Reader’s Question:

I’m planning to buy a life insurance policy for my best friend here in Florida. Is this possible?

Ernest

Clearwater, FL

In order for you to be able to buy life insurance for anybody, you have to have insurable interest in the person you are buying insurance for. This means that you would go through some kind of financial shortfall at the event of that person’s death. In broad terms, the list includes your own person, your spouse and your dependents, assuming you have any. Other persons that are not family are also included, providing that you are financially dependent on these other persons. Examples of such are business partners and other persons that you share ownership of property with.

The reason for all of this is: If this insurable interest prerequisite is removed, nothing prevents people from buying life insurance policies for just anyone who they expect to die. Also, the incidence of murder is not farfetched. I’m sure you’ve heard of instances where people are convicted of killing someone just for the insurance proceeds.

Your best friend there in Florida is lucky that you are considering taking out a life insurance policy on him. However, the burden of proof that you have insurable interest in him is on your shoulders. We’re talking financial loss here, not just emotional significance.

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