In most cases the life insurance policy owner and insured match. There are however, times when it makes sense to buy insurance on another person.
'Insurable interest' is key to insuring someone else. The indiviual requesting coverage must show a direct connection between his/her financial well-being and the other person's life. Life insurers cannot issue policies without proof of insurable interest. Examples of individuals that may have an insurable interest in your life include a spouse, parent, child, or business partner.
The next step, after proving insurable interest, is applying for coverage. Life insurance rates are based on the insurerd person's age, health status, inclination to participate in risky activities (like racing, sky diving), and more. The insured individual's responses determine the policy premium. Most life insruers also insist on a brief medical exam. A company-approved medical professional stops by to confirm the insured individual's lood pressure, height, weight, and possibly take blood and urine samples. The insured individual must also sign the application and other policy papers.
The application, medical exam, and signature requirements make it nearly impossible for someone to buy life insurance without your consdent. But, if a policyholder somehow pulls it off, there are still hurdles ahead. Insurance companies do not pay benefits in cases of fraud or misrepresentation. Legal repercussions are likely.