One of the more common questions I get from clients is whether they can purchase life insurance on someone other than themselves. The short answer is yes, in most cases. But there are important legal and practical requirements that govern when and how this can be done, and some common mistakes that can invalidate coverage or create problems down the road.
Let’s walk through how this works for spouses and for children, because the rules and considerations differ between the two.
The Insurable Interest Requirement
Life insurance in the United States requires that the policy owner have an “insurable interest” in the insured person. Insurable interest means you would suffer a genuine financial or emotional loss if that person died. Without insurable interest, a life insurance policy is legally void and the insurer can refuse to pay the claim.
The insurable interest requirement exists to prevent life insurance from being used as a wagering instrument. If a stranger could take out a policy on another stranger, that creates an incentive for harmful behavior. The insurable interest doctrine prevents that.
For immediate family members, insurable interest is generally presumed. A spouse has insurable interest in their partner. Parents have insurable interest in their children. Adult children typically have insurable interest in their parents. Extended family relationships, business partners, and other arrangements require more documentation, but the two scenarios we are discussing here (spouses and children) are the clearest cases.
Buying Life Insurance on Your Spouse
You can absolutely purchase life insurance on your spouse, and most financial planners recommend that both partners carry coverage if either one contributes economically to the household. That contribution does not have to be a paycheck. A stay-at-home spouse who handles childcare, household management, and logistics provides real economic value that would cost real money to replace if they died.
To purchase a policy on your spouse, you generally need two things: your spouse’s consent and your spouse’s participation in the underwriting process.
Consent is not just a formality. Most states require that the insured person sign the application. You cannot take out a secret life insurance policy on your spouse without their knowledge. If you try to forge their signature or otherwise obtain coverage without their awareness, the policy is fraudulent and unenforceable. Do not do this.
Participation in underwriting is required because the insurer needs health information about the person being insured, not the person buying the policy. If your spouse is applying for a fully underwritten policy, they need to complete the health questionnaire, and they may need to undergo a paramedical exam. If it is a simplified issue policy, they need to answer the health questions. The insurer cannot underwrite a policy without information from the actual insured.
As the policy owner, you pay the premiums and you control the policy. You designate the beneficiary (typically yourself, which makes sense for income replacement purposes). You can make changes to the policy, take loans against cash value if it is a permanent policy, and surrender the policy if you choose. The insured spouse has coverage but does not necessarily control the policy unless they are also named as a co-owner.
One scenario worth thinking through: what happens if you divorce? The policy ownership does not automatically change at divorce. If you own a life insurance policy on your ex-spouse and have named yourself as beneficiary, and your ex dies after the divorce, you may still receive the death benefit depending on your state’s laws and the policy terms. Some states have automatic revocation of beneficiary designations at divorce; others do not. This is a situation where updating beneficiary designations promptly at major life changes is important, and where ownership of policies on an ex-spouse may need to be negotiated as part of the divorce settlement.
How Much Life Insurance Makes Sense for a Spouse
The amount of coverage to put on a spouse depends on what the coverage is intended to replace. For a working spouse, a common starting point is 10 to 12 times annual income, adjusted for specific obligations like a mortgage, children’s education, and outstanding debt. For a non-working spouse who manages the household and childcare, you need to estimate the cost of replacing those services. Childcare for young children, household management, and the other functions a stay-at-home parent provides can easily be worth $50,000 to $80,000 per year when you price out what you would pay others to provide those services.
Beyond pure replacement cost, consider how long coverage is needed. If your youngest child is 5 and you want to make sure the surviving spouse can cover childcare and household costs until that child is 18, you need about 13 years of coverage. A 15-year or 20-year term policy covers that window well. If you also have a mortgage with 25 years remaining, you might need to layer coverage or choose a longer term.
Life Insurance on a Child: The Basics
Child life insurance is more controversial and more frequently misunderstood than spousal coverage. Let me give you the honest picture rather than a sales pitch.
Children can be insured through two main vehicles: a child rider attached to a parent’s policy, or a standalone policy on the child.
Child riders are add-ons to a parent’s existing term or permanent life insurance policy. For a relatively small additional premium (often $5 to $15 per month), a child rider typically provides $10,000 to $25,000 of term coverage on all of your children under one rider. The coverage is often convertible, meaning the child can convert it to a permanent policy without a medical exam when they become an adult, usually up to a certain age (often 25) and up to a certain multiple of the rider amount. Child riders require that you already have a policy on yourself to attach them to.
Standalone children’s whole life policies are marketed heavily through companies like Gerber Life and several others. These are small permanent policies that build cash value over time, and they are frequently sold as vehicles to “lock in insurability” for the child and to build cash value that can be used later for education or other expenses. The pitch is compelling but deserves scrutiny.
The Insurable Interest Question for Children
Parents have clear insurable interest in their minor children. The argument for insuring a child’s life was historically based on the economic contribution that child might have made to the family (particularly in agricultural eras when children contributed meaningfully to household labor). Today, the primary practical justification for child life insurance is different: it is about protecting future insurability and, to a lesser extent, covering burial and final expenses in the tragic event of a child’s death.
