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Did you know that you can take out a life insurance policy on an ex-spouse? Most people don’t, and at the very least they might assume some nefarious purpose for it. After all, how many murder stories include life insurance as a motive for the unthinkable?

Perhaps disappointingly for true crime junkies, taking out a life insurance policy on an ex-spouse is pretty benign – especially if someone is depending on spousal support or child support to make ends meet. In some cases, a judge might even require the paying spouse to carry a life insurance policy with their ex as the sole beneficiary!

This article, though, is not about divorce – and it’s definitely not about the murder. It’s about insurable interests, which can include things like child support and spousal support, and how these can play a role in life insurance.

If There’s an Insurable Interest, Life Insurance Can Secure It

Generally speaking, if someone would experience a financial loss or hardship because of your death, they have an insurable interest. They can then exercise that interest by taking a life insurance policy out on you.

Think about spousal support and child support again: If a spouse and the couple’s children became accustomed to a certain standard of living, then support payments are ordered to ensure that standard is maintained. If the paying ex-spouse dies, then the receiving ex-spouse and their children’s standard of living suffers. This means the receiving ex-spouse – and their children, for that matter – has an insurable interest.

Keep in mind that the potential scenarios for taking out a life insurance policy on someone else aren’t limited to situations involving divorce. As long as someone is financially dependent upon someone else or would experience financial hardship in the event of their death, then that person can purchase a life insurance policy on that person – although policies tend to mostly involve relatives.

Do I Need an Insurable Interest to Take a Policy Out on Someone Else?

Yes. If you are insuring someone else’s life to secure your financial interests, you must have an insurable interest to do so. Your insurable interest is, effectively, your legal reason to do so. Absent of such a reason, you will not be successful in insuring someone else’s life.

You can, of course, take out a life insurance policy on yourself. Many people do, and this is by far the most common way life insurance is used. When you have a policy on yourself, you can designate any beneficiaries you want to receive a specific percentage of the benefits paid out in the event of your death.