Quora Answer: Is It Appropriate to Buy Someone Else a Term Life Insurance Policy as a Gift?

The following is my answer to a Quora question: “Is it appropriate to buy someone else a term life insurance policy as a gift?”

Before considering appropriateness, you have to consider insurable interest.  You can only buy policies for your children, your spouse, your parents, or for someone you have a substantial business with, such as a key employee.

If you are buying a term life, who is the intended policy owner?  If you are the policy owner, and they are the life insured, it may not send the right signal.  Do you intend to profit from their possibly impending tragedy?  If you intend to transfer the policy, does that include the transfer of the responsibility of paying the premium?  Can they afford it?  Do they need this coverage?

Generally, this is a bad idea.  Insurance is a business decision, or a decision to mitigate against liability.  It is a joint decision between the policy owner and the insured.  Most relationships may not have the dynamics that make this possible.