The financial loss from a child’s death is primarily emotional, not economic. Children do not earn income that supports the family. There is no income to replace. The practical expenses that a policy would cover are funeral costs and possibly grief counseling or time off work for the parents, which are real but limited in dollar terms. A $10,000 to $25,000 child rider covers those costs adequately.
Guaranteed Insurability: The Most Legitimate Reason to Buy Child Coverage
The most defensible reason to buy permanent life insurance on a child is guaranteed insurability. If a child develops a serious health condition (Type 1 diabetes, epilepsy, a heart condition, cancer) while they are young, they may have difficulty purchasing life insurance as an adult at standard rates or at all. A policy purchased when they were healthy and young locks in coverage and, in many cases, gives them conversion rights that allow them to increase coverage later without medical underwriting.
This is a legitimate consideration. Life insurance can become unavailable or prohibitively expensive for people with serious health conditions. If your family has a history of certain conditions, or if you have watched a family member struggle to get coverage as an adult due to health issues developed in childhood, buying a policy on a young child to preserve their future insurability is a rational decision.
Guaranteed insurability riders are particularly valuable in this context. Many whole life policies for children include or offer for purchase a guaranteed insurability rider that allows the insured to purchase additional coverage at specified future dates without medical underwriting, regardless of their health status at the time. This can be a meaningful long-term benefit even if the base death benefit is relatively small.
How Much Coverage Makes Sense for a Child
For most families, a child rider on a parent’s policy providing $10,000 to $25,000 of coverage is sufficient. It covers end-of-life expenses and serves as a foundation for future insurability without a large premium outlay.
Standalone whole life policies for children are typically sold in amounts of $10,000 to $50,000. The cash value accumulation on these small policies is modest. After 20 years of paying premiums on a $25,000 policy, the cash value might be $8,000 to $12,000, depending on the policy structure and carrier. That is real money, but comparing it to what you would have had investing those same premiums elsewhere puts it in perspective.
If your primary goal is ensuring your child has life insurance access as an adult regardless of future health developments, a child rider or a small standalone policy accomplishes that efficiently. If your primary goal is savings or education funding, there are almost certainly better vehicles than a child whole life policy.
Very large face amounts on children are unusual and can attract underwriting scrutiny. Insurers want to see that coverage amounts make sense relative to the stated purpose. A $500,000 policy on a three-year-old is going to raise questions that a $25,000 policy does not.
Common Mistakes When Insuring Family Members
The most common mistake I see is failing to name a contingent beneficiary. If you name your spouse as the primary beneficiary on your policy and you both die in the same accident, the death benefit goes to your estate and may be subject to probate, delays, and creditors. Name contingent beneficiaries to direct where the money goes if the primary beneficiary is also deceased.
Another common mistake is purchasing coverage but not reviewing it when circumstances change. A policy you bought when your children were young may have inadequate coverage by the time they are teenagers. A policy you bought before your income doubled may be dramatically undersized for your current financial obligations. Life insurance is not a set-it-and-forget-it product. Review coverage amounts when you have a new child, buy a home, get a significant raise, or experience any major life change.
Failing to account for both partners’ economic contributions is a related mistake. Many couples insure only the higher earner and leave the other spouse uninsured. If the non-earning or lower-earning spouse dies, the surviving spouse may face substantial childcare and household costs at the same time as they are grieving. Both partners should have coverage unless there is a specific reason not to insure one of them.
Treating a child life insurance policy as a college savings plan is a strategic mistake. The returns are too low and the flexibility is too limited compared to a 529 plan or even a standard investment account. Buy child coverage for the right reasons (insuring against tragedy, protecting future insurability) and use better tools for savings goals.
Finally, waiting too long to buy spousal coverage when a partner has a known health issue is a timing mistake. If your spouse has been diagnosed with a condition that will likely make them uninsurable in a few years, buying coverage now while they can still qualify is far better than waiting. Insurability is not guaranteed, and the window for getting coverage at a reasonable rate can close faster than people expect.
The Application Process When Insuring Someone Else
When you are buying coverage on a family member, the application process looks somewhat different from buying a policy on yourself. You, as the policy owner, complete the owner sections of the application. The insured person (your spouse or child) completes the health sections or, in the case of a young child, the parent answers health questions on behalf of the child.
For spousal coverage, your spouse will need to sign the application in most states. For child coverage, one parent typically signs on behalf of the minor child. The insured’s signature confirms their awareness and consent to being insured.
If a paramedical exam is required, the insured person schedules and completes the exam, not the policy owner. The exam data belongs to the insured’s health profile, and the insurer needs it from them directly.
Work with an independent broker who can run the application through the most favorable carrier for the specific person being insured. If your spouse has any notable health history, the carrier selection matters as much for their application as it would for yours.