We all want to feel that our families are secure, and that extends to financial security. Getting a life insurance policy allows you to protect your family’s financial stability because it pays out a lump-sum payment should you pass away. Some people also take out policies for a parent, spouse, or grandparent, but other individuals may not know that you can also purchase life insurance for a sibling.
A common misconception is that life insurance is for those growing old or nearing the end of their life; however, you can also purchase life insurance to protect against an expected or unexpected family death, which could include a brother or sister. Purchasing sibling life insurance adds an extra layer of security for the beneficiary.
If you meet the eligibility requirements, which we’ll go over in this guide, you can buy an insurance policy for your sibling. We’ll answer the following essential questions so you can feel confident when purchasing a policy:
When and how can you buy life insurance for siblings?
Who is best suited for this insurance?
What is insurable interest, and does your sibling qualify for it?
What is insured consent?
By the end, you’ll have a full grasp of the nuances of life insurance for siblings and will know what's required for getting sibling life insurance.
The quick answer to "Can I purchase life insurance for a sibling?" is yes. However, just because you have a brother or sister, does not mean you can purchase an insurance policy for them. Life insurance policies have specific eligibility criteria that the policy owner or insured person must meet. Plus, two primary factors go into sibling life insurance.
You must prove to the insurance company that your sibling’s life has an insurable interest. Below, we'll go into detail about types of insurable interest and provide real-life examples.
This is commonly referred to as "consent from the insured." Your sibling must approve of you purchasing an insurance policy where they are the insured and you are the beneficiary. Here, your sibling will play an active role in the purchase of the insurance plan. Remember that you cannot buy life insurance for your sibling if they do not give you approval, even if there is proof of insurable interest. In addition, all policies will require a signed approval from the insured, used to acknowledge that they give the policy owner and beneficiary the right to insurance policy funds should they pass away.
Therefore, both factors must be present, not either/or, to meet the criteria. Along with ensuring you meet the requirements, the insurance company will ask you and the insured sibling to sign the insurance policy. The reason for approval from both sides is to make sure the company, insured sibling, and policy owner accept the terms and conditions of the set insurance policy.
Insurable interest is proof given to the insurer “that you would suffer financially if that person [the sibling] died.” What exactly does this mean? Well, let’s say that your sibling is the breadwinner or the financial anchor for the beneficiary — the one seeking the insurance policy. In that case, the death of the breadwinner sibling would directly affect the other sibling.
If you depend on your sibling for financial support, you can state that your sibling has an insurable interest. It means that you may purchase life insurance for the sibling.
Here are a few other examples of insurable interest for your sibling:
Primary caregiver: This means your brother or sister is the primary caregiver to your dependent parents and handles their wellbeing. If the sibling passes away, the financial and physical burden of taking care of your family will fall upon you.
Taking care of children: If your sibling has children, they could leave you responsible for their children. You would have the financial burden of funding the children’s physical and mental needs.
When applying for an insurance policy for sibling life insurance, make sure that insurable interest exists and that it must be in the present. If your sibling does not have insurable interest now but will in the future, you cannot purchase an insurance policy for them.
Understanding the term “insurable interest” will help your purchasing decision, especially since other forms of life insurance will also require insurable interest. For example, the life insurance company may ask you to prove insurable interest for parents, grandparents, children, and relationships through marriage if you decide to buy a life insurance plan for those individuals.
The insurance company will communicate with you (the beneficiary) and the insured (the sibling); they will also go over the necessary information to determine if you qualify for an insurance policy under life insurance for siblings.
You might think, why do you even need to prove your sibling has insurable interests in the first place? The reason is that insurance companies require proof of insurable interest as an additional safety factor. This ensures that the policy is not being bought with the intent of insurance fraud. To put it simply, it reduces the incentive for individuals to commit murder or other harm for the sake of receiving money from the insured sibling.
Overall, the rest of the steps are straightforward once there is both consent and insurable interest.
Let’s say that when reviewing your lifestyle, you’ve established that there is an insurable interest and that the person you are insuring has consented.
What’s the next step? Now you’ll need to search for a suitable insurance company. The insurer will help you establish if your insurable interest is valid for their insurance policy; they will then guide you through the rates and detail the information needed to pursue coverage.
Payments for insurance policies also require premiums. Each insurance policy differs in its rates and premiums, but most premiums are a monthly payment. These premiums may also come as an initial deposit and then transition to a monthly payment. In addition, the rate for a sibling's life insurance policy will depend on factors unique to their situation, such as age, gender, and lifestyle. If your sibling has a progressive medical condition that isn't immediately life-threatening, such as kidney failure, diabetes, or Parkinson's disease, you might consider them to be a good candidate for a graded whole life insurance policy. If you are looking for a more cost-effective option, term life policies offer lower premiums for smaller death benefits that will cover things like funeral expenses, or help pay off debts that your sibling has incurred that you may find yourself responsible for in the event of their death. Throughout this process, you and the insured will take an active part in forming the life insurance policy.
Finding the right insurance company doesn’t have to be difficult. At PolicyScout, we make it easy to choose general life insurance policies with the coverage you need. We've already ranked the top life insurance companies based on performance and compiled some of the best insurance blogs to help you make an informed decision. You can use an insurance aggregator to help compare prices and options available to you. Visit here to find out more about specific insurance companies for life insurance.
Don’t feel pressured when deciding whether to buy life insurance for your brother or sister. Before doing so, go over the eligibility again or call your insurance company. You can also browse more information about life insurance to feel more confident in your decision.
One of life’s priorities is taking care of your family. Although life insurance for a sibling is less common than other forms of life insurance, it remains a valid and useful tool for ensuring your security in life. Sibling life insurance protects yourself and your sibling.
It’s important to take measures that are best for your family and sibling. Wherever possible, stay informed on the life insurance options available in America, including general life insurance and grandparent’s insurance, and know that each life insurance policy will have a unique rate.
Above all, remember that you know what’s best for your family. If you feel that sibling life insurance is right, don't hesitate to reach out to PolicyScout for a quote.