Life Insurance For Girlfriends: Is It Possible?

Life insurance is a contract between an insurer and a policyholder, guaranteeing the insurer pays a sum of money to named beneficiaries when the insured policyholder dies. It is possible to take out life insurance on a girlfriend, but only if you have their consent and can prove an 'insurable interest', i.e., that their death would cause you financial hardship. This might be the case if you share finances, have children together, or live together.

Consent and insurable interest

In the context of a romantic relationship, insurable interest typically involves financial dependency. For example, if you and your girlfriend share expenses, such as rent or bills, and her death would significantly impact your finances, you likely have an insurable interest. Other examples of insurable interest in this context include joint ownership of a home or business, shared debts, or having children together.

Establishing insurable interest may be more straightforward for married couples, as they usually share a home, expenses, and may have children together. However, the industry is becoming more flexible and adaptable to modern relationships, making it easier for unmarried couples to prove financial dependency.

Consent is the other critical component. Your girlfriend must consent to the insurance and be willing to participate in the process, which may include signing the application, undergoing a medical exam, and being interviewed by the insurance company. Without her consent, you cannot purchase life insurance on your girlfriend.

In summary, to buy life insurance for your girlfriend, you must have her consent and be able to demonstrate insurable interest by proving your financial dependency on each other. This process helps ensure that the policy serves its intended purpose of providing financial security rather than enabling misuse or creating incentives for harm.

Proving insurable interest

• Spouse/spouse relationship
• Parent/child relationship
• Grandparent/grandchild relationship

However, these relationships tend not to be automatically recognised as having insurable interest:

• Stepparent/stepchildren
• Aunts, uncles, cousins, nieces, nephews, stepchildren, and stepparents (unless there is financial dependence)

Insurable interest can also be proven in business contexts. For example, a business contract or other proof that a company will experience financial hardship and loss upon the insured's death is needed when a corporation purchases a life insurance policy on a key officer.

• Spouse: Marriage certificate or domestic partnership registration
• Dependent relationship: Birth certificate or documentation of legal guardianship
• Parents: Consent to cover end-of-life costs
• Business partners: Business license, partnership agreement, or shareholder agreement
• Corporations: Employment contract, financial statements, meeting minutes, etc.
• Estate planning: Trust agreements and wills
• Legal obligations: Court orders for alimony or child support
• Debtor-creditor relationship: Loan agreement

It's important to note that insurable interest only needs to exist when the policy is purchased. For example, you can take out a life insurance policy on yourself and initially name your spouse as the beneficiary. If you later decide to change the beneficiary to a friend, you are allowed to do so as the insurable interest requirement was satisfied when the policy was approved.

Policy ownership vs naming your girlfriend as beneficiary

Policy ownership and naming your girlfriend as a beneficiary are two different things. You can apply to own policies on one another, but it is more straightforward for each partner to purchase a policy on themselves and name the other as the beneficiary.

Advantages of Owning Your Policy and Naming Your Girlfriend as Beneficiary

• Control: You have control over your policy and can change beneficiaries, adjust coverage, and otherwise manage the policy as you see fit.
• Premium Payment: You are responsible for paying the premiums, so you are not relying on anyone else to ensure the policy remains in force.
• Information Access: You will receive all communications about the policy.
• Payout: Your girlfriend would be the beneficiary and would receive the death benefit directly. Usually, this payout is tax-free and bypasses probate, allowing quicker access to funds.
• Flexibility: Owning your own policy allows you to adapt it to changing circumstances. If your relationship with your partner changes, you can easily modify the beneficiary.
• Trust: Trust plays a crucial role regardless of who owns the policy. If your partner owns a policy on you, you will need to trust them to manage it responsibly.
• Estate Planning: Assess how each option aligns with your overall financial and estate planning objectives. Owning your policy may have tax implications if the value of your estate surpasses the exemption limit.
• Communication: Regardless of the arrangement, clear communication is essential to ensure both parties understand the policy's terms and obligations.

