How To Give the Gift of Life Insurance

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You can gift life insurance to someone else either by designating them as the beneficiary of your life insurance policy or giving them a policy that could provide a death benefit for their beneficiaries. A life insurance gift can provide your loved ones with a tax-favored payout after your death or a financial safety net for the people who rely on their income.

Check out the rest of the article for more information on gifting life insurance and what you will need to take out a life insurance policy on someone else’s behalf.

Key Takeaways

  • You can select multiple people or organizations as beneficiaries for your life insurance policy, meaning they will receive a predetermined payout from your insurance company if you die while your policy is active.
  • If you transfer ownership of your life insurance policy to someone else, they can decide who will receive a death benefit after you die and how much money the death benefit will include.
  • To get a life insurance policy that covers someone else as a gift for that person, you must obtain their consent and prove to your insurance provider that their death would have a financial impact on you.
  • You’ll need to share personal information about prospective insureds and beneficiaries whenever you buy a life insurance policy for someone else along with the insured’s medical information and coverage preferences.

Can You Give Life Insurance To Someone?

You can give life insurance coverage to someone else either by gifting life insurance proceeds to them as a beneficiary or designating them as the insured for their own life insurance policy.

Gifting Your Own Life Insurance

One way to gift life insurance is to take out a policy on your own life and select someone else as the beneficiary, meaning they will receive a death benefit from your insurance company if you die during the policy’s coverage period. A major benefit of life insurance payouts is that they are generally tax free unless your whole life insurance policy has accrued interest above the amount of premiums paid into the policy.[1]

taxable income on life insurance

Your policy can have multiple primary beneficiaries including your spouse, family members, charities, a trustee or your estate. You can also select contingent beneficiaries who will only receive a life insurance payout if your primary beneficiaries have already died or are otherwise unavailable.[2]

Another option is to transfer ownership of your existing life insurance policy to someone else, meaning they could adjust the coverage amounts and change the beneficiaries that will receive a payout upon your death.[3] While the new owner may have to start paying the premiums, they may also be able to access the cash value your permanent life insurance policy has already accrued while securing a death benefit for their selected beneficiaries without going through a medical exam for their own life insurance policy.

Buying a New Life Insurance Policy as a Gift

Alternatively, you could buy a new life insurance policy for someone else, meaning they would be the insured and the beneficiaries they select would receive a payout upon their death rather than yours. If you remain the owner of the policy, you could opt to pay the life insurance premiums on the insured’s behalf.

To buy life insurance for your parents or anyone else, you will need to get their consent first, so you shouldn’t plan on surprising someone with the gift of their own life insurance policy. In addition, you can only take out a life insurance policy on someone if you can demonstrate insurable interest, meaning that person’s death would have an impact on your finances. In general, it’s easiest to prove you have insurable interest in a close relative.[4]

What Information Do I Need To Gift Someone Life Insurance?

In order to buy life insurance for someone else, you’ll need to share personal details about both the insured and the beneficiaries such as their names, addresses, phone numbers and Social Security numbers.

The insured may need to undergo a medical exam or share information the insurer can use to calculate their rates like their age, lifestyle and medical history.

If you’re buying a policy that will cover someone else, you should also be prepared to share how much coverage the policy should provide including the size of the death benefit and any life insurance riders that should be added to enhance the policy’s coverage. Since you’ll need the other person’s permission to buy them a policy anyway, it’s best to discuss how much life insurance coverage they want up front so you won’t have to play a guessing game when it comes time to purchase the policy.

How Do I Buy and Gift Life Insurance for Someone Else?

You should collect life insurance quotes from three to five different insurance carriers in order to find the right life insurance policy for your loved one. While individually reaching out to insurance companies for quotes may be a tedious task, you can make the process simpler by going through SmartFinancial.

To receive your free life insurance quote, you'll need to complete a simple questionnaire where you can let us know how much coverage you’re looking for and how much money you can afford to spend on a life insurance policy. Then, we’ll quickly match you up with insurance agents in your area who can help you find the right policy for your needs.

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Are there benefits to gifting life insurance?

Life insurance can provide a financial safety net to help someone cover their mortgage, college loans and other major expenses after a loved one dies.  Gifting life insurance either lets you grant these benefits to your beneficiaries or allows a new policyholder who might not be able to buy life insurance otherwise secure these benefits for their beneficiaries.

Can I gift multiple life insurance policies?

Yes, you can buy multiple life insurance policies both for yourself and as gifts for other people.

Can I buy life insurance for a minor?

Yes, you can buy life insurance for a child as long as you are the child’s parent or guardian or have the permission of their parent or guardian. You could also receive coverage for your child up to their 26th birthday by adding a term life insurance child rider to your existing policy.[5]

Is gifted life insurance taxable?

Life insurance death benefits generally aren’t taxable, although your beneficiaries may have to report any interest your life insurance policy has earned as taxable income.[1]

Can you give life insurance to a friend?

You may be able to buy whole life insurance or term life insurance for a friend if you can demonstrate insurable interest, meaning their death would impact you financially.[4] However, you should note that it is generally harder to demonstrate insurable interest for a friend than for a family member.


  1. Internal Revenue Service. “Life Insurance & Disability Insurance Proceeds.” Accessed Dec. 19, 2023.
  2. Insurance Information Institute. “What Is a Beneficiary?” Accessed Dec. 19, 2023.
  3. Haven Life. “Can You Transfer Ownership of a Life Insurance Policy?” Accessed Dec. 19, 2023.
  4. Lincoln Heritage Life Insurance Company. “Guide to Buying Life Insurance for Parents - Elderly, Burial.” Accessed Dec. 19, 2023.
  5. United States Securities and Exchange Commission. “Children’s Level Term Insurance Rider.” Accessed Dec. 19, 2023.

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