Can you insure someone's life if that person’s death would not cause you economic hardship?

In the context of life insurance, it is vital to establish an insurable interest, which means that the policyholder must demonstrate a legitimate interest in the continued life of the insured person. This interest typically arises from relationships where the death of the insured would result in a financial loss or economic hardship for the policyholder.

If a person’s death would not cause economic hardship, the policyholder lacks the necessary insurable interest, making it inappropriate and often illegal to purchase life insurance on that person’s life. The principle behind this requirement is to prevent moral hazards and potential abuse, ensuring that life insurance serves its intended purpose of risk management rather than facilitating unethical behavior, such as taking advantage of someone's death.

While it is possible for a person to have a personal connection to someone else (like familial ties) or even obtain permission from the individual, the core requirement remains that the policyholder has to face some form of financial loss from the eventual death of the insured to justify insuring their life. Hence, life insurance cannot be purchased on someone else's life without demonstrating that the death of that person would create an economic burden.