Key Points to Consider

• Consent: Unmarried couples in long-term relationships who want to buy life insurance on one another will need consent from their partner.
• Insurable Interest: You may also need to show proof of insurable interest to the life insurance carrier. Examples include both individuals being named on a lease, joint ownership of a home or business, shared debts, and having children together.
• Challenges: Getting life insurance for your girlfriend may be challenging if you have only been dating for a short period, don't live together, or are not financially dependent on each other.

Joint vs separate life insurance plans

Yes, you can get life insurance for a girlfriend or boyfriend with whom you are in a serious relationship. However, you will need their consent and will have to prove insurable interest, which means that you would face financial hardship if they were to pass away. Insurable interest can be established by providing proof of joint ownership or shared debts, for example.

Now, when it comes to joint vs separate life insurance plans, there are several factors to consider. Here are some key points to help you decide which option is best for you and your partner:

Joint Life Insurance Policies:

• Cost: Joint life insurance policies are typically less expensive than purchasing two separate permanent life policies since there is only one payout when one or both insured individuals pass away.
• Coverage: Joint life insurance covers two people and pays a benefit when one or both spouses/partners die, depending on the type of joint policy chosen.
• Types: There are two main types of joint life insurance policies: first-to-die and second-to-die (or survivorship) policies. First-to-die policies pay out after the first person's death, while second-to-die policies pay out only after both insured individuals have passed away.
• Considerations: Joint life insurance may be a good option for young, dual-income families or older, affluent couples with complex estate planning needs. It can also be useful for couples who want to ensure their beneficiaries' financial confidence once both spouses have passed away.

Separate Life Insurance Policies:

• Flexibility: Separate life insurance policies allow each individual to have their own coverage, which can be tailored to their unique needs and circumstances.
• Portability: Separate policies offer more flexibility if the relationship changes, as each person owns and controls their own policy.
• Longevity: With separate policies, the surviving spouse may need to purchase additional insurance at a higher price later on, as they will be older and possibly in worse health.
• Health: If one partner has health issues, separate coverage may be more cost-effective, as joint life insurance premiums are based on the average health status and life expectancy of both individuals.
• Considerations: Separate life insurance policies are often chosen by recently engaged or newly married couples to ensure financial confidence for the surviving spouse and any future children. They are also a good option if one or both partners have sufficient coverage coming into the relationship or prefer to keep their estates separate.

In summary, joint life insurance policies can be beneficial for couples looking to save money on premiums and protect their assets from taxes, while separate life insurance policies offer more flexibility and control over coverage. The best option for you and your partner will depend on your individual circumstances, financial goals, and the level of coverage needed.

When to buy life insurance for your girlfriend

It is possible to buy life insurance for your girlfriend if certain criteria are met. Here are some things to consider when thinking about buying life insurance for your girlfriend:

Consent and Insurable Interest

Firstly, you need to have consent from your girlfriend to take out a life insurance policy on her. Without her consent, it is unlikely that you will be able to get a policy approved.

Secondly, you will need to prove that you have an "insurable interest", meaning that you can demonstrate that her death would have an adverse financial impact on you. For example, if you share finances, have children together, or own a home or business together, then you may be able to establish insurable interest.

Length of Relationship and Commitment

The length of your relationship and level of commitment may also be considered by insurance providers. If you have been dating for a short time, it may be more challenging to get life insurance for your girlfriend, as providers may view this as a lower-commitment relationship. On the other hand, if you have been together for a significant period and/or are engaged or married, it may be easier to establish insurable interest and get approval for a policy.

Living Situation and Financial Dependency

Living together and being financially dependent on each other can also help establish insurable interest. Factors such as having a lease together, sharing bills or debts, or having children together can strengthen the case for insurable interest.

Health and Pre-existing Conditions

If your girlfriend has pre-existing health conditions, it may be beneficial to take out a life insurance policy earlier rather than later. The cost of the policy will likely be lower if she is younger and in good health. Additionally, some carriers may be more willing to provide coverage than others, so it is worth shopping around and obtaining multiple quotes.

In conclusion, when considering buying life insurance for your girlfriend, ensure you have her consent, establish that you have an insurable interest, and be prepared to provide proof of your relationship, living situation, and financial dependency.

Frequently asked questions