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Buying Life Insurance for Others in New Jersey


When buying a life insurance policy in New Jersey, the same person who gets the payout must have a substantial interest in the insured person. This means that the surviving beneficiary must experience a loss if the insured person passes away. If you have a financial hardship or a relationship with someone who will pass away, you may be able to buy a life insurance policy on them. You can purchase a life insurance policy on the following:

  • Adult child
  • Grandparent
  • Parent
  • Sibling
  • Minor child
  • Business partner
  • Spouse or life partner
  • A former spouse or life partner

When applying for a life insurance policy, the insured person must first sign the form, which gives the company permission to collect various details, such as their hobbies and medical history. Doing so ensures that the policy will only be purchased if the insured person is involved. You can not secretly buy a policy on someone else.

Use the quote comparison worksheet to help with shopping for a new policy.

What Are The Reasons For Buying Life Insurance on Others?

  • You want to ensure your parents have insurance coverage to cover their final expenses. This can be done through life insurance, which allows you to pay for, and manage the policy so that your parents do not have to.
  • If you are the cosigner of a loan, you will most likely be responsible for the loan's remaining debt if the borrower passes away. You can name yourself as the beneficiary of their life insurance policy if you cannot afford to pay the loan off.
  • Life insurance can be used to fund a buy-sell agreement, as it allows partners to name themselves as the policy's beneficiaries. If one of them passes away, the surviving partner can use the insurance payout to purchase the deceased partner's business.

The process involved in buying life insurance on someone depends on your relationship with the person. You should consult a New Jersey life insurance agent who is more knowledgeable on how to take out a life insurance policy on a family member and how to get life insurance on someone other than a family member.

How to Take Out a Life Insurance Policy on Someone Else?

Per section 17B:26-30 of the New Jersey Revised Statute, the term "insured" does not prevent a person from taking out a policy that provides coverage for someone else. If you take out life insurance on someone else, then you will be entitled to the benefits and rights under such policy once the person passes. However, you can only take out life insurance on someone you have a financial stake in, such as your parents, business partner and your spouse. To determine if you have a financial stake in someone else, you must meet certain requirements, one of which is the insurable interest test. Passing this test will prove that the insured's death will have a negative financial impact on you.

Even though every insurance company providing life insurance coverage has a varying underwriting process, you will, nonetheless, take the following steps when taking out a life insurance policy on someone else:

  1. Determine the type of life insurance you want to purchase. Typically, you can purchase a permanent or temporary life insurance policy. Term life insurance is usually cheaper than permanent life insurance, usually used for a short period of between 5 to 30 years. Meanwhile, permanent life insurance can be used for a long time if you do not lapse the policy.
  2. Irrespective of the type of life insurance policy you decide to purchase, it is best to get and compare multiple quotes from different insurance companies in New Jersey before choosing the one most suitable to cater to your needs.
  3. Once you have chosen an insurance company to purchase your preferred life insurance coverage, you need to seek the permission of the person you intend to take it out on. This typically requires you to get their signed consent and undergo a medical exam.
  4. Prove your insurable interest in the person you are taking the life insurance out on.

Usually, it is easy to prove you have an insurable interest when it comes to checking the insured’s personal or medical history. However, proof of interest may be required in some instances, such as life partnerships, business contracts, and non-legally binding arrangements. This proof can be provided by providing various documents, such as healthcare forms and business contracts.

A New Jersey life insurance licensed agent can help you find the best possible insurance coverage for your needs.

How To Get Life Insurance On A Parent in New Jersey?

In certain situations, you may be puzzled about how to take life insurance out on your parents. Typically, it is beneficial to have insurance policies for your parents. If they do not have life insurance, you can purchase policies to help with funeral and other final expenses. Considering life insurance policies that provide long-term care benefits is a good idea. This type of insurance can help your parents avoid financial hardship. A life insurance policy can help with the bill if they are subject to estate taxes.

Although the underwriting processes of different insurance companies vary on how to get life insurance on parents, you can take the following steps to get the right life insurance for your loved one:

Get permission from your parent:

  • This involves getting them to sign a consent form and undergo a medical exam. Even if a policy does not require a medical exam, failing to get the signature of the parent you are insuring could lead to fraud.

Select a type of life insurance policy:

  • You should decide whether permanent or term life insurance is needed. Term life insurance is typically cheaper than permanent policies, but it is only valid for a limited number of years, generally not more than 30 years. Whole life insurance or universal life insurance policies, which are types of permanent life insurance, on the other hand, remain in effect as long as regular premiums are paid. The insured can also build cash value with permanent life insurance.

Get and compare multiple life insurance quotes:

  • Regardless of the type of life insurance policy you need, it is important to compare multiple quotes from different insurance companies to find the best terms and prices. Since the prices of different types of policies vary from one company to another, you can get multiple quotes to ensure that you get the best possible deal.

Prove you have an insurable interest:

  • When getting a life insurance policy for your parents, the most important factor is proving your insurable interest. Insurable interest is a technical term insurance providers use to determine if you have a financial interest in another person's life. Therefore, to take out a life insurance policy on your parents, you must prove that their death will cause you financial hardship. If you can prove that you have an insurable interest in your parents, you can purchase your preferred life insurance coverage on them. Most family connections are easier to prove, and you can achieve this by providing all relevant documentation showing ties to them.


  • Regardless of if you are handling the application process and paying the life insurance premiums, you always need to involve your parents. You need their signature on the application to prove they consent to the life insurance policy. Also, they will need to take a medical exam.

You can take out your preferred life insurance coverage on your parents to protect you from financial hardship when they die. Nevertheless, it is recommended that you consult with a New Jersey-licensed life insurance agent who is more knowledgeable about how to get life insurance for a parent in the state and all relevant laws applicable to the process.

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