ **Post date:** [January 18, 2003, 6:14pm UTC](https://boards.straightdope.com/t/taking-out-life-insurance-on-someone/149425/10 "2003-01-18T18:14:35Z")
> [@](#): > > \*Originally posted by Rick \* > > Ah, where did you get this? cite? > I spent 7 years in the insurance business. During that time I saw (and heard) of just one case that was murder for insurance. The husband is still in jail for murder. He did not collect. > Murder for insurance is not a large problem for the industry. What I was guessing was that, if you are willing to kill your wife, you are going to do it regardless. But there have to be some people who do buy insurance on people they are planning to kill – why else would the police look for insurance policies after a death or disapearance? > [@](#): > > There are tax issues depending on who ownes a life insurance policy. To put such a limitation in without revamping the Internal Revenue code would cost some people lots of money in extra taxes. Could you explain this to me?