Can an Adult Own Life Insurance on a Parent?

Legal Requirement: Insurable Interest and Consent

Yes, an adult can own a life insurance policy on a parent, but only if they have an insurable interest and obtain the parent's written consent. Insurable interest means the policyholder would suffer a financial loss or hardship upon the parent's death, such as covering medical costs or providing for the parent's care.

How to Obtain Consent

The parent must sign the application and acknowledge that they understand the policy's purpose. Without a signed declaration, insurers will reject the application because the policy could be viewed as a wagering contract.

Typical Scenarios for Adult Ownership

Adults often purchase policies for parents to:

• Lock in lower premiums while the parent is still healthy.
• Cover long‑term care or hospice expenses.
• Ensure funds are available for estate taxes or debt repayment.

Policy Types and Ownership Options

Common policy choices include term life, which provides coverage for a set period, and whole life, which builds cash value. The adult can be the owner, payer, and beneficiary, while the parent remains the insured.

Key Considerations and Potential Pitfalls

Even with consent, insurers may scrutinize the relationship to confirm genuine insurable interest. If the adult stands to gain financially without a clear need, the application could be denied. Additionally, any change in the parent's health after the policy is issued could affect future claims.

Comparison of Common Policy Structures