Apr. 25, 2007

My father does not have a life insurance policy, as he believes that it is just something to make relatives fight over after a loved one has passed. I would like to take out a policy on him in order to cover his funeral expenses. Can I go about this without him knowing?

Katrina, Illinois

It is extremely difficult to take out an insurance policy on another person's life without that person knowing. For one thing, you must show that you have an "insurable interest" in your father's life, which means that you must show you stand to lose financially if he dies. Different states have different views on insurable interest. Generally, blood relatives and spouses are considered to have insurable interest, but it's not guaranteed.

Second, most life insurance policies require the insured person to take a medical exam before the insurer will issue a policy. There are guaranteed issue life insurance policies that do not require medical exams, but these are quite expensive, and a company might be unwilling to sell you a policy on your father's life without his consent.

If you are looking to cover final expenses and nothing else, you might discuss with your father the possibility of funeral insurance. Funeral insurance policies are small face value policies (usually a few thousand dollars) that cover funeral expenses. The death benefit is set aside for cost of the funeral, not for family members, so there's limited potential for family arguments over the money. Be careful, though, if you decide to go this route. Some policies require you to pay the premium in a lump sum that might be nearly the amount covered by the policy. Others allow premium payments to be spread out over three, five, or 10 years, and can ultimately add up to more than the policy's face value. We have a story on funeral insurance that can help you sort out the details: Tips for buying pre-need and final expense insurance.

You also might persuade your father to start saving money that will cover his final expenses. If you do find that a funeral insurance policy would require a large lump-sum payment, then depositing that lump sum in a savings vehicle might be the simplest option.

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Disclaimer: We are journalists, not financial planners or insurance brokers. Nothing we say should be interpreted as a recommendation to buy or sell any insurance product, or to provide other financial or legal advice.