Can I Take Out Insurance on Anyone?

Oct 17, 2022 | Allen A. Ritchie

Allen's Answers


Have you seen a movie or two where the bad guy takes out an insurance policy on a stranger and then … well, you know, kills the person?

So has the state of Alabama. And it says, “Oh no way, not in our state.” Forget the killing part; I am talking about the insurance part.

First, and this might surprise you, the person you are insuring must agree to the policy. You might not realize it, but your insurance agent has probably had that person sign something that says this is ok.

Second, by law, you must have a financial interest in the other person. Meaning if he or she dies, you will suffer a financial loss. You can understand this for a married couple, but you can argue this for the loss of a parent, a sibling caring for your parents, or even to cover the burial expenses of a child. Did you know you can also cover the loss of a business partner?

Here is one other thing. If you want to collect, make sure you are the beneficiary. It doesn’t matter who makes the payments; the insurance company will pay the person on the policy.

If these rules were not the law, you could take out an insurance policy on professional athletes as a way of gambling, your neighbor’s brother who is participating in risky behavior, or even a stranger on the street.

So much for an easy payday.

Join us on NBC 15 LawCall here in Mobile every Sunday night at 10:30, right after the news. We are taking a fall break and will offer 5-minute segments for the rest of the year and a live call-in segment every Monday on NBC 15 at around lunchtime. You can also call the Eiland & Ritchie offices at (251) 666-1212. We specifically set aside a few hours Monday morning to answer your questions.

Allen Ritchie

Alabama Personal Injury Lawyer